 "Zepto founders with the riders (Left to right- Kaivalya Vohra, Aadit Palicha)")
Quick commerce platform Zepto’s losses widened three-fold to Rs 1,272 crore in the last financial year (FY23), against Rs 390.3 crore a year ago (FY22), according to filings with the Ministry of Corporate Affairs. The Mumbai-based startup’s revenue from operations increased 14-fold to Rs 2,024 crore during the period, compared to Rs 140.7 crore in the previous year.
The firm’s total expenses came in at Rs 3,350 crore, a six-fold increase from Rs 532.7 crore in FY22. To earn a rupee, Zepto spent about Rs 1.7 during the year. This is down from Rs 3.7 it had to spend in FY22 for each rupee earned.
Zepto spent the most on purchase of stock-in-trade, for which it shelled out Rs 1,894 crore during the year, compared to Rs 213.2 crore in FY22. Its employee benefit expenses stood at Rs 263.4 crore in FY23 versus Rs 50.3 crore a year ago.
Despite the widening losses, the company improved its profit after tax (PAT) margin from 277 per cent in FY22 to 63 per cent in FY23. Zepto said it was on track to achieving Ebitda breakeven (excluding ESOP and other statutory non-cash line items) in the next 10 months, while continuing to grow the business meaningfully.
In August this year, the company raised $200 million in a series E funding round at a $1.4 billion valuation to become a unicorn, ending an extended dry spell. The round was led by the StepStone Group, a Baltimore-based institutional asset manager, which is also a Limited Partner (LP) of existing investor Nexus Venture Partners.
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Zepto has grown 300 per cent year-on-year (Y-o-Y) this year and its dark stores — that contribute to over 50 per cent of the business — are now profitable, Business Standard had reported earlier. The Mumbai-based startup is on track to turn cash flow positive in the next 12-15 months, and is eyeing a public listing in the next 18-24 months.
Zepto is also likely to achieve $1 billion in annualised sales in the next few quarters. It is currently hovering between 300,000 and 400,000 orders a day, while its average order value (AOV) ranges from Rs 400-500 at the moment.
Zepto competes with the likes of Swiggy, Instamart and Zomato-owned Blinkit, who have also managed to showcase healthy financials and a path to profitability. Blinkit recorded its highest-ever gross order value (GOV) and transacting customers in the months of June and July, turning contribution positive for the first time in the quarter ended June 2023.
Likewise, Instamart has also doubled down on reducing its burn. Swiggy – of which Instamart is a subsidiary – has reportedly reduced its monthly cash burn to $20 million from about $45-50 million that it was losing each month during its peak in 2021.
In terms of scale, Instamart leads the pack with a revenue of Rs 2,036 crore in FY22. It is yet to file FY23 results. Blinkit, on the other hand, posted a revenue of Rs 806 crore in FY23, and Rs 385 crore in Q1FY24.
The quick commerce model saw a boom in 2021 after the Covid-19-induced lockdown propelled demand for grocery delivery. Zepto, which was founded in 2021 by Palicha and Kaivalya Vohra, was among the few companies that rode this wave with its promise of 10-minute deliveries.
As a result, the firm raised $60 million in October 2021. In December that year, Zepto raised another $100 million, before raising $200 million in May 2022. Its penultimate funding round valued the company at $900 million.
