They say that sharing your success with others only makes it grow, keeping this sentiment in mind Zomato has taken a meaningful step to show its dedication to its employees by granting nearly 12 million stock options under its Employee Stock Option Plans ESOPs.
On October 2, 2024, the company officially announced that a total of 11,997,768 stock options have been distributed to eligible employees through its ESOP 2014 and ESOP 2021 programs.
These stock options, valued at a staggering Rs 330.17 crore, are tied to Zomato’s current share price of Rs 275.2. The move aims to empower employees by giving them a chance to build long-term wealth, nurturing a sense of ownership, and boosting overall motivation. The company’s Nomination and Remuneration Committee approved these grants, which employees can exercise within 10 years from the vesting date or 12 years from Zomato’s listing in 2021.
The majority of the stock options—11,997,652 to be precise—come from the ESOP 2021 plan, with just 116 options under the older ESOP 2014 plan, also known as the Foodie Bay Employee Stock Option Plan. Each option allows employees to convert it into one fully paid-up equity share with a face value of Re 1.
Zomato’s Growth and the Battle with Swiggy
This announcement comes at a time when Zomato’s main rival, Swiggy, is gearing up for a major IPO, intensifying the competition in India’s food delivery market. Zomato’s shares have already surged by 121% this year, and a remarkable 330% over the last two years. With a current market capitalization of Rs 2,43,122 crore, Zomato’s stock closed at Rs 275.2 last Friday, up 2.4% even as the broader market took a dip.
In the first quarter of FY25, Zomato showed impressive growth, reporting a consolidated net profit of Rs 253 crore, a significant year-on-year increase. Its revenue from operations grew 74% YoY, reaching Rs 4,206 crore.
Zomato’s Rollercoaster Ride
However, it hasn’t all been gleaming gold for Zomato, its latest ESOP announcement comes after a few turbulent years following its 2021 IPO. While the company had an impressive debut on the stock market, its shares soon took a downturn, hitting record lows. Concerns about high valuations and the challenges of scaling profitably were the primary causes. The company’s acquisition of the quick commerce platform Blinkit also raised investor concerns, leading many to worry about the impact on Zomato’s profitability timeline.
With the stock under pressure, early investors began to sell off their stakes, driving the company’s valuation down to below $5 billion from a high of $14 billion after its listing. In response, Zomato made some tough decisions, including laying off staff and exiting more than 200 cities that were underperforming. At the same time, the company began implementing strategies to boost revenue, such as increasing restaurant commission fees and expanding its Blinkit dark store network.
The Road to Profitability
Despite these hurdles, Zomato’s turnaround from losses to profitability has been impressive. The company shifted its focus from rapid growth to becoming more financially sustainable, relying heavily on data analytics, operational optimization, and strict cost management. In June 2023, Zomato posted its first profitable quarter, a major milestone just two years after going public. Since then, its stock price has skyrocketed, rising over 200% in the last year.
A significant part of Zomato’s transformation has been its growing advertising revenue and improvements in its quick commerce operations. These factors have helped Zomato maintain profitability in a highly competitive market.
Rewarding Employees for Their Role in Success
The Rs 330 crore ESOP grant is not only a reward but an investment in Zomato’s employees, aligning their success with the company’s continued growth. As Zomato cements its place in the market, this gesture of sharing wealth with its workforce is demonstrative of the company’s commitment to a future built on collaboration, hard work, and shared success.
This move, coming just as Swiggy prepares for its own IPO, shows Zomato’s confidence in both its strategy and its people—who have been crucial to its success so far.
