Delivery Hero's Asian Crossroads: Can Strategic Shifts Turn the Tide?
3min read Delivery Hero’s Q1 2025 results in Asia have painted a mixed picture: while the company’s global momentum continues, its performance in its third-largest revenue region—Asia—has raised red flags. The 8% year-on-year decline in Asia GMV to €5.4 billion contrasts starkly with its global growth, underscoring the urgent need for progress in this critical market. As Delivery Hero pivots toward tech-driven efficiency and market exits, the question remains: will these moves stabilize Asia’s trajectory or deepen the stumble?
The Asia Dilemma: South Korea’s Struggles and Hidden Bright Spots
The Asia GMV slump is overwhelmingly tied to South Korea, where high prior-period comparisons and a weakened customer value proposition (CVP) dragged performance. CFO Marie-Anne Popp admitted candidly, “We probably had a customer value proposition that wasn’t good enough.” This admission is telling: South Korea, which accounts for a significant chunk of Asia’s revenue, now requires a full-scale turnaround.
Yet, outside South Korea, the story is different. Excluding its largest Asian market, GMV grew 22% year-on-year (like-for-like basis), driven by stronger order volumes and larger basket sizes. Hong Kong, for instance, has stabilized its position since late 2024, with improved vendor onboarding and customer acquisition efforts. These pockets of growth suggest Delivery Hero’s broader Asian strategy isn’t entirely broken—but its success hinges on reviving South Korea.
The Turnaround Play: Tech, Logistics, and Market Discipline
Delivery Hero’s response to Asia’s challenges combines aggressive localization and technology investments:
- South Korea’s Multi-Pronged Rescue Plan:
- Subscription Programs: New initiatives here are showing promise, with engagement metrics exceeding expectations.
- Logistics Overhaul: Self-operated deliveries now account for a significantly higher share of orders in South Korea, boosting revenue. A redesigned app interface has also improved user satisfaction.
Vendor Partnerships: Expanding relationships with restaurants and retailers to enhance service reliability and menu variety.
AI and AdTech as Profit Drivers:
- AI algorithms reduced rider wait times at vendors by 0.7 minutes, saving €41 million in costs.
- AdTech upgrades added €39 million to adjusted EBITDA in 2025.
AI-driven search and recommendations could unlock an additional €400 million in GMV by optimizing vendor availability.
Strategic Market Exits:
- The withdrawal from Thailand by May 2025 reflects a broader focus on profitability. CFO Popp emphasized the company’s commitment to exiting markets that fail to meet maturity or profit thresholds—a lesson learned from past missteps.
Investor Concerns and Management Reassurance
Despite the Q1 stumble, Delivery Hero reaffirmed its full-year 2025 guidance of 8–10% GMV growth and €975–1,025 million adjusted EBITDA. However, investor skepticism persists: shares fell 10% post-results, with analysts like UBS citing concerns over South Korea’s competitive pressures.
The company’s case rests on execution. The €400 million GMV uplift from AI alone highlights the potential of its tech bets, while the South Korea strategy’s success could swing Asia back into growth. Meanwhile, the focus on profitability—exiting unprofitable markets and prioritizing own-delivery logistics—aligns with a shift from scale to sustainable margins.
Conclusion: Asia’s Fate Will Define Delivery Hero’s 2025
Delivery Hero’s 2025 narrative hinges on two factors: turning South Korea around and leveraging technology to offset regional headwinds. With 22% GMV growth in non-South Korean markets and €400 million in AI-driven opportunities, the company has clear pathways to recovery. However, South Korea’s performance—where a 9% YoY revenue rise in Asia (despite GMV declines) hints at margin improvements—will be the ultimate test.
If Delivery Hero can stabilize its largest Asian market while capitalizing on its tech investments, its full-year guidance remains achievable. But stagnation in South Korea could prolong Asia’s drag, risking its global growth narrative. Investors should monitor two key metrics: South Korea’s GMV trajectory and the EBITDA impact of AI/AdTech initiatives. For now, the path forward is clear—but execution remains the only currency that counts.
Data Note: Delivery Hero’s adjusted EBITDA guidance for 2025 assumes a €400M GMV boost from AI and a 22% GMV growth rate in non-South Korean Asia. As of Q1, its Asia revenue stood at €1.06 billion, with EBITDA contributions from AdTech and cost savings already materializing.
