Zomato posts loss of Rs 63.2 Cr in Q3; revenue up by 82.5 pc
on Thursday posted a consolidated loss of Rs 63.2 crore in the third quarter of 2021-22. This was an improvement from the year-ago period when the company made a loss of Rs 352.6 crore.
In the previous quarter, the food delivery decacorn posted a loss of Rs 429.6 crore.
Its consolidated revenue from operations was Rs 1,112 crore — 82.5 percent higher than from a year ago, when it posted Rs 609.4 crore. Sequentially, it grew by 8.5 percent from the previous quarter, when it posted a revenue of Rs 1024.2 crore.
The company said that its customer delivery charges declined by 22 percent, driven by a reduction of Rs 7.5 per order in customer delivery charges in Q3 FY22 as compared to Q2 FY22.
“We re-distributed our growth investments more in favour of discounts on customer delivery charges vis-a-vis food coupons,” said the company in a statement, explaining, “Why? We are seeing higher return on investment with discounted delivery charges as compared to coupons. As a result, discounts per order were reduced by Rs 5 per order in the last quarter as compared to Q2 FY22.”
It also added that customer delivery charges were reduced partly as the foodtech giant now operates in 180 new cities, taking the total upto over 700 cities. It temporary waived off delivery charges in the newly-added cities to cultivate a culture of ordering food from restaurants.
The company’s adjusted EBITDA loss was at Rs 270 crore in Q3 FY22 as against Rs 310 crore in the previous quarter. This was “driven by rationalising spends across various businesses and functions,” said the company.
It reported adjusted revenue of Rs 1,420 crore on a year-on-year basis, up by 78 percent. On a sequential quarter-on-quarter (“QoQ”) basis, it was a flat quarter, added the company.
Adjusted revenue is the sum of revenue from operations (from all businesses) and customer delivery charges.
Its Gross Order Value (GOV) grew by 84.5 percent year-on-year and 1.7 percent quarterly to Rs 5,500 crore in Q3 FY22. The contribution as a percentage of GOV from the food delivery business was 1.1 percent in Q3 as against 1.2 percent in Q2.
“We believe that the weak QoQ growth in GOV was primarily due to reduction in customer delivery charges as mentioned above, in addition to a soft impact of post-COVID-19 reopening (including some shift from delivery to dining out),” said the company.
The food delivery company reported a 93 percent growth in the number of orders annually, and 5 percent quarterly. It had an average order value which includes customer delivery charges down by 3 percent sequentially, “mostly on account of reduction in customer delivery charges” added the company.
The company acquired 5.5 million new users whereas it gained 7.4 million in Q2 and 6.7 million in Q1 owing to an increase in marketing spend to capitalise on COVID-19 led momentum.
The company saw the highest ever GOV in the past quarter on December 31, 2021. It said it recorded a high at $18 million, which was 78 percent higher than the same day last year.
“This is the highest YoY growth we have seen on December 31 in the past three years,” said the company.
Its Hyperpure business, where it supplies ingredients to restaurants, grew by 168 percent annually and 40 percent quarterly to Rs 160 crore in Q3 FY22. Present in nine cities, it supplied to over 27,000 unique restaurants in this quarter – up by 50 percent from nearly 18,000 in Q2 FY22.
The company also threw light on its Dining-out and Zomato Pro by saying, “The revival of in-restaurant dining in Q3 FY22 led to some green shoots in our dining-out ad-sales business. Our focus here, for now, is on improving our product and customer engagement while putting monetization on the backburner for a while.”
On capital and investments
“We are currently well capitalised, with close to $1.7 billion cash on our balance sheet, and we don’t envisage raising cash in the foreseeable future,” said the company.
It plans to focus on two key areas of investment, the core food businesses and quick commerce.
“We will need to continue to fund the growth investments here (core food business) till the business becomes profitable,” said the company. “Quick commerce offers a huge addressable market and is also very synergistic with our food delivery business in the long term giving us a right to win over standalone players.”
In the past year, the company invested $225 million across three companies – Blinkit (erstwhile Grofers), , and . The objective of these investments was to build quick ecommerce in India, said the food delivery company.
To date, Zomato has invested in six startups.
“We want to continue making minority equity investments in businesses that will accelerate growth of our business. We aim to work together with founders of other companies in a symbiotic relationship and utilize their expertise to strengthen and support our business,” said the company.
In January, it bought a minority stake in two startups — a 19.48 percent stake in adtech companyfor $15 million and a 5 percent stake in business-to-business (B2B) software platform for $5 million.
It also announced that it will set up a wholly owned subsidiary as a non-banking finance company (NBFC).
“We are in the process of setting up our own NBFC, which will allow us to extend short term credit to our ecosystem – our delivery partners, customers and restaurant partners,” Zomato said in the earnings release. “We believe we can add significant value to, and improve the experience of, our platform partners with this initiative without requiring Zomato to allocate significant capital.”
In the earnings release, CEO and Founder Deepinder Goyal, and CFO Akshant Goyal signed off saying, “Over the next few years, our focus will remain on creating a great experience for our stakeholders and helping to grow our overall ecosystem rather than optimising for revenues or profits.”