If a picture is worth a thousand words, a chart is probably worth a lot more.

For instance, take this chart from restaurant aggregator Zomato’s last annual report.

So, what is interesting about this chart?

At first glance, it appears as if the company is in fine fettle and living up to its reputation as one of India’s marquee food tech startups even from a financial perspective. Revenue has gone up 3X year-on-year, and visually, costs seem to be only marginally higher than revenue.

But if you take a second look, you will notice that the revenue and cost charts are not drawn to the same scale. So while the towers look comparable visually, it is an illusion derived from a neat sleight of hand.

If you redraw the graphs using a common scale, it would look as below.

This redrawn chart tells us a lot more. While revenue has indeed gone up 3X, costs have grown much faster at 6X, and as a result, losses have exploded nearly 25X (from $12 million to $294 million).

And since every good chart deserves another, Zomato followed up on the chart above with another one in its report for the first half of the financial year ending March 2020:

This chart was better than the previous one—not only were the revenue and losses graphs not drawn to the same scale, the latter didn’t even have any numbers!

Admittedly given that Zomato is a private company, it is under no obligation to publish detailed financials and is well within its rights to cherry pick metrics of its choice.

But there are two problems here.

Firstly, these shenanigans stand out in stark contrast to the company’s annual reports hitherto. Not only have these reports offered detailed financials, but, in addition, Deepinder Goyal, Zomato’s founder and CEO, has repeatedly touted this level of transparency as a strength.

More importantly, this journey from clear disclosures to chart calisthenics points to Zomato’s deeper travails in the last two years.

How so?

Exactly two years back, Zomato publicly announced that it had reached profitability. “Zomato is now a profitable company. Yes, throughout the 24 countries where we operate, and across all our businesses, we are starting to make money,” Goyal had said in a blog post. 

From a point of claiming profitability two years back, how did Zomato end up in a situation where it is losing hundreds of millions of dollars per year and is now reticent to the point of not even disclosing its losses?


Sumanth Raghavendra

Sumanth is a serial entrepreneur with more than eighteen years experience in running startups. He is currently the founder of Deck App Technologies, a Bangalore-based startup attempting to re-imagine productivity software for the Post-PC era. Sumanth’s columns appear regularly in leading publications. He holds MBA degrees from the Indian Institute of Management, Bangalore and Thunderbird, The American Graduate School of International Management, USA.

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