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Zomato becomes profitable in six markets including India

By Binu Paul

  • 08 Feb 2016
Zomato becomes profitable in six markets including India

After a tremulous period towards the end of last year, restaurant listings and services startup Zomato Media Pvt Ltd has achieved operational break-even in six markets such as India, Middle East (UAE, Lebanon and Qatar) and Southeast Asia (Philippines and Indonesia).

This makes Zomato the first Indian ecommerce unicorn to become profitable in the home market. Unicorn is a new-age tag meant for startups sporting a $1 billion valuation.

Zomato did not disclose the revenue numbers.

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“We have more than doubled our revenue year on year for the last few years and are going to post some great growth numbers this year as well. We are profitable in six of the 18 markets,” Deepinder Goyal, co-founder and CEO of Zomato, said in a press statement.

The company claimed that its India business accounts for 35 per cent of its revenue.

Founded in 2008 by IIT Delhi alumni and ex-Bain employees Goyal and Pankaj Chaddah, Zomato is now present in 23 countries and claims to be the market leader in 18 of them. The company has also made eight overseas acquisitions in various countries.

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Its aggressive expansion drive last year began with the acquisition of Urbanspoon. The $52 million deal was the restaurant discovery and food ordering venture’s biggest inorganic bet and allowed it to venture into the US market. In April, Zomato launched Zomato Order, its separate app for food ordering. This pitted Zomato against entrenched food ordering startups such as Foodpanda, TinyOwl, Swiggy and others.

Chaddah has been leading Zomato's foray into online ordering business and claims that the company now serves over 15,000 orders a day at an average ticket price of Rs 575.

“We can now channelise the profits to grow faster and compete harder in countries where we see significant competition. It's a great thing that we don't fully depend on external funds to fuel all the experiments and initiatives that we have undertaken in India and elsewhere,” Chaddah said.

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Zomato has so far raised $225 million in external funding from prominent investors such as Info Edge, Sequoia India, Vy Capital and Temasek.

The last couple of months have been challenging for Zomato. In October last year, Zomato said it was laying off around 300 employees across the globe, or nearly 10 per cent of its workforce. Most layoffs happened in its content teams across 22 countries. Zomato has also been facing difficulties in retaining top-level staff as many senior executives have left the firm after short stints.

Again in October, Goyal sent an email to the company’s sales staff, indicating that Zomato may fail to meet its sales target for the current financial year.

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The company also tried to attract more eyeballs by advertising on porn sites. However, the move drew a barrage of criticism from social media channels, compelling Zomato to withdraw the campaign. Early this month, Zomato shut down its food ordering business in four cities.

Taking a potshot at Zomato for playing up profitability in select markets while it’s still being a non-profitable company in a majority of its markets, startup investor and Seedfund co-founder Mahesh Murthy wrote on his social media pages, “So Zomato announces it is profitable in some regions but not most, and not at head office or company level. I guess we'll now wait for Flipkart to announce they're profitable in Lakshadweep.”

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