The cmpany, an n-demand utfit based in the U.K., went public ealie in 2021. Its shs initially sagged, dawing cncen abut bth the value f n-demand cmpanies and tech cncens listing in Lndn me bly. Hweve, shs f Delive have since ecveed, and the cmpany’s secnd-quate eanings ept saw it aise its expected gss de vlume gwth expectatins “fm between 30% t 40% t between 50% t 60%.”
Given its ising gwth expectatins and impving public-maket valuatin, yu may be supised that Delive is willing t leave any f the 12 makets in which it cuently peates. In the case f Spain, it appeas that Delive is cncened that changes t lcal lab laws will make its peatins me expensive in the cunty, which, given its mdest maket sh, is nt palatable.
Recall that Spain pted a law in May — a law geneally ageed t in Mach — equiing n-demand cmpanies t hie thei cuies. This is the st f aangement that n-demand cmpanies in fd delivey and ide-hailing have lng fught; many n-demand cmpanies unpfitable withut hiing cuies, and ding s culd aise thei csts. The pssibility f wsened ecnmics makes such changes t lab laws in any maket a wy f statups and public cmpanies alike that lean n feelance delivey wkes.
Let’s pase the Delive statement t bette undestand the cmpany’s pespective. Hee’s the intducty paagaph:
Delive tday annunces that it ppses t cnsult n ending its peatins in Spain. Delive cuently peates acss 12 makets wldwide, with the vast majity f the Cmpany’s gss tansactin value (GTV) cming fm makets whee Delive hlds a #1 #2 maket psitin.
Tanslatin: We’e pbably leaving Spain. Mst f u de vlume cmes fm makets whee we in a leing psitin (the cmpany cmpetes with Ube Eats, Glv and Just Eat in diffeent makets). We nt in a leing psitin in Spain.
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Spain epesents less than 2% f Delive’s GTV in H1 2021. The Cmpany has detemined that achieving and sustaining a tp-tie maket psitin in Spain wuld equie a dispptinate level f investment with highly uncetain lng-tem ptential etuns that culd impact the ecnmic viability f the maket f the Cmpany.
Tanslatin: Spain is a vey small maket f Delive. T gain lts f maket sh in Spain wuld be vey cstly, and the cmpany isn’t sue abut the lng-tem pfitability f the cunty’s business. This is whee lab issues like this cme int play — investing t gain maket sh in a cunty whee yu business is less pfitable is had t pencil ut.
And accding t El Pais, the decisin by Delive cmes as it was up against a deline egading wke eclassificatin. That may have cntibuted t the timing f the annuncement.
Fm this junctue, Delive spends thee paagaphs discussing hw it will suppt wkes in case it des leave the Spanish maket. It clses with the fllwing:
This ppsal des nt impact peviusly cmmunicated full-yea guidance n Gup annual GTV gwth and gss pfit magin.
Fai enugh.
On-demand cmpanies have me aguments ve the yeas that changes t lab laws that wuld push me csts nt thei plates in the fm f hiing cuies — simply paying them me — wuld make cetain makets unecnmic and dive them away. Hee, Delive can fllw thugh with an exit at essentially n cst, given hw small its de vlume is cmpd t its the 11 makets.
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