On track to double revenue, Zomato’s Goyal tells analysts

Online restaurant listing and services company Zomato is on course to double revenue this financial year in line with investors' expectations, co-founder and CEO Deepinder Goyal told analysts on Monday, just a week after warning employees the firm might fail to meet the sales target for 2015-16.

“If we execute well we will meet our revenue targets,” he said in response to a VCCircle query related to the internal mail that was leaked to the media in which he shared his doubts about meeting the revenue target. “It (the mail) was just in that direction.”

When asked about his reference to the sales team's underperformance in the mail, he said: “Every sales team needs pressure to work. It was an internal email that is part of the regular conversation we keep on having with the sales team. The other thing is that there is a lot of context behind that. You have to put that in that context.”

Zomato, which is valued about $1 billion, tripled its revenue to Rs 97 crore in 2014-15 from Rs 30.6 crore the previous year. Its losses widened to Rs 136 crore from Rs 41 crore.

Goyal said the company's the two relatively new revenue streams – online food ordering service and Book, the table booking platform for restaurants – would add to its traditional revenue stream of advertisements on its website. He expects advertising revenue to be 40 per cent while online order transactions and sale of Book to contribute 30 per cent each.

The company is also working on a point-of-sales system for restaurants that is at an early stage, Goyal said. The system went live on about 40 locations and the company would expand its reach by the end of January.

Goyal said the food ordering service peaked at 10,000 orders a day last week. “In volume terms this is 40 per cent of what the market leader has. But our ticket size is 2.5 times bigger than the market leader. In terms of overall value being transacted, we might already be the largest player or we are very near to that position,” he said.

Goyal claimed that the discounting offered on Zomato for food ordering is much less than the competitors. “Our advantage is that we have zero customer acquisition cost,” he said.

The Zomato CEO also took potshots at the competition. “We originally thought of Zomato as an online food ordering business. In 2008, when we started, it was way too early for online food ordering business in India. We really wanted someone else to do the job of educating the users as well as restaurants on how things work, and our competitors have done a good job on that.”

To a question on some food-tech companies laying off employees or shutting down, Goyal said: “The biggest problem our competitors face is the huge customer acquisition cost.”

On Zomato's fund-raising plans, he said that the company has a “significant amount” of money. “If we were to raise capital, that will be to essentially to go after more growth opportunities that are not part of the current plan,” he said. “In general, we are not banking on the fact that the next round will come in. We never ever built a business assuming the next round will come in…We have a break-even plan in place,” he added.

Including the last round of funding led by Temasek and Vy Capital in September, Zomato has so far raised $225 million.

Referring to a spate of exits by senior executives, Goyal said the company doesn't have a lack of senior-level executives and that it was not actively looking for senior people. “When it comes to hiring senior people it is like a marriage. You always want it to work but it really doesn’t work (that way),” he said.

Goyal also said that the company would aim to double its online traffic in the US and focus on cities where competition is less.