Zomato's Hyperpure helps boost Q3 revenue up 75%, loss widens
Consolidated net loss widened to Rs 347 crore in the October-December quarter from Rs 67 crore in the same period in the year prior.
Zomato staged a stellar 75% revenue boost for the December quarter, outpacing expectations, with its Hyperpure operations making up for slowing growth in its core food-delivery business.
Revenue from operations jumped to Rs 1,948 crore in the third quarter of financial year 2022-23 from Rs 1,112 crore in the corresponding year-ago period. Higher expenses towards deliveries, advertising and purchase of stock-in-trade, however, widened consolidated net loss to Rs 347 crore from a loss of Rs 67 crore earlier.
Revenue from Hyperpure, which supplies fresh and packaged products to restaurants, rose 169% to Rs 421 crore, partly fuelled by supplying goods to sellers on Blinkit’s marketplace, the quick commerce business acquired in June last year.
Hyperpure is “well placed to monetise the opportunity” to synergise with Blinkit’s supply chain and sourcing strengths, the company said in an earnings statement Thursday evening.
Founder and CEO Deepinder Goyal said the Gurugram-based company will choose to prioritise growth over profitability in the Hyperpure segment.
Zomato's shares soared over 9% yesterday following Deepinder's tweet hinting at profitability. The stock has fallen more than 60% since its listing in July 2021. On Thursday, ahead of the earnings announcement, the shares ended nearly unchanged at Rs 54.60 apiece on NSE.
Food-delivery growth slows
Zomato earned Rs 1,565 crore from its food-delivery business in the December quarter, up 30% from the same period in the year prior. Adjusted revenue declined 1.0% from the preceding quarter, largely owing to declining order volume.
“We have seen an industry-wide slowdown in the food delivery business since late October (post the festival of Diwali). This trend has been seen across the country but more so in the top 8 cities,” CFO Akshant Goyal said in the statement.
The slowing growth in the food-delivery business is a concern, Nikhil Choudhary, research analyst at Nuvama Institutional Equities, told YourStory.
"Zomato has provided mixed set of results. The company beat street expectations on revenue while EBITDA and (after-tax profit) were broadly in-line," he said.
"Blinkit has shown strong performance on growth and profitability. However, the food-delivery business has been impacted, (which is) reflected in the decrease in monthly transacting users, flat (gross order value) and (quarter-on-quarter) decline in the adjusted revenue," Nikhil said.
"We believe that this impact has been clearly the result of closure of the Zomato Gold membership in August 2022 and underlying slowdown in (quick-service restaurant) business."
Gross order value in the food-delivery business rose 21% year-on-year, although average order value was up by a more modest 6%. On the other hand, average monthly transacting customers grew to 17.4 million in the third quarter from 15.3 million a year earlier.
Monthly active food-delivery restaurant partners were at nearly 2 lakh, while monthly active food delivery partners were at about 3 lakh.
Zomato Gold, Instant and dining
The company said its Gold loyalty programme, which was relaunched in late January, already has over 9 lakh sign-ups, and is expecting the feature to drive loyalty and higher frequency of orders.
The foodtech company will also remodel its Zomato Instant programme to Zomato Everyday, with a focus on "home-style cooked meals at affordable prices." Zomato Instant was launched in March last year with a promise of 10-minute food-deliveries.
Zomato's dining business, which includes Zomato Pay, has started to take off but doesn't yet contribute meaningfully to the overall size of the business, according to Deepinder.
Aman Priyadarshi, global head of Zomato's Dining Business, quit recently, making him the fifth senior executive to exit the company over the past year.
On Thursday, Ant Group Senior Vice President Douglas Feagin resigned as non-executive director on Zomato's board, days after he exited Paytm's board.
Zomato's revenue from 'other' segments, which included the dine-out business, delivery services Talabat in the UAE, and offline events such as Zomaland, amounted to Rs 173 crore in third quarter.
Zomato expects revenue from this segment to decline in the ongoing quarter since it discontinued food delivery in the UAE in November, and Zomaland was a seasonal event.
Blinkit's performance
Blinkit registered a 21% year-on-year growth in order volume in the third quarter. Average order value, however, fell marginally to Rs 553 from Rs 568.
"The slight downward pressure on AOVs might be a result of the slowdown where customers are preferring to buy smaller packs instead of larger ones," said Albinder Dhindsa, founder and CEO of Blinkit, previously known as Grofers.
Albinder, however, said the third quarter was the highest ever in terms of new and returning customers, without divulging numbers. Blinkit registered monthly active transacting customers in the third quarter at 3.1 million, up from 2.6 million a year earlier.
"On a positive front, Zomato (excluding Blinkit) has turned Adjusted EBITDA breakeven in January 2023," said Nuvama's Nikhil. "Depending on certain execution wins, this could come through for Q4FY23."
(The story has been updated with additional information throughout.)
Edited by Saheli Sen Gupta and Feroze Jamal
