American Wolt, bought by the messenger platform company Doordash, made big losses last year.
The growth company Wolt made a loss of 579 million euros last year with a turnover of 106 million euros.
Of the losses, around EUR 125 million consists of incentives received by Wolt’s employees last year.
If you include the losses of the previous two years, the losses of Wolt Group’s parent company, Wolt Enterprise, already rise to more than one billion euros.
The matter is clear from the 2023 financial statements of Wolt parent company’s companies registered in Finland.
Wolt is responsible for all of Doordash’s international operations. You cannot find sales figures or profitability information for different countries such as Finland in the financial statements.
Accumulated the losses mean that Wolt will not pay a single euro of corporate tax to Finland for a long time.
On the other hand, tax revenue is coming to Finland from the income tax side, almost twice as much as previously anticipated thanks to the skillfully concluded trade agreement for Wolt’s employees.
The reason is the stock bonus system made in connection with the trade agreement, which was used to commit Wolt’s executives and employees to continue working for Doordash.
Doordash set aside 500 million euros worth of shares for the stock bonuses of employees participating in Wolt’s incentive system.
Doordash’s share price was $206 at the time the deal was announced.
The incentive system was agreed upon for four years, so that every year a batch of shares worth around 125 million euros is triggered.
However, it was recorded in the purchase agreement that the incentive system is based on a euro amount, which will only be converted into share incentives at the time of the official completion of the transaction with the share value at that moment.
When the final trading day finally came, Doordash’s share price had sunk to about $67.
In this way, the Woltians participating in the incentive system received approximately three times the number of Doordash shares compared to the original.
The added joy was that after the deadline, Doordash’s rate has started to rise again. Now Doordash is around $130.
Courses the favorable toss and the increase in the number of shares practically means that the annual incentive of 125 million euros, which was initially agreed to engage many people from Wolt, grew last year to be worth almost 200 million euros, according to the HS estimate.
In other words, the incentives received by several Wolt employees from last year are clearly greater than what could be suddenly concluded from the 2023 financial statements.
The number of incentive pots in the following years depends on the course development, but with good luck the number of incentives may well double from the agreed 500 million euros to one billion euros within four years.
However, in Wolt’s accounting for last year, that amount still appears as an annual expense of approximately 125 million euros according to the Agreement.
The Wolt emissary drove by the restaurant Amarillo in April 2020 in Helsinki.
Wolt store after that, Doordash’s stock started to rise. At its peak, the stock traded at $245.
Employees who had already earned previous stock incentives during the Wolt era were then free to sell their holdings.
Then interest rates rose and the prices of growth companies collapsed.
The reason was above all that the value of the future profits of growth companies is compared, i.e. discounted, to the prevailing interest rate.
The higher the expected annual risk-free interest return was in relation to the long-term profits of growth companies, the lower the market value of growth companies fell.
Doordash’s stock weakened to a low of $44. Incentives did not have time to go that low, but the official value was defined by the mentioned share price of $67 on the final trading day.
Wolt’s there are thousands of people in the share-based incentive system.
The company’s management and product development have mainly been in Finland, so the effect of the incentives will be reflected in the 2023 income taxes.
When the 2023 income tax information is published in November, a large group of Wolt executives and employees will once again be at the top of the list. The same situation will repeat itself in the next two years.
When you remove the 125 million euro portion of share incentives from Wolt Enterprise’s loss of 579 million euros last year, an estimated 454 million euros remain.
That number gives a measure of how strongly Doordash invests in international growth under Wolt’s leadership.
It is difficult to dig information from Doordash’s own results announcements. The company’s investor communication, like many other American companies, is secretive. It does not disclose country- or region-specific information about its turnover, nor about the profitability of its various operations.
Wolt has expanded to many cities in Germany. Image from the city map of Wolt’s Germany consumer application.
Investors have already been waiting this year for Doordash to say that the net result has finally turned profitable.
In the April-June financial statement bulletin, the net result was still in the red, mainly due to new share incentives totaling USD 160 million and various provisions.
< p class="article-body margin-bottom-24 padding-x-16">However, the cash flow already looks promising. The company said in its semi-annual report that its free cash flow for the previous 12 months was $1.6 billion.
It seems that Doordash is largely financing the rapid international expansion under Wolt’s leadership with already profitable US restaurant deliveries.
It is completely in Finnish hands, including Canada and Australia.
CEO of Wolt Mickey Kuusi responsible for Doordash’s international operations, Riku Mäkelä About Doordash’s international operational activities and Marianne Vikkula About Wolt’s operational activities.
Wolt says that international growth is concentrated in Germany and Japan. Doordash now operates in a total of 31 countries, including the Wolt brand in 27 different countries.
In Japan, Wolt’s app looks like this to consumers.
Four new countries have arrived during the year – Albania, Austria, Iceland and Luxembourg – but more important than countries are the different cities for Wolt, of which there are already about a thousand.
Employees Wolt has more than 12,000 employees, when messenger partners are not included.
Wolt Enterprise’s turnover in 2023 was only 106 million euros, according to the trade register notification.
Compared to the loss of almost 600 million euros, the number is grossly small.
According to the company, the turnover figure presented cannot be compared to the entire result of Wolt, because the turnover includes the turnover of only one of the company’s operations (Wolt Enterprises Oy), while the result includes all investments made in Wolt countries.
According to the company, the reason for the particularly low turnover is that the method of calculating turnover has been changed to comply with Doordash’s US practice.
It also differs from the practice of European platform courier companies.
In Europe, courier platform companies report a slice of about 30 percent of the gross amount from the sale of ordered products, i.e. the sales volume (GOV, Gross Order Value), as their own turnover.
In American practice, the platform company’s turnover is considered instead to be only the income or sales margin that remains with the company after commissions paid to referrals, customer service costs and various refunds.
As a rule of thumb, that amount is about 13 percent of the sales volume.
It is best to compare courier companies by comparing the value of their orders, i.e. sales volumes.
Wolt Enterprise’s loss includes the investments made in all Wolt countries and companies, but only a part of the income from already profitable countries.
The comparison of the financial statements is also complicated by the fact that Wolt also submitted the financial statements of his three other Finnish Wolt companies to the trade register.
They are Wolt Services, which covers the operations of Wolt markets in Finland, the payment company Wolt License Services, and Wolt Operations, which covers part of Finland’s business operations.
Of these, Wolt Services’ turnover of 37 million euros is worth noting. That turnover comes solely from the sale of the products of Suomen Wolt Market, i.e. Wolt’s own Ruokakauppa. It means that Wolt is already a noticeable grocery store in Finland even as an independent.
How about what was Wolt’s total sales volume, i.e. the value of products delivered by Doordash’s international operations, last year?
It has to be evaluated by combining different information.
Doordash last reported Wolt’s sales volume in its Q4 2022 report.
At that time, sales had grown at an annual rate of 50 percent from the year before, and were in the order of four billion euros on an annual basis.
The growth rate must have slowed down since those times, but the industry is still growing.
The Doordash group, whose sales volume last year was just under 67 billion dollars, said in its second quarter earnings data that the entire group’s sales volume had increased by 20 percent year-on-year in the second quarter.
It can well be assumed that the growth in the international market has been faster than in the already mature market in the United States.
If you had to guess, Wolt’s sales volume in 27 countries last year could be somewhere between five and nine billion euros. Of course, a lot depends especially on how successful the investments in Japan and Germany have been.
Wolt’s founder and CEO Miki Kuusi (left) and Doordash’s founder and CEO Tony Xu in a joint interview with HS at the Slush event 2021 in Helsinki Messukeskus.
#Wolt #management #Wolt #making #huge #loss #richer #reason #clause #related #sale #company
