Zomato enters cash conservation mode, to cross-leverage customers for Blinkit
Limited reported net losses of Rs 186 crore for the first quarter of FY2023—a 48% reduction from the comparable quarter last year when the foodtech unicorn reported Rs 360 crore in losses. The total revenue from operations grew to Rs 1,414 crore for the quarter ended June 30, 2022, compared to Rs 844.4 crore reported for the year-ago quarter.
“...there is no plan to make any more minority investments as we are in cash conservation mode, and are busy executing what we already have on our plates right now,” said Zomato CEO Deepinder Goyal in filings made with the BSE.
The company reported adjusted revenue of Rs 1,470 crore for its food delivery business for Q1 FY2023, compared to Rs 1,030 crore for the year-ago quarter. Its business-to-business (B2B) offering, Hyperpure, contributed Rs 270 crore to the adjusted revenue for Q1 FY2023, with other businesses contributing Rs 70 crore.
Deepinder said that Hyperpure was likely to grow beyond being a supply partner to restaurants. “As we expand into quick commerce, the capabilities we have built in Hyperpure will also come in handy. Hence, there is a long runway for growth here,” he added, mentioning the acquisition of quick commerce app Blinkit, which was announced in June 2022.
Zomato paid nearly $568 million forin June to acquire the remaining stake in the quick commerce entity. Zomato already owned a 9% stake in the company before the acquisition.
Deepinder also defended Zomato’s decision to acquire Blinkit, adding that the company followed “rigorous and detailed due diligence, deliberations and negotiations” before agreeing to the transaction.
The Blinkit business reported an order volume of 83 lakh for the month of July 2022, compared to 79 lakh in May 2022. The revenue for July 2022 stood at Rs 75 crore, compared to Rs 58 crore in May 2022. The company didn't share the metrics for June
In EBITDA terms, the food delivery business registered breakeven during Q1 FY2023.
“Growth in revenue was driven by nearly 10% quarter-on-quarter growth in Gross Order Value (GOV) to Rs 6,430 crore in Q1 FY2023 and growth in revenue per order,” said Akshant Goyal, CFO at Zomato Limited, in market filings. He added that growth in order volumes and minor growth in average order value contributed to the growth in GOV.
Zomato CEO Deepinder said in the filings that monthly transacting customers are likely to drive growth in the upcoming quarters. According to the filings, the average number of monthly transacting customers for the app stood at 1.7 crore during Q1 FY 2023, compared to 1.23 crore in the year-ago quarter.
After the go-ahead from the regulator, Zomato plans on cross-leveraging Zomato’s customer base for Blinkit and vice-versa, said Deepinder in the filings.
“As stated earlier, we believe that in India, super brands will work better than super apps. Which means that the Blinkit app will continue to operate independently. We will also start working on integrating the delivery fleet back-ends which should drive higher delivery efficiency over time,” he added.
The company will stay focused on scaling Blinkit in the top 15 cities.
(The story was updated to correct Zomato's Q1 FY23 operating revenue.)