Zomato steadies the ship

Zomato, the B2B/B2C food and restaurant tech business, has issued some unaudited numbers for the year to end-March17 showing an increase in revenues and a massive reining in of its cash burn.

The business was never far from the headlines a few years ago. It raised nearly $225 million over five years and went on an acquisition and international expansion spree, which included buying UrbanSpoon in the US for a reported $55 million.

Eighteen months or so ago, it started to announced layoffs, and closed some operations amid significant losses. Some analysts dropped their valuation from a reported billion dollars to half that.

It is no wonder then that everyone at Zomato “simply put [their] heads down to execute” during 2016.

The business now feels confident enough to raise its head above the parapet and talk up its growing revenues – up in the year by 80% to come in at $49 million.

As significant is the reining in of its previously eye-watering levels of cash burn. During the year to end-March16 it got through an average of $4.2 million in cash a month – by the end of March17 this has been slashed to $250,000.

It claims that it is now “well on [its] way to hit profitability”.

Where that profitability will come from is not clear. Its B2C operations – restaurant reviews, table reservations, an advertising product – continue to grow in terms of traffic. In March 2017 it was getting 120 million visitors (up 69% on March 16).

Its B2B business – including  a cloud-based point of sale platform for restaurants and a back-end for online food delivery services – has been improved upon during the year, it claims.

The B2C side of the restaurant business is a difficult nut to crack. Priceline Inc rarely backs the wrong horse and the $940 million writedown it suffered two years after buying OpenTable for $2.6 billion indicates the scale of the difficulties.

Zomato appears to be in a much better shape now than it was a year ago.  How it performs over the next twelve months will be critical.

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