 "Deepinder Goyal")
Beating the other food technology companies on the road to profitability, online restaurant search, rating and food-ordering firm Zomato has operationally broken even in India, as well as five other markets - the UAE, Lebanon and Qatar in West Asia; and the Philippines and Indonesia in Southeast Asia.
According to sources, the food start-up, which has attained the coveted title of a 'unicorn' - a company with a valuation of more than $1 billion - plans to raise as much as $200 million in April from its old and new sets of investors. China's web services giant Baidu could be a lead investor in Zomato's fresh funding round, sources say. If it does invest, this will be Baidu's first investment in India.
"Zomato has been in talks with Baidu for some time. In all probability, it will take part in the fresh funding round in April. When that happens, the company's valuation will be more than $1.5 billion," said a source close to the company. In September last year, Zomato's valuation had increased to a little over $1 billion.
The company, which was in the news last year for laying off around 300 employees, shutting down regional centres, and failing to meet financial targets, is aiming for an operational profit this year. Zomato's food-tech peers like Foodpanda and Swiggy are yet to break even in key markets.
"We have always been paranoid about revenue, and building a sustainable business. We have more than doubled our revenue on a year-on-year basis in the past few years, and we are going to post some great growth numbers this year as well. We are profitable in six of the 18 markets where we are the market leaders. This proves our long-lasting conviction for our business and the fact that we are on the road to creating the first truly global consumer internet company out of India," said Deepinder Goyal, founder & chief executive, Zomato.
Launched in 2008, Zomato today has around 2,600 employees and plans to increase the number to 4,000 by the end of the year.
"We can now channel 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," said Pankaj Chaddah, co-founder of Zomato.
The company has had its share of problems. Besides the layoffs last year, it has faced a tough time retaining the top management team. Recently, chief product officer Tanmay Saksena - who had been given the position only a little while earlier - put in his papers. Industry insiders said Saksena quit due to investor pressure to improve Zomato's performance.
In the past three years, the company has expanded its operations and provides in-depth information for over 1.4 million restaurants across 23 countries. It is the market leader in 18 of those markets. Zomato made eight acquisitions in various countries, including the $52-million one in January 2015 of Urbanspoon, which has operations in North America, Australia and Europe.
Zomato has so far raised $225 million from investors like Info Edge, Sequoia India, Vy Capital and Temasek. According to the company, 22 per cent of its traffic and 35 per cent of its revenues come from India. It also recently entered the transactions business and now serves over 15,000 orders a day at an average ticket price of Rs 575.
"Zomato has emerged one of the finest global consumer internet businesses coming out of India. It has grown to a position of dominance in most of the markets it operates in, and has scaled revenue with a known path to profit. We are excited by Zomato's growth story so far, and proud to have partnered with it over the past five years to help it grow further," said Sanjeev Bikhchandani, founder & executive vice-chairman, Info Edge India.
FOOD FOR THOUGHT
- China's Baidu could be a lead investor in Zomato's fresh funding round
- The firm is aiming for an operational profit this year
- Zomato's peers like Foodpanda and Swiggy are yet to break even in key markets
