Swiggy, the Bengaluru-based food delivery giant, witnessed its net loss surpassing the INR 4,000 crore mark for the financial year ending March 31, 2023. The Invesco-backed decacorn reported a net loss of INR 4,179.3 crore in FY23, marking a 15% increase from the previous fiscal year’s INR 3,628.9 crore.
However, there was positive news on the revenue front, with Swiggy experiencing a robust growth of over 40% in operating revenue, reaching INR 8,264.4 crore during the fiscal year 2022-23, compared to INR 5,704.9 crore in FY22. This expansion was attributed to the scaling up of its quick commerce vertical throughout the year.
Established in 2014 by Sriharsha Majety, Nandan Reddy, Phani Kishan Addepalli, and Rahul Jaimini (who left the company in 2020), Swiggy initially began as a food delivery startup. However, during the pandemic, it diversified its services, introducing Swiggy Instamart, Swiggy Genie, and Minis store.
Swiggy generates revenue through various channels, including online platform services for partner merchants (restaurants, grocery stores, and delivery partners), advertising services, the sale of food and traded goods, subscriptions, and other platform services. In FY23, the sale of FMCG products through Swiggy Instamart contributed INR 3,221.4 crore to the revenue, showing a 39.7% increase from INR 2,035.6 crore in the previous fiscal year. Additionally, INR 4,413.9 crore was earned from the sale of services, reflecting a 28% rise from INR 3,444.4 crore in FY22.
While the revenue growth was noteworthy, the total expenditure escalated by more than 35% to INR 12,884.4 crore in FY23 from INR 9,574.5 crore in the preceding fiscal year. Key areas of expenditure included procurement cost, outsourcing support cost, marketing expenditure, employee benefit expenditure, and losses on order cancellations.
1. **Procurement Cost:** This category, covering the cost of buying FMCG products for Swiggy Instamart, increased by 49% to INR 3,380.9 crore in FY23 from INR 2,268.1 crore in FY22.
2. **Outsourcing Support Cost:** Rising by 34%, the outsourcing support cost reached INR 3,159.3 crore in FY23 from INR 2,350.2 crore in FY22. This cost encompasses employees on third-party payrolls, including delivery executives and staff working at dark stores.
3. **Marketing Expenditure:** Swiggy allocated INR 2,361.7 crore to advertising during the fiscal year under review, marking a 28% increase from INR 1,848.7 crore in FY22.
4. **Employee Benefit Expenditure:** While Swiggy managed to reduce employee costs by 12% to INR 1,283.3 crore in FY23 from INR 1,458.9 crore in FY22, the company had undertaken multiple rounds of layoffs in 2022 and 2023.
5. **Losses on Order Cancellations:** This category witnessed a decrease of 11%, with losses totaling INR 139.5 crore in FY23, down from INR 156.4 crore in the previous fiscal year.
This financial disclosure comes in the wake of reports that Swiggy is planning to lay off around 400 employees as part of its efforts to showcase improved financial numbers before filing for an initial public offering (IPO) later this year. The company is reportedly aiming to raise $1 billion (INR 8,300 crore) through its IPO.
Despite the financial challenges, Swiggy reported achieving profitability in its food delivery business as of March 2023, making it one of the few global food delivery platforms to reach this milestone. However, specific numbers regarding this profitability were not disclosed.
In recent weeks, Swiggy has extended its food delivery services to the Agatti island city in Lakshadweep and has witnessed several high-profile exits among its leadership team. The company, valued at over $10 billion, has raised more than $3 billion in funding and faces competition from Zomato, which has reported consecutive profitable quarters in FY24.
