Also in this letter:
- Stellaris raises $225 million for its 2nd India fund
Amandeep Lohan named MD & CEO ofAppario Twitter abides byIT rules : Govt tells Delhi HC
Zomato’s revenue up 22% but losses widen to 168% in April-June
Zomato unveiled its first quarterly earnings report as a public company on Tuesday.
Losses up: Net loss widened over 168% to Rs 360 crore in the April-June quarter even as operational revenue jumped 22% to Rs 844 crore.
Of this, Rs 806 crore came from the Indian market, and Rs 31 crore from the UAE and other markets.
Zomato said the increase in losses is “largely on account of non-cash ESOP expenses, which have increased meaningfully in Q1 FY22 due to significant ESOP grants made in the quarter pursuant to creation of a new ESOP 2021 scheme”.
The company, which recorded a successful listing on the BSE last month, had reported a total loss of Rs 134 crore in the January-March quarter, with revenue at Rs 692 crore. In the same quarter a year ago, it earned revenue of Rs 266 crore and recorded a loss of nearly Rs 100 crore.
Zomato’s market capitalisation stood at a little over Rs 98,000 crore as of Tuesday, as shares closed at a per share price of Rs 124.95, down by more than 4%.
Spike in orders: The company said that its food delivery business in India reported its highest ever gross order value (GOV) of around Rs 4,538 crore in the April-June quarter, up 37% from Rs 3,315 crore in the previous quarter.
- GOV is the total monetary value of all food delivery orders placed on
Zomato India including taxes, customer delivery charges, gross of all discounts, excluding tips.
It said it has delivered a billion orders since 2015 and more than 100 million in the past three months.
Beyond food delivery: Zomato also saw its losses widening in Hyperpure, its supplies business for restaurant partners, “due to investment in growth”. Revenue from dining out continued to decline.
For delivery partners: Zomato and rival
Goyal said the company has taken a host of initiatives to increase earnings and improve working conditions of its delivery partners.
The company claims its revised pay structure guarantees a 15% increase in earnings per order compared to a year ago.
Also Read: Focus on growth, building long-term business, says Zomato’s cofounder Deepinder Goyal
Son on Swiggy: Meanwhile, SoftBank founder Masayoshi Son said a public listing by Zomato’s rival Swiggy could also deliver “good returns” if it went public.
At a post-earnings presentation for SoftBank on Tuesday, Son told analysts, “If they (Swiggy) go public, I believe that we will be able to see good returns from here too… that’s our expectation.” He also noted that Zomato’s share price was doing “great” after its listing.
SoftBank invested $450 million in Swiggy last month, as part of a $1.25 billion funding round. After the fundraising, Swiggy cofounder and chief executive Sriharsha Majety had said he did not have a concrete timeline to take Swiggy public, for now.
Stellaris raises $225 million for its second India fund
(L-R) Stellaris Venture Partners founders Rahul Chowdhri, Ritesh Banglani, Alok Goyal
Stellaris Venture Partners, an early-stage investor, said it has raised $225 million for its second India-dedicated fund. This is almost three times the size of its $90 million first fund, launched four years ago.
It makes Stellaris among the largest in the seed-to-series A stage funds in India, a segment which has seen heightened interest over the last few years.
Founded in 2017 by three former Helion Venture Partners executives, Ritesh Banglani, Alok Goyal and Rahul Chowdhri, Stellaris is among a new breed of funds that emerged after the first first bull run in India’s startup ecosystem.
Stellaris Fund-II, which has backed startups such as consumer brand Mamaearth, software-as-a-service (SaaS) firm Whatfix, health tech platform Mfine, has snagged 80% of the capital from global limited partners (LPs) with the rest of the dry powder coming from Indian entrepreneurs, family offices and others.
By contrast, the previous fund had secured almost 50% of commitments in rupee capital.
Change of tack: Stellaris kept away from cash-guzzling consumer internet startups in its first fund but may now look to invest in some of these high-burn companies. “In our first fund, we focussed on product businesses — whether it was SaaS or direct-to-consumer brands. These either become profitable early on or they consume less capital even if they grow exponentially. Then there are platform businesses, which need more cash. But the outcomes and exits are also larger,” Banglani said.
What worked for Stellaris? A venture capital investor said Stellaris’s main strength is that the three partners have worked together for a long time. “They have been investing together for many years and have seen cycles, which is required for good decision making…”
When Banglani, Goyal and Chowdhri got together to start Stellaris, they had already spent time at Helion having invested across a dozen companies including BigBasket, Livspace, Shopclues, Truly Madly, Housing and Toppr. But it wasn’t easy for them to launch a brand new fund as first time founder-investors focussed on technology.
Tweet of the day
Amazon’s Amandeep Lohan now MD & CEO of Appario Retail
Amandeep Lohan has been appointed managing director and CEO of Appario Retail for five years, effective August 2. He was previously head of
Appario Retail is a joint venture between Amazon and the Patni Group. Lohan’s appointment comes as Appario’s fate hangs in the balance, with Amazon facing increased pressure from regulators.
On Monday, the ecommerce firm said that it would wrap up its Cloudtail India joint venture with NR Narayana Murthy’s Catamaran next May amid regulatory scrutiny.
Sumit Sahay, another Amazon senior executive, was made Cloudtail CEO in 2017 but has now moved back to the ecommerce major as director, selling partner services, effective May.
Cloudtail has told merchants that Amazon’s announcement about ending the joint venture would not affect payments or any other contractual obligations.
Replacement plan: Sources told us that Amazon plans to appoint several independent sellers to fill the gap when Cloudtail, one of the largest sellers on its platform, shuts down next May.
It will also not hold any stake — directly or indirectly — in these mid-sized sellers, four industry executives told us, and will only provide help and expertise.
Amazon is restructuring its marketplace to ensure that no single seller has a dominant position.
Twitter in compliance with IT rules, govt tells Delhi High Court
Twitter can breathe a sigh of relief after an intense, weeks-long standoff with the Indian government.
What happened? The government told the Delhi High Court yesterday that Twitter appears to be in compliance with the IT Rules 2021, having made appointments in all three key positions mandated under the revised rules.
Who are they? Vinay Prakash, who was earlier hired as chief compliance officer and resident grievance officer as a third-party contractor in July, has become a full-time employee of the firm, Twitter told the court. He will report directly to Jim Baker, vice president for legal at Twitter Inc. Former ByteDance executive Shahin Komath has been appointed as the nodal contact person.
“Last chance” heeded: Twitter had filed an affidavit last week saying it had made appointments for all three key positions to comply with the new IT rules but hadn’t disclosed the names of the officers. This was a week after the Delhi High Court had told the platform it was in “total non-compliance” with India’s revised IT rules and had given it a week as “last opportunity” to file better affidavits showing its compliance.
Last month, the government told the court in an affidavit that Twitter had lost the immunity granted to social media intermediaries under the IT Act, 2000, after it failed to comply with the new intermediary guidelines. Following this, at least four first information reports (FIR) have been registered against the company.
ETtech Done Deals
■ TechnoPro Holdings Inc., one of Japan’s largest technical staffing service firms, is acquiring Udupi-based app maker Robosoft Technologies for Rs 805 crore. Under the terms of the two-part deal, TechnoPro will buy 80% of Robosoft in the first tranche for Rs 580 crore, and the remainder in a year.
■ Credgenics, a debt resolution and legal automation platform, said it has received $25 million in funding from Westbridge Capital, Tanglin Venture Partners and Accel Partners.
■ Mudrex, a crypto asset management platform, has raised $2.5 million in a seed funding round led by Nexus Venture Partners, with participation from Village Global and prominent angels. The startup plans to use the funds to scale up the team and operations, to create more products and to acquire global regulatory compliance.
■ Germany’s investment banking firm IEG Investment Banking Group has set up its own venture arm in India to invest in local startups, a senior company official said. The firm, called IEG India 12 Apostel, has made its first investment of $1.5 million in Rozana.in, a social commerce startup.
■ BlueLearn, an education technology startup, has raised $450,000 in a pre-seed funding round led by Lightspeed India Partners, Titan Capital, 2am VC. A few angel investors also participated in the fundraise.
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