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What's this note about?

In this note, we outline 2024 trends and summarise key calls into 2025. Overall, we continue to prefer eFood over Classifieds and Other Internet.

Online Food Delivery & Takeaway

FY24 has been a year of flux for eFood. Within food delivery, the year has been marked by accelerating top-line growth rates, improving FCF generation and an increasing focus on portfolio pragmatism. We think this combination aided balance sheets and drove the rise of optimism on the market that further portfolio management could materialize. In many ways much of what the market wanted to see from food delivery in 2024, happened. The space performed reasonably well up +6% in 2024. We expect trends of accelerating growth, FCF generation, cash returns and portfolio rationality to continue in 2025 but expect to see capacity for more meaningful share price outperformance as the industry earns the market's trust and proves that it is institutionally investible. We see competition as the biggest concern for the segment. Whilst we think industry participants have largely continued to demonstrate 'prosperous co-existence' we have seen isolated flare ups in competition.

Online Classifieds

In our view, the last 12-to-18 months have been characterised by marked and in most cases unwarranted valuation disconnects across the space. To contextualise the thesis, we flag three key themes dominating the space in 2024: 1) Cyclicality exposure; 2) Competitive concerns; and 3) Execution in adjacencies. We expect the three key topics to remain an important part of the discussion in 2025.