Zomato losses widen by 282%, online restaurant search portal ups revenue by 92%

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Bangalore | Updated: May 26, 2016 10:06:52 AM

The losses at the online restaurant search and discovery portal Zomato widened by 262% at the end of FY16 even as its revenue increased by 92%.

Earlier this month, Zomato had come under severe attack from brokerage house HSBC which had marked down its valuation to nearly half its value (0 million).Earlier this month, Zomato had come under severe attack from brokerage house HSBC which had marked down its valuation to nearly half its value (0 million).

The losses at the online  restaurant search and discovery portal Zomato widened by 262% at the end of FY16 even as its revenue increased by 92%.

Zomato reported a loss of Rs 492.27 crore for the year ended March 31, 2016 as compared to Rs 136 crore in FY15. Meanwhile, the revenues increased to Rs 184.97 crore at the end of FY16 as compared to Rs 96.7 crore in FY15.

These disclosures were made following the financial results of Info Edge, the parent company of Zomato. The losses for Zomato has been steadily increasing over the years. In February, Zomato had claimed that it had achieved operational breakeven in six countries including India, Qatar, UAE, Lebanon, Philippines and Indonesia.

Earlier this month, Zomato had come under severe attack from brokerage house HSBC which had marked down its valuation to nearly half its value ($500 million). However, Zomato CEO Deepinder Goyal hit out saying their claims were incorrect and that the company (HSBC) had not understood the business well.

In a blog post then, Goyal said, “We hit 33,000 online orders yesterday – at our average order values, it makes us the largest player (and only profitable players on a unit economics level) by GMV. We already are profitable in the order business at a unit economics level, and the overall online ordering business will hit profitability when we get to an average of 40,000 orders a day. We should get there in the next 3-6 months. Also, there isn’t any food delivery company in the world which owns its last mile logistics fleet, operates at scale, and is profitable. These assumptions and statements in the HSBC report make it look like they’re coming from someone who doesn’t – and hasn’t bothered to – understand the space well.”

The HSBC report had said that Zomato had low market share and the company drove a large percentage (>50%) of business to some of the biggest restaurant names in the country. It raised concerns over the advertisement-heavy business model, growing competition in the food ordering space and fast paced international expansions.

The company had entered the unicorn club when it raised $50 million from Info Edge and others in April 2015. The company announced that it had achieved operation break-even in February this year across its businesses in India, the Middle East (UAE, Lebanon and Qatar) and Southeast Asia (Philippines and Indonesia).

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