Swiggy initiates second phase of ESOP buyback, returning $50 million to 2,000 employees

Swiggy, a business that delivers food and groceries, revealed that it has started buying back shares from about 2,000 employees as part of a planned liquidation of employee stock options (ESOPs), which was initially disclosed in 2021.

The repurchase occurs at a time when the Indian startup ecosystem is experiencing a fundraising winter. As a result, some new-age firms have been compelled to preserve cash and lengthen their cash runways, which has mostly been accomplished by letting go of tens of thousands of employees.

The ESOP repurchase plan was initially introduced in 2021 and was intended to be completed in two phases, the first of which was due in July 2022 and the second of which was due in July 2023.

Swiggy repurchased shares in July 2022 for roughly $20-$23.

In summary, the ESOP repurchase exercise cost $50 million, which was somewhat more than Swiggy’s initial estimate of $35–40 million.

Swiggy has acquired ESOPS four times since 2018, with the size escalating yearly. The Bengaluru-based business reportedly spent $9 million in 2020 after repurchasing shares for $4 million in 2018.

Following a pause of almost two years, Swiggy repurchased shares in 2022 for $20–$23 million. As of this writing, it will be paying out $27–$30 million to 2,000 workers, which is less than half of its full strength of just over 5,000.

Employees who transferred from Dine out to Swiggy after the latter was bought would fall under this category.

“Our team is Swiggy’s most valuable asset, and we are happy that macroeconomic conditions notwithstanding, we’re able to keep our commitment of sharing Swiggy’s success and growth through these wealth creation opportunities,” said Girish Menon, Head of HR at Swiggy.

That was despite the fact that Swiggy’s previous fundraising round in January 2022 valued the company at $10.7 billion. Since then, Swiggy has experienced a number of markdowns that valued the firm at less than it did during its prior financing.

However, according to Sriharsha Majety, CEO and co-founder of the firm, other business segments, such as Dineout Instamart, its quick-commerce subsidiary, had also shown improvement in financial health as of March 2023. The company’s primary operation, meal delivery, had also become adjusted EBITDA positive (excluding ESOP expenses).

Swiggy’s announcement places them on a growing list of modern businesses that have honored their staff members this year. 

Also Check: Following Zomato, Swiggy Launched Data-Driven Insights Platform to Fuel their Expansion