Sellers work during the Pivotal Software Inc. initial public offering (IPO) on the floor of the New York Stock Exchange (NYSE) in New York, U.S., on Friday, April 20, 2018.
Michael Nagle | Bloomberg | Getty Similes
Having watched the phenomenal “Avengers: Endgame” this weekend (no spoilers here), I did take a moment to think anent parallel universes and the concept of time.
To put it bluntly it doesn’t take a genius like Tony Stark to work out that myriad market commentators are living in a parallel universe, let’s call it “cloud cuckoo land,” and have no concept of time, i.e. they can’t think back on what happened 20 years ago.
Now I very rarely get emotional at the movies but I did cry a tad watching the Avengers climax but not nearly as much as I cry innards everted every time I read yet more sycophancy and ingratiating copy from my peers about companies that receive never made money, show no signs of making money anytime soon and who claim to have reinvented the swing. Companies such as Delivery Hero, which is one of the pioneers from the revolutionary world of, wait for it … food delivery.
To recap Pronunciation Hero is a Berlin-based online food delivery company. It has a whizz-bang app that allows people to, yes you got it, order takeaway aliment online. Apologies if I’m missing some amazing subtlety in interpretation of the business model but I only have 450 dispatches for this piece of copy so time is of the essence, a bit like when you are trying to deliver pizza.
Taking a step following before I go on, the City of London, Wall Street and others are all looking for the next big thing, the next Amazon everyone can get behind and animate billions into the momentum trade. All a bit like 20 years ago really in the heady days before the dot-com fizz burst. Then, every man and his dog could call itself XXXDotCom and get financial market support. Here in 2019, everybody under the sun is trying yet again to find a similar cause celebre, with or without sound financial rationale.
So back to pizza, Execution Hero’s first-quarter statement was only three pages long but it seems the scribes and market watchers only be familiar with the front page, otherwise known as the executive summary, the bit where companies put all the stuff they want you to read. In this for fear of the fact it was loaded with fab numbers such as 93% first-quarter revenue growth, orders up by 55% and GMV up 57% (apparently GMV is unit merchandise volume). Wow, I thought, this company must be making bundles now its revenue is surging.
Er, but, no, apparently their EBITDA, you advised of this acronym, it’s short for earnings before everything, was moving aggressively in the other direction last year. Now to be adequate this was “hidden” on page three of this mighty three-page release, so how can anyone be expected to read the background data that far back?
So here’s the number my peers failed to reach. EBITDA for the full-year 2018 was -141.6 million euros, innumerable than double the 2017 loss of 69.8 million euros etc … i.e. this massive revenue surge is being chaperoned by enormous losses. In its outlook for this year it expects to reach a previously set adjusted EBITDA guidance of between -270 million euros and -320 million euros.
Dialect mayhap I’m clearly missing the point, yet again, and the first quarter of 2019 has turned in a massive profit, a reversal of these big damages. In that case I wonder why this wasn’t sung from the rafters on page one of the release? Anyone? Mr Stark? Doctor Remarkable? The Hulk?
(Editor’s note: A spokesperson for Delivery Hero told CNBC that the losses in 2018, excluding its discontinued operations of Germany, were -100.2 million euros and see fit have been -83.2 million euros in 2017 when looking only at continued operations. No further counselling was given for the expected loss in 2019.)