Zomato Media Pvt Ltd on Wednesday said that a surge in advertisements and the food delivery business had helped its revenue grow by 80% in the 2016-2017 financial year. The food technology start-up earned $49 million (approximately Rs 330 crores) in the last fiscal, Mint reported on Thursday.
The company’s advertising revenue, its core business until it entered the food delivery sector in May 2015, grew 58% year on year to $38 million in FY17, while the food delivery business, where Zomato competes with Swiggy (Bundl Technologies Pvt. Ltd), clocked $9 million, an eight-fold growth over FY16, Mint said.
However, Chief Operating Officer Surobhi Das said that Zomato’s cash burn in 2016 was far higher than that in 2015. “FY16, a year ago, wasn’t ideal for us despite having achieved 2X revenue growth over FY15. That’s because our cash burn was very high at an average of $4.2m a month. Along with the burn rate, we were also in the middle of consolidating/rationalising our international operations to make better use of our execution bandwidth moving forward,” Das wrote in a post on the company’s blog.
In fact, the turbulence in FY16 led to an erosion in valuation for Zomato, when HSBC Securities and Capital Markets (India) Pvt Ltd slashed its valuation by about half to $500 million in May last year, the Mint report said.
Das acknowledged the setbacks and added that layoffs in Zomato’s international teams had also affected the morale of its workers. Zomato, which operates in 23 countries, is one of the few Indian consumer start-ups to have a global presence. She, however, added that the company had begun this year on a high.
“Our March 2017 revenue is $5 million, helping us exit the last financial year at a $60m/year revenue run rate. We achieved $49 million in revenue in FY17, a growth of 80% over FY16. Along with a growth in revenue, we also reduced our annual operating burn from $64 million in FY16 to $12 million in FY17,” the chief operating officer posted.
Apart from advertisements and food delivery, Zomato also handles table reservation. It has also begun a product called Zomato Gold, which will allow its subscribers to get exclusive offers like happy hours for drinks at various pubs and restaurants. The feature has been launched in Dubai and Lisbon and will debut in India soon.