Rocket Internet cuts its losses – and keeps quiet about upcoming IPOs

Rocket Internet is not yet profitable, but things look better than ever.

Expectations are high prior to Rocket Internet’s annual general meeting on Friday. And recycled rumors of possible deals and offerings on the stock market have boosted Rocket Internet’s share price considerably in recent days.

For those hoping to be surprised by Rocket Internet's 2017 first quarter announcement, prepare to be disappointed. The findings from their Q1 2017 report are "in line with expectations,” the Berlin company announced Wednesday morning.

Losses are falling and sales are rising

According to Rocket Internet, some of their companies’ turnovers – the company only publishes numbers only from selected companies – grew by 28 per cent compared to last year. Or a whopping €617 million ($692 million).

Rocket Internet also said the aggregate adjusted EBITDA margin improved, reducing losses by €20 million. Furthermore, according to the adjusted EBITDA, cash flow increased by 7.9 per cent, from a negative 22.6 per cent to negative 14.7 per cent. This is also reflected in the company’s balance sheet, the company says.

In the first quarter of 2017, Rocket Internet reported €9 million in sales and a loss of €86 million. Despite a noticeable imbalance, this is a positive trend: In 2016, the Rocket Internet had €342 million in losses.

With numbers like these things are looking good for the Berlin giant. The company also reportedly has €1.5 billion in liquid assets.

Delivery Hero, Rocket Internet’s food delivery service, was among the company’s most important investments. Sales, according to Rocket Internet, reached €121 million, a 93 per cent increase.

And Rocket Internet’s second great hope, HelloFresh, is also performing better than the previous year. The startup, which delivers fresh foods needed to make an entire meal, saw sales increase 45.2 percent compared to the same quarter last year. This increase amounts to more than €205 million.

3 companies expected to become profitable

"We are confident that our selected companies will make further progress towards profitability this year and invest in sustainable growth," says Rocket Internet CEO Oliver Samwer.

The CEO confirmed that three companies should be profitable by the end of the year, but did not name which companies he was referring to.

Samwer also refrained from commenting on possible IPOs. One of the most promising contenders being Delivery Hero, with many experts predicting the startup will make a grand entrance this summer.

HelloFresh is also a possible contender, but this would be the company’s second attempt: The first attempt is said to have failed because of disagreements between shareholders.

The Global Fashion Group also posted growth in sales: Net sales rose by 196.9 million to 265.3 million since Q1 2016.

And Namshi, a Zalando clone, performed well on the stock exchange last week. Rocket Internet sold a portion of Namshi to Emaar Malls, a Dubai-based company, for €151 million.

Last year Rocket Internet launched eight new startups. This year, according to Samwer, it will range between five and eight. “It’s not the number, but the quality of the company that counts,” Samwer says.

Cleaning up the portfolio

Rocket Internet has worked hard to sift through unsuccessful ventures and projects in the last year. Jabong, a problem child for the Global Fashion Group, is just one example and was recently sold to Flipkart for €70 million.

And there was also the costly venture Foodpanda, which was sold to its competitor Delivery Hero at the end of 2016.

After a period of heavy turbulence, Samwer and his team are strategically adjusting their portfolio and focusing on a select few startups.

With only ten startups currently keeping Rocket Internet, it seems more time will be spent investing rather than building new ventures.

This article originally appeared on Gründerszene (German).

Photo credit: Gründerszene

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