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Zomato to invest $1 billion in startups over next 1-2 yrs even as losses grow, contribution margin falls

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Zomato saw revenue grow by 22 percent sequentially to $189 million in the September quarter, while EBITDA losses also grew to $41 million

Zomato to invest $1 billion in startups over next 1-2 yrs even as losses grow, contribution margin falls
Zomato CEO Deepinder Goyal announced the company's investments in startups such as Curefit, Shiprocket and Magicpin, and said the company will invest another $1 billion into more companies over the next couple of years.
Zomato said it is in the process of selling Fitso to Curefit (Curefit Healthcare Pvt Ltd) for $50 million, and is also investing cash in Curefit. Net $50 million cash investment plus value of the Fitso business (worth $50 million) will give Zomato a cumulative shareholding worth $100 million in Curefit (6.4 percent shareholding in Curefit).
The company said it has also signed definitive documents for investing $75 million in logistics player Shiprocket for a 8 percent stake as part of a larger $185 million round.
The company saw revenue grow by 22 percent sequentially to $189 million in the September quarter, while EBITDA losses also grew to $41 million , a near 2x increase sequentially and a 4x jump year on year.
Zomato said losses went up due to increased spending on branding and marketing for customer acquisition, increased investments and growing share of smaller/emerging geographies in the business, and increased delivery costs due to unpredictable weather and increase in fuel prices.
When it comes to profitability, contribution as percentage of gross order value was 1.2 percent  in Q2 FY22 as compared to 2.8 percent in Q1 FY22.
The company said reduction in contribution margin was on account of increased investments in growth geographies, ie growing share of smaller, emerging cities in our business, as well as an increase in delivery cost per order (Rs 5 per order increase in Q2 FY22 as compared to Q1 FY22).
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