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“We still believe the stock is undervalued.”
So said Talabat CEO Toon Gyssels speaking with Dan Murphy on CNBC on the back of the company’s Q2 earnings release.
Show me a public-markets CEO who doesn’t think that and I’ll show you a boardroom polishing the door handle for their way out. On this occasion, though, Gyssels really has a point.
Talabat’s second-quarter results are equal parts impressive on the numbers and fascinating for what they reveal about the state of MENA food delivery and quick commerce.
At first glance, the headline metrics look alarming. Adjusted EBITDA fell 13% year on year to $147 million, while net income fell 18% to $100 million.
Ye despite that, the company confidently hoisted its full-year guidance across every metric in its stable.
We’ll give you the long answer shortly. The short one is that Talabat is spending more, just not everywhere it envisaged it would have to.
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Having no skin in the game in Saudi Arabia gave Talabat room to watch the wreckage, get its ducks in a row, and design a counter-strategy before Keeta reached its own backyard. In the Kingdom, Meituan’s aggressive discounting wreaked havoc across the food-delivery landscape, forcing competitors to contract, consolidate, or skip town altogether.
Meituan’s international division clearly had its sights set well beyond Riyadh, using its Saudi playbook as a template for Bahrain, Kuwait, Qatar, and the UAE. Expecting a similar price war, Talabat ringfenced an additional 0.5% of GMV for incentives and marketing to defend its turf.
Instead, Gyssels plainly told analysts last week: “We don’t need to spend all of that.”
And this defence didn’t even come at the expense of market position, with management disclosing that Talabat actually gained category share across the UAE, Kuwait and Qatar during Q2, with gains exceeding three percentage points in its strongest market.
When demand’s better than expected and the price of defence is lower, hiking up guidance makes a lot more sense indeed.
Now, we’ve combed through the entire financial statement, listened in on the earnings call and read the presentation deck so you don’t have to.
And there’s quite a bit hiding beneath the headline print.
Taken together, five findings tell a much more interesting story about where Talabat is heading: where the growth is moving, what grocery is actually worth, how dark store economics really stack up, where regulators are drawing lines, and the massive Uber-shaped question looming on the horizon.
So, five bits of food for thought, starting with a market that, dating all the way back to its Otlob days, has given Talabat plenty by way of volume but not always much by way of profit.
1. Egypt is starting to matter for profit, not just growth
Ostensibly, Talabat remains a Gulf-heavy company, but one of the more surprising takeaways from the quarter was the extent to which the mix is starting to shift.
GCC GMV invariably still accounts for the lion's share, growing 5% to $2.3 billion in Q2, but in the rearview mirror, Egypt, Jordan, and Iraq are no longer a nondescript speck in the distance, growing 41% to $642 million. Where a year ago the GCC represented 83% of Talabat’s GMV, today it’s 78%.
The more interesting shift, though, is when we hone in on profit.
