INside Performance Marketing
Rocket Internet Cuts Losses in Q1 Despite Slower Growth

Rocket Internet Cuts Losses in Q1 Despite Slower Growth

Rocket Internet is seeing a steady improvement in its balance sheets despite slower sales growth witnessed in Q1.

The quarterly loss for main start-ups under the internet platform’s umbrella decreased by 23% on the previous year.

It came at a price, however, as the company’s revenue slowed. A fall in emerging market currencies and less marketing spend resulted in sales going up 34% at €532 million, but down from the 217% growth rate observed a year ago.

The changes came as a result of Rocket Internet’s switch in focus, with the emphasis now on improving profitability over spending funds on marketing and logistics needed for business development.

The new move was put into action in a bid to address major concerns coming from investors in regards to the company’s main start-ups, which were considered to be overvalued and losing money.

Improving profitability

Since its founding in 2007, Rocket Internet has grown to hold multiple assets across the food, fashion, travel, general and home sectors, including HelloFresh, Home24 and foodpanda, in over 110 countries.

A first-quarter roundup published by the Berlin-based company revealed that while it has progressed in reaching its goal to reduce losses, the journey it has been on has inevitably come at a cost.

The platform’s shares have decreased by 5.2%, valuing Rocket Internet at €3.7 billion - a big plunge from the €5.3 billion estimated by the firm on April 30 this year.

An obvious reason for Rocket’s decrease in value has been attributed to a recent slash in worth for some of its other sites. The stock saw a decline of 25% when one of the company’s major investors, Kinnevik, cut the valuation of its own fashion sites by two thirds in April.

On the horizon

Some of Rocket Internet’s start-ups did however bring good news. The company reported increased profitability within its Middle East fashion site Namshi as well as furniture site Westwing, which reduced losses to one and six million euros respectively.

One of the company’s largest holdings, HelloFresh, saw its losses widen as a result of marketing and warehouse spend. However, its revenue improved by 211% in the first quarter.

"These results show that Rocket Internet's selected portfolio companies have significantly improved in the first three months of the year and are well progressing on their path to profitability,” commented Oliver Samwer, Rocket Internet’s CEO, who backed the assets to continue their positive development in 2016.

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Monika Komar

Monika Komar

A News and Features Reporter at PerformanceIN, Monika covers stories and developments in the fast-evolving world of performance marketing.

Monika studied Modern Languages at the University of Southampton and worked in marketing and communications before making her way over to PerformanceIN.   

Read more from Monika

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