Rocket Internet’s Zalora and Foodpanda may be running out of cash

Poor panda is sad panda. Photo credit: Pixabay

Zalora, a Rocket Internet fashion shopping site focused on Southeast Asia, may be running out of money, its annual report suggests.

Its adjusted EBITDA, or earnings before interest, taxes, depreciation, and amortization, totaled negative US$259 million from 2013 to 2015, while its total disclosed funding from external investors stands at US$238 million, says Tech in Asia data. That means it may have spent beyond the money in its reserves.

While Rocket Internet did not disclose Zalora’s cash position – in other words, the cash it has on its books – it did reveal the number (US$86.3 million) for the group Zalora belongs to: the Global Fashion Group, which consists of six companies.

Now, even if the entirety of the US$86.3 million belongs to Zalora (which is highly unlikely), they’d run out of money in a year’s time, based on 2015’s adjusted EBITDA of negative US$105 million.

These numbers suggest it may be perilously close to emptying its war chest.

Even though Zalora touts its improving profit margin, revenue, and transaction volume, it might be a case of too little, too late.

The saving grace was Singapore’s sovereign wealth fund Temasek, who invested in both Alibaba and Lazada, and brought the two together to hammer out a deal. Alibaba this week paid US$1 billion to take a controlling stake in Lazada, which operates in six Southeast Asian nations.

Now, Zalora may have to pull a similar move. In fact, it has likely begun the process.

Low on fuel

Foodpanda, on the other hand, appears to be in a better situation, although it might enter the red zone soon. It registered a negative adjusted EBITDA of US$116 million in 2015 and a cash position of US$97.9 million, which means it’ll need to dramatically improve margins to stay afloat without raising any more cash.

This might explain its recent layoffs in India and Hong Kong, which can be seen as cost-cutting moves.

This gels with comments that unnamed Foodpanda employees have made about the development, which were apparently made to “ensure that the company will become more profitable.”