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Zomato is locked in an intense battle for market leadership with Swiggy (Mint)
Zomato is locked in an intense battle for market leadership with Swiggy (Mint)

Zomato’s revenue triples in FY19 on high expenses

  • Zomato spent $500 million in 2018-19, a six times jump from $80 million in the previous year
  • The company spend around 25 per delivery in 2018-19 against 44 in the previous financial year

Bengaluru: Online food ordering and discovery platform Zomato notched up strong revenue growth over the last year, but expenses skyrocketed at a much faster pace. Revenue at the Gurgaon-based company shot up from $68 million in FY18 to $206 million in FY19, primarily driven by its delivery vertical, according to the company’s annual report released on Friday.

Zomato, which is present in the capital intensive business of delivering food, spent $500 million during FY19, marking a sixfold jump from the $80 million it spent in the previous year.

The company claims its annual revenue run-rate, usually calculated on the basis of the highest monthly revenue number, to be around $350 million.

As food delivery is a major part of Zomato’s business, it has been major contributor to the company’s revenue.

However, the company also spent a large amount on promotional and marketing activities for this vertical.

This has accounted for a significant chunk of Zomato’s losses of about $294 million.

“We have had tremendous growth aided by promotional marketing spends to acquire new users and be the first-to-market in many cities in India," read the report.

Zomato has also claimed that it has improved its unit economics over the last financial year.

During FY18, the company spent around 44 per delivery, while in FY19 it brought down the cost to 25.

“Unit economics of the food delivery business have come a long way," read the annual report.

“The key driver metric of unit economics—number of deliveries per rider per hour—has gone up to 1.4 from 0.9 last year," the report said.

The company’s financials come at a time when Zomato, which is in the market to raise capital, is locked in an intense battle for market leadership with competitor Swiggy.

Zomato Media, which owns the online food delivery and restaurant discovery platform, sold its UAE food delivery business to Germany’s Delivery Hero Group for about $172 million in March.

In contrast, in December, Swiggy secured $1 billion in a round led by South Africa’s Naspers, valuing the company at $3.3 billion.

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