Info Edge Executive Vice Chairman Sanjeev Bikhchandani disclosed on the earnings call that Zomato has a burn rate of around $1 million a month, and sufficient money in the bank. This gives it a runway of 2-2.5 years it seems.
“The company seems to have decided that, look, we can get to breakeven whenever you want but we should still now focus on growing the business because lot of building blocks are in place, which is why they stabilized the burn here and they have gotten enough money in the bank till last 2-2.5-years at this burn rate, maybe a little less than that, but the company seems to be in a comfortable position.”
Last quarter, Bikhchandani had said that Zomato can choose to break even in 3-4 months, but it’s a choice. Zomato has food ordering in India, Dubai and Philippines.
Things can change when there is competition, of course. Bikhchandani was responding to a query about UberEATS, which, it appears, is being launched in India soon. “…it is too early to say yet what the impact will be. Having said that, Zomato has built a great brand franchise, great traffic, a huge unique value which drives the traffic without too much advertising. So the burn rates have come down to maybe $1 million or a month or thereabouts. Now, what we should do, we have to see when UberEATS comes in.”
In the past, Info Edge has had to react to competition, most notably, it raised $120 million to protect market share for 99Acres when Housing was spending money like it had a coke addiction. Housing has since sobered down, merged with Proptiger, and has $55 million more to spend.
Of course, it’s not that Zomato hasn’t had competition in India: There was a slew of delivery startups, including TinyOwl (remember this?), then Runnr, but more notably, RocketInternet backed FoodPanda and Swiggy, which has raised $75 million in total.
Zomato has responded to competition too, with first launching delivery in the Indian market, then acquiring a logistics company, but clearly, Swiggy hasn’t caused the kind of panic that Housing did for Info Edge. However, lest you forget, competition is still around, and doesn’t like it’s going anywhere yet. Of course, what Uber brings to a market is a seemingly bottomless capital, and the willingness to bonfire their money to burn competition.
For the fiscal year 2015-16, Zomato had reported operational revenues of Rs 184.97 crore but an operating EBITDA loss of Rs 492.27 crore for the period, across this markets. India revenues were around Rs 83.23 crore, and the share of food ordering in this was around Rs 16.64 crore.