Delivery Hero's Spanish subsidiaries, operating under the Glovo brand, are preparing for potential reclassification decisions from the Spanish Labour Authorities.
The move follows a lack of final agreement on the classification of delivery riders under Glovo's operational model, which was introduced in August 2021.
Glovo management has opted to transition from a freelance to an employment-based model for its delivery riders in Spain.
The move is aimed at mitigating further legal uncertainties and increasing contingencies.
The change is specific to Glovo's operations in Spain and will affect its adjusted EBITDA [earnings before interest, taxation, depreciation and amortisation] by €100m ($105m) for the financial year 2025.
Glovo is nonetheless projected to achieve a positive adjusted EBITDA within the same timeframe.
The company has revised its contingency estimates, now expecting them to rise to between €440m and €770m in its full-year financial report for 2024.
This is an increase from the €330m to €550m range reported at the half-year mark.
The revised figures account for social security contributions, fines, VAT claims and other payment charges up until the end of 2024 for Glovo Spain.
Despite these developments, Delivery Hero has stated it does not plan to recognise any provision related to these potential reclassification decisions.
The company maintains that there is insufficient legal basis for such decisions to be enacted.
While awaiting final court rulings, Glovo will be required to provisionally pay or secure bank guarantees for the amounts due, which will be staggered over the coming years.
The initial payments or bank guarantees are expected at the earliest in the second quarter of 2025.
In light of these circumstances, Delivery Hero reaffirms its financial guidance for the fiscal year 2024.
In November, Delivery Hero’s management board, with the supervisory board’s consent, resolved to pursue an initial public offering of 15% of Talabat’s total issued shares.
Talabat is indirectly held by Delivery Hero.
The company aims to list all Talabat shares on the Dubai financial market by mid-December 2024, pending necessary approvals from the United Arab Emirates’ Securities and Commodities Authority.
