Deliveroo has posted its first interim profit since its highly criticized public debut in 2021.

The food delivery giant recorded a profit of £1.3 million in the first half of this year, marking a major recovery from an £82.9 million loss in the same period last year. Orders rose by 2% year-over-year to 147 million as inflationary pressures and cost of living concerns began to ease, with the gross transaction value increasing by 5% to £3.69 billion.

Additionally, Deliveroo achieved a positive free cash inflow of £3.2 million, reversing a previous £27.7 million deficit, and announced a £150 million share buyback to return value to its shareholders.

The financial results sparked a surge in buying of the company’s stock, which had famously dropped by 25% from its IPO price of 390p on its first trading day in March 2021. Shares closed up 13½p, or 10.5%, at 141p.

Will Shu, CEO and co-founder of Deliveroo, celebrated the profit and positive cash flow as significant milestones, attributing the buyback to the company’s strong financial outlook.

“The stock market is unpredictable, but our priority is the business and delivering for our customers,” said Shu, 44. “I believe the buyback is driven by our confidence in generating cash flow and growth prospects. The stock price will take care of itself. Our focus remains on the business.”

The average cost of food orders plus delivery fees rose to £25, up from £24.20 the previous year, driven mainly by higher prices from restaurants and shops, although the rate of price increases is slowing.

Deliveroo, which partners with around 182,000 restaurants, grocers, and retailers, operates in a fiercely competitive market. Rivals Getir and Gorillas exited the UK market this year, while Uber continues to grow its Uber Eats platform. “It’s absolutely competitive across restaurants and grocery,” Shu noted. “We have to strive every day to be at our best. That’s what keeps us motivated.”

Deliveroo’s push into the grocery sector powered significant growth in the first half of the year, accounting for 14% of the group’s gross transaction value. Since launching Deliveroo Shopping last November, the initiative has shown positive results, including collaborations with companies like B&Q.

Shu emphasized the importance of the grocery segment, stating: “There is a shift away from large weekly shop deliveries offered by Ocado and Tesco, towards a multi-week, smaller basket experience with fresher items. Younger generations are accustomed to this on-demand convenience. Compared to ten years ago, it’s a night and day difference.”

The company raised its full-year core earnings forecast to the upper half of its £110 million to £130 million guidance range. “I am very positive and optimistic, but execution is key,” Shu added.

Investment bank Jefferies commended the half-year results, describing the performance as “impressive.” They highlighted Deliveroo’s achievement of first-time half-year net profit and free cash flow generation, noting encouraging signs in consumer behavior, although order growth remains low.