If you have been asked to name a successfully operating Indian food startup in the present turbulent times, it would not be wrong to pitch Zomato — considering its figures for the FY’17 (year ended in March 2017). As per the company blog published this Wednesday, Zomato has been able to score $49 million in revenue in the past year. Thus, manifesting a growth of ~80% over FY’16.
Interestingly enough, company’s March 2017 revenue stands at $5 million itself, helping the company to exit the last financial year with a revenue run rate of 60 million/year. It also bragged about a significant reduction in company’s operating burns, down by $52 million from the previous cycle. Zomato has reduced their annual operating burn from $64 million in FY’16 to a mere $12 million in FY’17.
Zomato’s path to profitability respites to its consolidation march, over the past year. The company farewelled nine countries including U.S. and U.K., after reporting a sharp 262 per cent increase in losses for the past year. The move dropped down the operational cost for Zomato from $9.1 million to a scanty $1.7 million. The company had to cut down on both money management(which accounted for thousands of job cuts) to achieve a threshold needed to monetize each operation respectively.
Detailing the matter further, the blog read as under,
A year ago, wasn’t ideal for us despite having achieved 2x revenue growth over FY15. That’s because our cash burn was very high at an average of $4.2m a month.Along with the burn rate, we were also in the middle of consolidating/ rationalising our international operations to make better use of our execution bandwidth moving forward.
The food venture now claims to have an average monthly cash burn (for the period of December 2016 – March 2017) about $250,000 globally, down from $4.2 million last March. The adjacent rise in monthly visits by 63%, counting to about 120 million in total credits to the Zomato’s achievement. Moreover, it witnessed a massive upsurge in monthly active users, up by about 43% over March 2016 — 53 million in total.
In September 2016, Zomato rolled out a revamped ads-model worldwide which helped its merchants realise about 3x increase in value from advertising on the platform. Thus, the ad sales revenue grew to ~$38 million in FY’17, contributing to its present victory. It further improved the efficacy of its sales team, which led to over 83% growth in productivity (revenue/headcount) in the ads business.
The company’s lined up with its vision of expansion which helped it to gain a growth of ~$9 million in FY’17, 8x of FY16. It now operates in about 13 cities and 3 cities in UAE. The launch of a cloud kitchen in Delhi also reasons out to be a factor worth weighing for Zomato’s progress.
It’s hunger for moonshots and focused business strategy are key reasons for the amusing figures of today. Rather than expanding its existing product range, the company is moving ahead with new launches for the customers. Moreover, India and UAE are the two chief regions for Zomato’s service.While in other international markets its presence is next to negligible.
In addition, thanks to increased user engagement levels, the introduction of Zomato Gold– a premium membership program for Dubai & Lisbon and Zomato’s Point of Sale (PoS) product — currently in beta phase; it is ahead of the competition in the current food-tech space.
