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Rocket Internet’s 'proven winners' witness revenue rise in H1

Business |REPORT

Rocket Internet’s 'proven winners' witness revenue rise in H1

By Prachi Singh

1 Oct 2015

Three of German ecommerce investor Rocket Internet-backed top online start-ups are expected to break even by the end of 2017. The company said its top 12 start-ups, or its ‘proven winners’ saw average weighted net revenues jump 142 percent to 1.37 billion euros (1.5 billion dollars) in the first half, from growth of 82 percent in 2014.

Oliver Samwer, Founder and Chief Executive Officer of Rocket Internet said, “Our proven winners continue on their strong growth trajectory in 2015. The H1 financials demonstrate growth as well as improvements in profitability. Rocket’s transition to IFRS shows the strong progress that we have made in terms of financial reporting in the group and our focus on increasing transparency.”

Proven winners report revenue jump

The biggest revenue increases were reported by online general merchandise sites such as Jumia in Africa and Lazada in southeast Asia, followed by fashion sites such as Namshi in the Middle East. Five online fashion firms, three general merchandise sites, two food delivery firms and two home furnishing sites, saw average operating margins rise six percentage points, though all continued to make severe losses.

However Samwer said that a certain number of proven winners will break even in two years. He was talking at a capital markets day presentation webcast from London. The company said that its portfolio value increased 3.4 billion euros (3.8 billion dollars) since its listing in Frankfurt last October to six billion, in part due to a financing round that lifted the value of online ingredients delivery firm HelloFresh.

Founded by brothers Oliver, Alexander and Marc Samwer in 2007, the company has established a dozens of ecommerce platforms hoping to follow successful ventures such as Amazon and Alibaba in new markets like Africa, Latin America and Russia. The company said that the Rocket Internet platform is well on track to start 10 new companies in 2015, nine of which have been launched to date.

Group revenues up but profit dwindles

First-half revenues for the Global Fashion Group, which incorporates five online fashion firms in emerging markets, rose 63 percent to 418.2 million euros (466.1 million dollars), while the operating margin improved slightly to a negative 36.1 percent from 37.4 percent.

Furniture websites Home24 and Westwing, both seen as eventual IPO candidates, saw revenue rise 98 percent and 48 percent respectively. Operating margins deteriorated to negative 31.7 percent for these both firms.

First-half revenues for Rocket Internet rose 5 percent to 71.3 million euros (79.4 million dollars) but it slipped to a loss of 45.9 million euros (51.1 million dollars) from a profit of 91.9 million euros (102.4 million dollars) a year ago due to a reduction in consolidation gains from companies it no longer owns stakes in.