Prosus, which has backed companies such as Byju’s, PharmEasy and Eruditus, holds a 33% stake in Bengaluru-based Swiggy.
Citing investments in Instamart, Prosus said its share in Swiggy’s loss had shot up to $180 million in FY23 from $100 million in FY22. That translates to an aggregate loss of around $540 million for Swiggy for the fiscal year.
In its annual results, announced on Tuesday, Prosus reported year-on-year growth of 26% in gross merchandise value (GMV) for Swiggy’s food-delivery business, and a five-and-a-half time jump in GMV for quick-commerce vertical Instamart. The growth was reported for the January-December 2022 period.
Notably, Prosus had reported on-year GMV growth of 40% and 15 times for Swiggy’s food-delivery and quick-commerce verticals, respectively, during the first six months of calendar year 2022.
“In the last two reporting periods, Swiggy has concentrated on reactivating users, increasing monthly frequency and improving user conversion. The benefits are reflected in its results for FY23, with over 272,000 enabled restaurants on its platform, 155% of pre-pandemic levels, with GMV at $2.6 billion,” Prosus said in its earnings release.
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“In FY23, Swiggy also redoubled its focus on the profitability of its core restaurant food delivery business, which its CEO recently announced had turned profitable in March 2023 (after factoring all corporate costs excluding share-based costs) following an investment phase. Our share of Swiggy’s trading loss increased to $180 million (FY22: $100 million), driven by investment in Instamart, which peaked in the year,” it added.
The $180 million Swiggy trading loss accounted for as Prosus’ share translates to an aggregate loss of around $540 million for Swiggy during the reporting period, given the investor’s 33% stake in the company. Similarly, Prosus said its share of Swiggy’s revenue for the period under review was at $297 million, which will translate to about $900 million of revenue for the food-delivery firm.
Last month, Swiggy chief executive Sriharsha Majety had announced that the Bengaluru-based startup’s food delivery business had turned profitable as of March 2023, after factoring in all corporate costs; excluding employee stock option costs.
Majety also said that the company has made disproportionate investments in its grocery delivery business Instamart and would likely invest less in the business henceforth as it is moving towards profitability.
Meanwhile, Swiggy’s key rival in India — Gurgaon-based listed company Zomato — also reported that its Earnings before interest, taxes, depreciation and amortisation (Ebitda) had turned positive at Rs 28 crore, excluding the quick commerce business, for the quarter-ended March 2023. Zomato had said it aims to achieve net profit on a consolidated level in the next four quarters.
Over the last few months, Swiggy has also seen its valuation being cut by some of its investors, including Invesco and Baron Capital. ET had reported on May 26 that Baron Capital Group had reduced Swiggy’s valuation to $6.38 billion as of March 31, 2023, down from its peak valuation of $10.7 billion ascribed during its last fundraise in January 2022.
On May 9, ET had reported that Invesco, the lead investor of the round, had slashed the food-delivery company’s valuation by 33% to $5.5 billion (from $8.2 billion), having already lowered it from $10.7 billion earlier.
ET had reported on January 5 that Instamart’s new user additions had slowed significantly after crossing the 300,000 mark.
With new customers hard to come by, quick commerce companies such as Instamart, Zomato-owned Blinkit, Zepto, and Tata-owned BigBasket’s BB Now are attempting to increase the spends by their existing users.
ET reported last December that these platforms have been nudging users to place more items in a single order in an attempt to increase average order values. They have also been expanding categories, adding beauty and personal care products, over-the-counter pharmaceuticals, small electronics, home furnishing, and pet care, among others.