Deliveroo's rapid growth slowed last year amid reports the $2 billion UK startup is in talks to sell to Uber

Deliveroo CEO William Shu

Deliveroo's rapid growth slowed last year after it reported a 116% increase in revenue to £277 million ($361 million).
The company's losses also widened to £184.7 million ($241 million).
But Deliveroo said it's become a more efficient business, with its gross margin jumping impressively from less than 1% to 23%.
The earnings come amid rumours that Uber might buy or partner with Deliveroo.

Food delivery startup Deliveroo's stratospheric growth slowed last year amid reports it is in talks to sell to Uber.

According to preliminary earnings released on Monday, Deliveroo reported revenue of £277 million ($361 million) for the 12 months to 31 December 2017, up 116% on the previous year.

While the company's growth is strong, it has slowed in comparison to 2016, when its revenue rocketed 611% to £129 million.

Deliveroo also remains unprofitable. It reported a pre-tax of £184.7 million ($241 million), worse than its £129.1 million ($168.3 million) loss in 2016.

The firm attributed the widening loss to "major investments" such as expanding to new markets, offering insurance to its delivery riders, and its £11 million ($14.3 million) acquisition of US firm Maple.

A big bright spot in Deliveroo's earnings

But there was one major improvement in Deliveroo's business — one which might explain why it's looking like a tasty acquisition or partnership target for rival Uber. Deliveroo saw a big jump in gross margin.

The gross margin figure can indicate the underlying health of a business, and shows the proportion of each pound or dollar of revenue a company keeps as a gross profit before it pays out costs such as overheads. A higher margin indicates a more efficient, scalable company.

In 2016, Deliveroo reported a tiny gross margin percentage of around 0.7%. According to the firm's public statements, that number leapt to 23% in 2017.

Deliveroo said the improvement was thanks to "growing maturity" in its markets, and the fact more customers are ordering more food. Gross profit came in at £64.3 million ($84 million), up from £1.1 million ($1.4 million) in 2016.

Deliveroo revealed the numbers in a press release on Monday, ahead of formally filing its accounts with more detailed numbers with the UK's Companies House. Those accounts, when public, will reveal more details around employees and salaries.

Uber and Amazon rumours swirl

The earnings come amid reports, confirmed by sources speaking to Business Insider, that Deliveroo has fielded multiple acquisition offers.

Initial talks with Amazon, first reported by The Telegraph, were never serious, according to sources. They may have been a case of the retail giant scouting out the competition.

Uber is a more serious contender to acquire Deliveroo, although investor sources seem mixed on whether a full acquisition will happen, per a Bloomberg report.

A partnership or investment are more likely options, according to industry insiders. The sources said Deliveroo was unlikely to accept an acquisition offer for less than $6 billion. Deliveroo was last valued at $2 billion.

Will Shu, chief executive of Deliveroo, said in a statement: "Deliveroo is growing rapidly around the world, driven by our passion to bring amazing food to people whenever and wherever they want it.

"Our growth is matched only by our ambition. We want to become the world’s definitive food company and we have invested heavily in innovation, technology, people and restaurants. We are changing the way people eat and helping restaurants to expand to new areas and in new ways."

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