DHER A Record Growth Half-Year, With a Net Loss That Grew Even Faster

Going Public on a Widening Loss

Delivery Hero's pitch, laid out plainly in its own half-year report, is to "create a positive takeaway experience around food, ordering and service" by running multiple local delivery brands (foodpanda, foodora, Talabat.com, Yemeksepeti, and others) across more than 40 countries, then converting order growth into a rising commission take-rate^» as each market matures.

This half-year report covers the six months to June 30, 2017 - the same day Delivery Hero AG's shares began trading on the Frankfurt Stock Exchange's Prime Standard segment, priced at €25.50 and closing that first day at €27.80. By the company's own description, it was the largest food-delivery IPO globally and the third-largest internet IPO in Germany's history.

The growth numbers are real: orders rose 47% and GMV^» 51% on a like-for-like basis (assuming the foodpanda Group, acquired December 31, 2016, had been consolidated for the full comparison period), while reported revenue - which isn't adjusted for the acquisition - grew 94.3% to €253.2 million. Group take-rate improved from 12.8% to 14.1%, meaning revenue is genuinely growing faster than the volume underneath it, not just riding a bigger GMV number. What the headline growth doesn't show is that the consolidated loss for the half grew even faster - up 76% to €221.4 million, against a backdrop where the company's own materials chose to lead with adjusted EBITDA^» narrowing from -35.7% to -18.4% margin (as a percentage of total segment revenue) instead. Both things are true at once, and only one of them made it into the investor deck's headline slide (see Beyond the Usual).

The Prescription

MENA is the one region already generating real profit - adjusted EBITDA of €15.5 million on €62.3 million of revenue this half (roughly 25% of revenue), more than double the prior year's €7.7 million on €32.7 million (roughly 24% of revenue), while GMV grew 61% and take-rate climbed from 9.0% to 10.4%. That's the only regional segment proving the model can convert scale into an actual profit, not just a narrower loss, and Delivery Hero should treat it explicitly as the funding engine for the three regions still losing money - Europe, Asia, and Americas - rather than reporting all four as if they're on equal footing in the deck.

What it should stop doing: leading investor communications with the adjusted EBITDA improvement (-35.7% margin to -18.4% margin, as a percentage of total segment revenue) while the GAAP operating result worsened 48.5% and the consolidated net loss worsened 76% in the same half. A large chunk of that gap is genuinely one-time - €51.1 million of share-based compensation expense tied to converting six legacy virtual-share programs into a single stock-option plan around the AG conversion, versus €19.2 million a year earlier - but a newly public company's first set of investor materials is exactly the wrong place to start training shareholders to look past the GAAP number in favor of the flattering one. Disclose the one-time items and explain them - which the report does, buried in the notes - instead of just showcasing the metric that already excludes them.

Key Financial Metrics

H1 2017 vs. H1 2016, continuing operations, reported in EUR (H1 2017 also shown in USD)

FX: EUR 1 = USD 1.1442 (June 29, 2017 close, the last trading day before this quarter's June 30, 2017 period end).

Metric	H1 2017 (EUR)	H1 2017 (USD)	H1 2016 (EUR)	YoY
Revenue	€253.2M	~$289.7M	€130.3M	✅ +94.3%
Gross profit	€163.8M	~$187.4M	€92.4M	✅ +77.3%
Adjusted EBITDA (total segments)	-€45.3M	~-$51.8M	-€47.0M	✅ improved 3.6%
Operating result (EBIT)	-€134.5M	~-$153.9M	-€90.6M	⚠️ loss +48.5%
Consolidated loss (incl. discontinued ops)	-€221.4M	~-$253.3M	-€125.5M	⚠️ loss +76.4%
Diluted/basic EPS (continuing + discontinued)	-€1.54	—	-€1.02	⚠️ loss deepened
Cash flow from operating activities	-€79.0M	~-$90.4M	-€67.5M	⚠️ outflow +17.1%
Free cash flow (proxy: OCF less capex)*	-€87.5M	~-$100.1M	-€73.6M	⚠️ outflow wider
Cash and cash equivalents	€305.8M	~$349.9M	€230.9M (Dec 2016)	✅ +32.4%

*Delivery Hero doesn't report free cash flow as a defined metric; the figure above is operating cash flow (-€79.0M) less capex - payments for property, plant, and equipment (-€5.7M) and intangible assets (-€2.8M) - not a company-disclosed line.

Balance sheet	Jun 30, 2017	Dec 31, 2016	Change
Total assets	€2,175.8M	€1,632.1M	✅ +33.3%
Total equity	€1,482.7M	€892.2M	✅ +66.2%
Total liabilities	€693.1M	€739.9M	✅ -6.3%

Revenue growth is only partly organic: the first-time consolidation of the foodpanda Group (acquired December 31, 2016) added €43.7 million of the €122.9 million YoY increase - roughly 36% of the growth. The rest is real order and GMV growth across every region. The loss picture is messier than the adjusted-EBITDA headline suggests: administrative expenses jumped from €58.3 million to €114.3 million, driven mostly by the one-time share-based compensation reclassification described in The Prescription above, while interest expense more than doubled (€36.2M vs €15.0M, up 141%) on accelerated amortization of loan transaction costs triggered by the IPO itself - a cost of going public that shows up in the P&L, not just the cap table. Total equity's 66% jump is mostly the IPO and Naspers proceeds landing in capital reserves, not retained earnings - retained losses actually deepened from -€587.6M to -€807.7M over the same half.

The adjusted EBITDA trend genuinely improved. The GAAP numbers underneath it - operating loss, net loss, and interest expense - all got worse in the same period, largely because of costs the adjusted metric is specifically designed to exclude.

Key Operational Metrics

Like-for-like basis (LfL) unless noted

Metric	H1 2017	H1 2016 (LfL)	YoY
Orders	131.8M	89.4M	✅ +47%
GMV	€1,752.2M	€1,163.9M	✅ +51%
Group take-rate	14.1%	12.8%	✅ +1.3pp
Employees (headcount, period-end)	12,594	9,209 (Dec 2016)	✅ +36.8%

Employee growth outpaced revenue growth's organic component, driven mainly by hiring delivery drivers as Delivery Hero rolled out its own-fleet delivery service in MENA and the Americas during the half - a genuine capacity build, not just headcount inflation.

Segment Results

H1 2017, four reportable segments (geographic regions)

Delivery Hero reports four regional segments: Europe (its home market, led by Germany), MENA (Middle East and North Africa), Asia, and Americas.

Segment	Revenue (H1'17)	YoY	Adj. EBITDA (H1'17)	Adj. EBITDA margin (% of revenue)	Take-Rate	GMV YoY
Europe	€95.5M	✅ +41.3%	-€25.5M	-26.7% (vs. -40.8% H1'16)	16.2% → 17.3%	✅ +34.3%
MENA	€62.3M	✅ +90.5%	€15.5M	+24.9% (vs. +23.5% H1'16)	9.0% → 10.4%	✅ +71.0%
Asia	€67.2M	✅ +>100%	-€24.2M	-36.0% (vs. -82.0% H1'16)	13.5% → 15.8%	✅ +>100%
Americas	€21.5M	✅ +117%	-€11.0M	-51.2% (vs. -99.0% H1'16)	10.3% → 12.4%	✅ +80.4%

MENA is the standout: the only region generating a profit, holding a roughly steady ~24-25% adjusted EBITDA margin on revenue even as revenue nearly doubled - discipline, not just a smaller loss from slower spending. Every other region's margin improved materially even while still deeply negative: Europe's margin improved from -40.8% to -26.7% of revenue despite the fastest marketing investment growth of any region, evidence the home market is closest to genuine operating leverage. Asia's margin improved the most of any region (-82.0% to -36.0%) even as its absolute loss widened 40% - Delivery Hero ramped marketing spend and rolled out foodpanda integration and logistics investment across the region, a deliberate reinvestment choice per the report, not a cost overrun, but one worth watching given Asia is now the second-largest segment by GMV. Americas remains the smallest and earliest-stage region by every metric, with the steepest negative margin (-51.2% of revenue) of the four, though narrowing sharply from -99.0% a year earlier.

Beyond the Usual

An IPO that triggered its own debt acceleration

Delivery Hero's bank loan of €111.0 million became immediately due the moment the IPO completed on June 30, 2017, under the loan's own contractual maturity terms - reclassified from a non-current to a current liability at period-end and then actually repaid on July 6, 2017, using IPO proceeds. Separately, shareholder loans with a nominal amount of €190.0 million were reclassified to current trade payables the same day after a call option was exercised in connection with the listing, and were "completely repaid in July 2017." Going public didn't just raise capital here - it simultaneously forced the repayment of over €300 million of existing debt within days, a structural mechanic that doesn't show up anywhere in the investor presentation's IPO-highlights slide.

IPO proceeds sat as a receivable, not cash, at the reporting date

Of the €476.0 million net IPO proceeds Delivery Hero was owed, only about €19.0 million had actually settled as cash by June 30, 2017 - the rest (€457.0 million) is recorded as a receivable and didn't clear until July 4, 2017, four days after the period end. This means a meaningful share of the balance sheet's €543.7 million increase in total assets this half is a timing artifact of when bank settlement happened to land relative to the reporting date, not new cash actually on hand at period-end.

Naspers bought in at scale, weeks before the float

Naspers Ventures B.V. invested €387 million in May 2017 via a cash capital increase, acquiring shares corresponding to 12,890,100 post-split shares - roughly 7.5% of the 171,998,900 total shares outstanding at IPO. A large, sophisticated global internet investor buying a meaningful stake at scale just weeks before the public float is a real market-validation data point worth knowing, separate from whatever the IPO price itself implied.

A goodwill-heavy acquisition with a retention-linked earn-out

The June 2017 acquisition of Kuwait-based Carriage Group cost €84.8 million in cash for a business with only €5.0 million of identifiable net assets - meaning €79.8 million, or 94% of the purchase price, was booked as goodwill, mostly described as "not separable components such as positive business prospects and employee know-how." A further performance-related earn-out with a €40.3 million fair value is tied to the seller's management staying through December 31, 2018 - a structure that pays the sellers to keep running what they just sold, common in this kind of deal but worth knowing the mechanics of.

A first-time valuation loss tied to a Korean subsidiary's ownership structure

The report recognizes a €18.8 million valuation loss on a put/call agreement for the remaining minority interest in RGP Korea Ltd - the entity operating Delivery Hero's Foodfly business in Seoul. This sits inside "other finance costs" rather than anywhere more visible, and foreshadows what the report's own subsequent-events note discloses: Delivery Hero completed the acquisition of RGP Korea's remaining shares on September 20, 2017, after this half-year period closed.

A pending UK divestment still needs a competition regulator's sign-off

The planned sale of the hungryhouse Group (the UK operations, reported as a discontinued operation contributing -€6.5 million to the half's loss) remained conditional on approval from the UK's Competition and Markets Authority as of this report's date, with the presentation flagging the CMA's provisional findings as expected "late September / early October 2017" - after this reporting period and its filing date. Until that clears, the UK exit isn't a completed transaction, just a signed one.

Target Valuation Range

The market is implying an enterprise value of roughly €4.78 billion, or ~8.9x Delivery Hero's own FY2017 revenue guidance - too early to call on fundamentals, but a growth-story multiple the market is already applying against a business still guiding to an adjusted EBITDA margin of -15% to -17% for the same year, not one supported by anything in this half-year's actual profit-and-loss statement. A real DCF-derived fair-value range isn't computable yet either - see below for why - so this EV/Revenue read is the only numeric anchor available this early.

Delivery Hero AG closed its first trading day, June 30, 2017, at €27.80 per share. With 171,998,900 shares outstanding at the time of listing, and period-end cash of €305.8 million against interest-bearing debt of roughly €301.4 million (the €111.0 million accelerated bank loan plus €190.4 million of loans payable, both repaid days after period-end per Beyond the Usual above), the company was close to net-cash-neutral at the reporting date:

Market cap → enterprise value	H1 2017
Share price (period-end)	€27.80
Shares outstanding	171,998,900
Market capitalization	€4.78B (~$5.47B)
Total liabilities (interest-bearing debt)	~€301.4M
Less: cash and equivalents	€305.8M
Enterprise value	~€4.78B (net-cash-neutral)

Peer-multiple sanity check	H1 2017
Revenue basis	FY2017 guidance, €530-540M
Enterprise value	~€4.78B
EV/Revenue (FY2017 guidance)	~8.9x - rich for a business guiding to a negative adjusted EBITDA margin for the same year, though not unusual for a marketplace business this early in penetrating a food-delivery market it estimates at €636 billion across its countries of operation
EV/GMV (H1 2017 annualized, ~€3.5B)	~1.4x - a softer-looking cross-check, but GMV measures order volume flowing through restaurants, not revenue Delivery Hero actually keeps; the EV/Revenue read above is the more meaningful one

A formal multi-year share-price comparison isn't possible for this post - Delivery Hero has only traded publicly since June 30, 2017, the very last day of this reporting period, meaning there is exactly one day of price history as of this quarter's end. That first day's close of €27.80, roughly 9% above the €25.50 offer price, is itself the only price data point available at this stage - not a trend that exists yet to analyze. Delivery Hero has not split its stock since this IPO, so this €27.80 figure is the actual nominal price quoted that day, not a retroactively adjusted one.

A real DCF isn't attempted here: a single half-year of results from a company one day into public trading, still guiding to a negative EBITDA margin, doesn't yet give a reliable multi-year free-cash-flow base to project from - the peer-multiple check above is what a reader should actually lean on this early.

Every region outside MENA is still burning cash to build the market Delivery Hero is betting on - which is exactly why MENA's discipline matters more than its size: it's the only proof yet that the funding engine for the other three regions actually works.

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