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Zomato is nibbling its way towards profitability—but where is the main course?

By Itika Sharma Punit & Madhura Karnik

Zomato, India’s largest restaurant search portal, is now making profits—at least in some markets.

On Monday (Feb. 08), the startup announced an operational break-even for its business in six markets—India, the UAE, Lebanon, Qatar, The Philippines and Indonesia. In all, the Delhi-based Zomato operates in 23 countries.

While the announcement says little about Zomato’s overall financial performance, even a mention of profitability is rare among other unicorns—private firms valued at over $1 billion. ”We have always been paranoid about revenue, and therefore building a sustainable business,” Deepinder Goyal, founder and CEO of Zomato, said in the statement.

The company did not share details on what percentage of its business comes from these six markets. About 35% of the company’s revenue comes from India, which makes for around 22% of its traffic. Since its launch in 2008, Zomato has expanded to nearly two dozen countries and made eight overseas acquisitions, according to the statement. It has received $225 million in funding so far.

“While on the one hand it’s okay to think that they’re at least talking about profitability, on the other hand it’s really silly to announce that they are profitable in a few geographies without saying how the profits overall are,” Mahesh Murthy, co-founder of investment firm Seedfund, told Quartz. “I don’t even know what all they have included in their accounting when they say they’ve turned profitable, so this announcement means nothing much.”

Last year was difficult for Indian food technology startups. In November 2015, Zomato missed its sales targets and Goyal voiced his discontent in an email to his sales team. A month later, Zomato laid off around 300 employees—almost 10% of its workforce—so it could focus more on profitable areas.

Focus on profits

Until recently, the only data that privately held Indian startups shared were gross merchandise value—the total value of goods sold on a marketplace—or the number of users that visit their website. However, none of these say much about the financial health of the company.

Over the last few months though, profitability has taken centre stage for India’s startup ecosystem. In May 2015, online fashion retailer Myntra said it would turn profitable by end of 2016. Around the same time, online furniture marketplace Pepperfry also gave a 18-24 months horizon for making profits.

Last month, e-commerce firm Shopclues told Quartz that it was getting harder for the company to raise funds. The startup is now targeting profitability by next year, and lining up an IPO (initial public offering) in 2017.

“Investors are now saying that growth is fine but you need to have some path to profitability. Even if it doesn’t happen in the next three or six months, there has to be some path towards it,” Arvind Singhal, chairman and managing director of consulting firm Technopak, told Quartz.