Food tech major Zomato has turned around its fortunes. The Gurugram-based company, now recognised for its execution chops and stellar financial performance, started off just like most other new-age technology companies that have been loss-making, chief financial officer (CFO) Akshant Goyal said.
His comments come a day after arch rival Swiggy filed its updated draft red herring prospectus (DRHP) with the Securities and Exchange Board of India (SEBI). Several industry participants have compared Bengaluru-based Swiggy with Zomato and called out the former for lagging behind.
However, a company that has a concrete path to profitability will be rewarded in the long-term even if it is incurring losses currently.
“When we went public, we were a loss-making business with very little visibility on profitability. And that's how we sold our IPO to public market investors…they were pretty okay with the profile of our business. In our case, the business matured in those two, three years to a point where it became profitable,” Goyal said while speaking at the Tie Delhi NCR’s India Internet Day 2024 on September 27.
Founded in 2008, Zomato was loss-making until FY24 – which was a turnaround year for the company. It clocked its full year profitability in FY24 and has built on that momentum since then.
On Blinkit acquisition
Zomato had faced a lot of backlash for its Blinkit acquisition in 2022 especially because the company had failed previously and quick commerce was an unproven sector at that time.
“Blinkit was a loss-making business which we acquired while we were public. And we got a lot of backlash. But shareholders were supportive. They were, yes, skeptical of how this business would shape up when the food delivery business itself was still young,” CFO Goyal said.
The business has however matured ahead of Zomato’s own expectations. “When you underwrite a business, you're also underwriting the management team. And therefore, a track record over time helps….communication is key -- on how clearly you are communicating and making sure that we, as a company, are leading the narrative on our business, rather than people conjecturing on what it could be,” he added.
IPO by chance
Even as Zomato’s IPO has delivered returns to its shareholders, CFO Goyal said the decision to go public was an unplanned move.
“We decided to go public over a lunch break. Deepinder (Goyal) (Zomato founder) asked me if we should (go public), because the private market had dried up. There was also no history before, for a company like us, to raise money in public markets. So my first reaction was like, this is going to be even harder than raising money in private markets,” he concluded.
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