The company, which made a stellar debut on the stock exchanges in July this year, had posted a revenue of Rs 844.4 crore from operations in the first quarter of the financial year ended June 30.
Gurgaon-based Zomato attributed the increase in losses to rising spending on branding and marketing for customer acquisition, higher investment and increasing share of smaller and emerging geographies in the business and increase in distribution cost due to unpredictable weather and rise in fuel prices. ordained.
Importantly, Zomato announced plans to deploy $1 billion in startups over the next few years. It also announced major investments in three companies – logistics aggregator shiprocketLocal shopping and savings platform magicpin as well as fitness startup CultFit, formerly known as curefit,
According to the company, it has invested $275 million in four companies over the past six months, including investments in online grocer Grofers. this was it
Invested $100 million in Grofers in August.
“We plan to put in another $1 billion over the next 1-2 years, a substantial portion of which is likely to go into the quick-commerce space,” the company said.
Last month, Chief Executive Deepinder Goyal
Said in an interview to ET That the company was looking to support businesses that would add more than $10 billion to its market capitalization. “We are investing in some really good founders and companies – all in synergistic or adjacent areas of our business. We expect, over time, some of these companies and founders to continue on their growth path with Zomato. Will choose to merge. We are not asking any of these founders or companies for future M&A rights. We want the chemistry to work here,” Goyal had said.
These investments, according to the company, are part of its long-term approach, where it is prioritizing in three main areas — divestment of businesses that aren’t going to add exponential value for shareholders, to building a core food delivery business. Focusing on the ecosystem, and ultimately investing in and partnering with companies to tap growth opportunities beyond food.
As part of the CultFit investment, Zomato is in the process of selling fitness app Fitso to Curefit for $50 million. “To develop a great long-term partnership with CureFit (CultFit), we are also investing cash in CureFit. The net $50 million cash investment plus the value of the Fitso business (valued at $50 million) gives us CureFit (6.4% shareholding) The transaction will value CultFit at $1.5 billion, making it the newest unicorn in India. Its final publicly known valuation is approximately $800 million, Zomato said while announcing the investment. Was.
“This will help us explore the potential cross-selling benefits between Zomato and CureFit, as we see food and health become one side of the coin in the long term,” Zomato said.
Zomato said it is deploying $75 million in Shiprocket for an 8% stake as part of a larger $185 million round and it has raised $50 million in Magicpin as part of a $60 million funding round. have invested. Zomato is getting 16% stake in Magicpin.
Zomato founder and CEO Goyal, who is also the cofounder of Zomato, recently joined the board of Magicpin.
Earlier this year, Tata Digital, a 100% subsidiary of Tata Sons,
entered into a memorandum of understanding To invest $75 million in Cultfit, which was founded by Mukesh Bansal. Prior to Cultfit, Bansal founded Myntra which he sold to Flipkart in 2014. Bansal joined Tata Digital as its Chairman, working closely with Tata Group executives to drive the salt-to-steel group’s ambitious plans in the digital economy. Tata also acquired majority stake in online pharmacy 1mg and e-grocer BigBasket. CultFit’s valuation was not disclosed at the time of Tata Digital’s investment.
Investing in startups is led by Zomato’s corporate development team, which reports to Chief Financial Officer Akshat Goyal. The four-member team is headed by Kunal Swarup, who was earlier at Kotak Investment Banking. As part of the investment in its core offering, Zomato will invest $50 million in the (business-to-business) supply business for restaurant partners, Hyperpure, over the next 18-24 months.
Zomato reported an increase in order value along with its transacting users in the last quarter, a trend it has seen over the past year.
Zomato’s Gross Order Value – the total monetary value of orders including taxes, customer delivery charges and gross of all discounts – grew 19% from the previous quarter to $721 million, driven by an increase in the number of users transacting monthly, active dining Is. Delivery restaurant and delivery partner.
Zomato’s adjusted revenue — which is a combination of revenue from operations and customer delivery fees — in the second fiscal quarter was $189 million, up 22.6% compared to the previous quarter.
The company’s monthly transacting users increased to 15.5 million from 12.3 million a quarter ago. Zomato said it has 301,000 monthly active delivery partners and 173,000 active delivery restaurants. The food delivery firm had earlier invested in online grocery delivery startup Grofers for around 10% stake. “We have a financial stake in Grofers. Our worst case scenario is that we have a financial investment that will give us some return. Hopefully, this is not a financial but a strategic one. And we’ll see if it makes sense for us to merge at some point. But right now, it is too early to say anything,” Goyal had earlier told ET in an interview.
The series of new investments comes as changes to the food delivery and discovery platform, including a clean-up exercise this year, as part of which it has closed its international operations in the US, UK, Ireland and Singapore .
Zomato said in its filing on Wednesday that all the businesses it had closed contributed less than 1% to adjusted revenue and about 13% of losses in the second quarter.
Earlier this year, the company was focusing on building out its fitness and health verticals through the Fitso and Nutraceuticals business, both of which were spun off or spun off. As part of the new vision, Zomato will focus on building a hyper local ecosystem around its core business.
“The growth of the food delivery business was such that in the big picture, these businesses stopped adding much to the overall business. We don’t want to create businesses that can only add $1 billion in shareholder value. We need our Be prudent with team time and money in our bank,” Goyal told ET last month when asked about the different businesses the company took over the year.