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Jun 9, 2016
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Rocket Internet CEO pledges growth and profits

By
Reuters
Published
Jun 9, 2016

Rocket Internet sought to reassure shareholders on Thursday that the German ecommerce investor is still on track after its shares were battered by concerns about the mounting losses and sinking valuations of its start-ups.


Rocket Internet CEO and founder Oliver Samwer - Rocket Internet


Europe's biggest Internet investor has shifted its focus this year towards minimizing losses at its biggest 12 start-ups in areas from online fashion to food delivery, even at the expense of slower revenue growth.

Most Internet start-ups make heavy losses in early years as they pour money into marketing, logistics and technology to pursue revenue growth above all else, hoping that once they reach scale, they can move into the black while keeping growing.

"We want to remain a growth company," Rocket's founder and Chief Executive Oliver Samwer told the company's annual shareholder meeting, predicting an average revenue growth rate of 25-40 percent for the next few years.

Shares in Rocket Internet slid last week after it reported average revenue growth at its top start-ups slowed sharply in the first quarter to 34 percent, from 217 percent a year earlier, as it took steps to try to reduce their losses.

The stock was down another 3 percent at 1239 GMT at 18.91 euros, less than half the 42.50 euros offer price when Rocket listed in 2014 and down a third this year.

The most recent sell-off started in April after major investor Kinnevik (KINVb.ST) slashed the valuation for Rocket's fashion sites, prompting concern about the worth of the other companies in its portfolio.

Kinnevik CEO Lorenzo Grabau stepped down from the Rocket supervisory board on Thursday, but said the two companies would work together closely in future, adding his departure was due to a desire to avoid possible conflicts of interest.

Most shareholders who spoke up at Thursday's meeting seem prepared to give Rocket the benefit of the doubt.

"If you know the business model, you understand that it takes time to make the investments profitable," said Michael Kuhnert, spokesman for the SdK investor association.

Rocket has pledged the 1 billion euros ($1.1 billion) it burnt through in 2015 will mark a peak for losses and has promised to make three start-ups profitable by the end of 2017.

Samwer said Rocket had enough cash to keep funding its companies until they turned profitable and highlighted progress it had already made at stemming losses at its online fashion businesses and food delivery sites.

"We have access to more capital than any other Internet investor in Europe," he said.

$1 = 0.8806 euros

 

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