Zomato Announces Fresh Employee Stock Options to Motivate Talent and Reward Growth

Zomato, the leading name in foodtech and quick commerce, announced a significant initiative for its employees on Monday. The company introduced a new employee stock option (ESOP) program, designated as ESOP 2024, to incentivize its workforce.

Expanding the Ownership Pool: Benefits and Approvals

The Zomato board of directors has approved the implementation of ESOP 2024. This plan allocates a fresh pool of 18,26,27,402 stock options for employees across Zomato, its subsidiaries, and associated entities. The resolution, however, requires the formal endorsement of Zomato’s shareholders.

Unlocking Employee Value: Conversion and Estimated Worth

Each ESOP option will eventually translate into an equity share within the company, as per regulatory filings. Financial analysts at Fintrackr estimate the total value of these newly introduced ESOP options to be approximately Rs 3,780 crore, which translates roughly to $455 million. This valuation is based on Zomato’s peak share price of Rs 207, recorded on May 13, 2024 (3:00 PM IST).

Strategic Rationale: Attracting, Retaining, and Rewarding Talent

The expansion of the ESOP pool is a strategic move by Zomato. The company aims to “promote employee ownership” and leverage this program to attract, retain, and motivate critical talent, fostering alignment with the company’s ambitious growth trajectory.

Zomato’s Financial Strength: Revenue Growth and Profitability

Zomato’s robust financial performance in FY24 serves as a strong foundation for this employee-centric initiative. The Gurugram-based company witnessed a remarkable 71% year-on-year surge in revenue from operations during FY24. Revenue figures climbed from Rs 7,079 crore in FY22 to Rs 12,114 crore in FY24. Additionally, Zomato achieved profitability in FY24, recording a profit of Rs 351 crore, compared to a loss of Rs 971 crore in the previous fiscal year.

Competitive Landscape: Zomato Outpaces Swiggy

While Zomato thrives, its primary competitor, Swiggy, trails behind. During the first three quarters of FY24, Swiggy reported revenue from operations of Rs 5,476 crore and a loss of Rs 1,600 crore. Looking at the entire FY23, Swiggy’s performance translates to Rs 8,265 crore in revenue and a loss of Rs 4,179 crore. Zomato’s financial resilience and impressive growth stand out in comparison.

By implementing ESOP 2024, Zomato demonstrates its commitment to its employees and its confidence in its continued success. This strategic move positions the company to attract and retain top talent while propelling its growth ambitions forward.