Zomato delivers a larger loss and yet orders new startup investments

Foodtech start-up Zomato, delivered a net loss of Rs 434.9 crore for operations in July-September quarter. This is a significant jump from the loss of Rs 360.7 crore reported in the previous quarter.

Here is what the managements said
Despite revenues which grew over 20% quarter-on-quarter Zomato's management stated, “The company incurred higher losses because of investments in the growth of food delivery business.”

Zomato loss explained
The company highlighted three reasons for the losses-:

• Increased spending on branding and marketing
• Growing share of smaller/emerging geographies (which are less profitable)
• Hike delivery costs due to unpredictable weather and an increase in fuel prices.

Despite the losses Zomato ordered in investments in other startups. It will be investing around $75 million in Bigfoot Retail Solutions Pvt Ltd (Shiprocket) for an 8% stake and also $50 million for a 16% in Samast Technologies Pvt Ltd (Magicpin).

And this is not the end of it, Zomato management told shareholders that they plan to deploy another $1 billion over the next 1-2 years, with a large chunk of it likely to go into the quick-commerce space.