Foodtech unicorn Swiggy on Thursday said its food delivery business, which accounts for the majority of its revenue, has turned profitable as of March 2023, excluding costs related to employee stock ownership plans (ESOPs).
The SoftBank-backed company’s chief executive Sriharsha Majety said in a blog post that the firm’s sharp focus on innovation, coupled with strong execution, helped it achieve the feat.
“This is a milestone for food delivery globally, not just for us, as Swiggy has become one of the very few global food delivery platforms to achieve profitability in less than 9 years since its inception,” he added. Majety didn’t reveal any numbers.
To be sure, Swiggy’s key rival Zomato had said that it achieved adjusted Ebitda (earnings before interest, taxes, depreciation, and amortization) break-even in the first quarter of the last fiscal year, only to clarify that it actually achieved the milestone in the next 90-day period. Also, in February, Gurugram-based Zomato had claimed its overall business, excluding quick commerce vertical BlinkIt, hit positive adjusted Ebitda, which the company defines as Ebitda excluding rentals and ESOP costs.
Meanwhile, sharing an update on Swiggy’s quick commerce business, Instamart, Majety said that the business was on track to achieve break-even on a per-order basis in the coming weeks.
“We’ve also made strong progress on the profitability of the business and we’re on track to hit contribution neutrality for this three-year-old business in the next few weeks,” he said.
In the financial year 2022, Swiggy had reported a consolidated loss of Rs 3,628.9 crore, more than double its loss of Rs 1,616.9 crore in the preceding financial year on the back of rising support costs. Its revenue from operations grew more than two-fold to Rs 5,704.9 crore in FY22 from Rs 2,546.9 crore the year before. The company is yet to post its financials for 2022-23.
Swiggy has achieved the milestone at a time when the overall food delivery business is facing a slowdown as a result of a macroeconomic slowdown in the mid-market segment as well as the boom in dining out.
For the past several quarters, Swiggy has taken a lot of measures to bring down its costs. For starters, the company laid off nearly 380 employees out of its 6,000-strong workforce earlier this year. “This has been an extremely difficult decision taken after exploring all available options," Majety had said at that time.
The company has also shut down or sold some of its verticals to bring its costs down. While it was in the process of shutting down its meat-selling marketplace, it sold its cloud kitchen business Swiggy Access to Beenext-backed cloud kitchen company Kitchens@.
However, despite its cost-reducing efforts, Swiggy appears to be facing difficulties in wooing its existing investors, two of which have already knocked down the value of their stake in foodtech unicorn.
The US-based asset management giant Invesco marked down the value of its stake in Swiggy by nearly 49%, as of January. The investor had participated in the company’s $700 million funding round, which had valued the firm at $10.7 billion. The latest revision has brought down Swiggy’s valuation between $5.46-5.5 billion.
Another backer of Swiggy, Baron Capital, marked down the value of its stake by 34%, as of December 2022, resulting in a revised valuation of $7.1 billion for Swiggy.
