The food delivery market in Indian has seen fierce competition in recent years with two unicorns Zomato and Swiggy at loggerheads in the fight for the largest market share. During FY20, the Bengaluru-based Swiggy has edged out its main competitor, posting a topline figure of Rs 2,955.6 crore, Rs 213 crore more as compared to Zomato’s earnings in the same period.
Swiggy’s revenue from operations ballooned 2.4X to Rs 2,696 crore during FY20 from Rs 1,128.3 crore earned in FY19. Service fee collected from its restaurant partners made up 55.7% of the total operating revenue, growing by 86.4% to Rs 1,501.8 crore in FY20.
Sale of food products under private labels including The Bowl Company, Goodness Kitchen etc was the leading growth driver for Swiggy: this income ballooned 6X to more than Rs 405.1 crore, making up 15% of the operating revenues in FY20.
Further, advertisement income doubled its revenue share to 6.7%, as these collections surged 4.7X to Rs 179.7 crore in FY20. Income from delivery services also grew 2.8X to Rs 545.7 crore, making up 20.2% of the operating revenue.
Swingy earned another Rs 260 crore in the form of income from financial instruments during FY20. While the Prosus-backed company has managed to pump its collections, it has burnt through significant capital during FY20 to achieve the growth of scale.
It spent a little over Rs 6,864.1 crore in total during FY20 — 87.6% more as compared to aggregate expenses of Rs 3,659.1 crore incurred in FY19. Swiggy spent Rs 2.55 to earn a single rupee of operating revenue as compared to Rs 1.92 spent by Zomato to earn the same during FY20.
Moving over to the expense sheet, we see costs related to the operation of the private label brands along with payments to delivery riders stood out as the biggest line item, making up 42.5% of the total expenditure. These costs grew by 70% to Rs 2,920 crore during FY20 as compared to Rs 1,718 crore spent on the same during FY19.
Employee-related payments and advertisement expenses are the other two largest cost centres for Swiggy, collectively making up nearly one-third of the total expenses. Employee benefits expenses grew 2.1X to Rs 1,147.2 crore while costs related to advertising and promotions jumped by13.5% to Rs 1,049 during the fiscal ended in March 2020.
The food delivery platform lost nearly Rs 261 crore on cancelled orders and theft by riders FY20, a figure which ballooned 2.3X during the last fiscal. Costs related to legal and insurance fees surged 3.7X to Rs 121.6 crore while outsourcing expenses grew 3.3X to Rs 71 crore during FY20.
Communication and technology expenses of Rs 458 crore pushed the net cash outflow from operations to Rs 3841.4 crore during FY20, jumping by 63.7% as compared to outflows of Rs 2346.5 in FY19.
Operating and customer acquisition costs have grown every year since Swiggy’s inception year as the company pushes the scale of operations, Swiggy’s outstanding losses have surpassed Rs 7,003 crore by the end of FY20. The company annual losses amounted to Rs 3,908.5 crore in FY20, growing by 65.5% as compared to Rs 2,361.8 crore it lost during FY19.
While EBITDA margins have improved from -180.50% in FY19 to -122.25% during FY20, Swiggy will have to work harder competing with its main rival Zomato which operates at significantly better margins and has tighter control over its purse strings.
