Zomato posts 70% rise in revenue YoY; expects EBITDA-level profitability in next 4 quarters
Zomato's revenue rose 70% year-on-year helped by massive growth in Hyperpure business and Zomato Gold sign-ups. It said it continuously observes and learns from ONDC and other developments in the restaurant industry.
Food and grocery delivery firm posted a 70% increase in revenue to Rs 2,056 crore in the fourth quarter of FY23, helped by growth in its B2B supplies business Hyperpure. Losses for the period declined to Rs 188.2 crore, down 47% from the year-ago period.
Zomato Hyperpure witnessed a whopping 146% rise in revenue to Rs 478 crore in the fourth quarter, compared to the year-ago period. The company introduced a delivery charge for orders below a certain value which led to some churn in restaurants ordering from Hyperpure, resulting in decline in losses in the segment, it said.
The Deepinder Goyal-led firm posted revenue of Rs 7,079.4 crore in fiscal year 2023, up 69% from FY22. Losses in FY23 fell to Rs 971.3 crore from Rs 1,208.7 crore in the previous year.
However, the firm's total expenses shot up to Rs 2,431 crore in the January-March quarter from Rs 1,701.7 crore in the same quarter last year.
Food delivery growth slows
Revenue from the food delivery business in the quarter grew by 22% to Rs 1,172.5 crore—from Rs 956 crore in the same period last year.
Zomato’s business excluding quick commerce turned EBITDA positive on an adjusted basis last quarter, driven by growth in the food delivery vertical that generated Rs 7800 crore of adjusted EBITDA, the firm said in its letter to shareholders.
The company said that it is 90% confident it will achieve EBITDA-level profitability for its entire business, including quick commerce, in the next four quarters. The company is prioritising increasing revenue in food delivery and reducing losses in Blinkit to attain the goal, it said.
“In food delivery, over the last five quarters, we have improved our margins meaningfully while further strengthening our market position. We will continue with the same mindset as we look to further expand the Adjusted EBITDA margin (from the current 1.2%) to our stated goal of +4-5% of GOV,” CEO Deepinder Goyal said in the statement.
Gross order value (GOV) of food orders stood at Rs 6,500 crore last quarter, while monthly transacting customers rose to 16.6 million from 15.7 million last year.
The quarterly growth was slow mainly due to a slowdown in demand from October last year to January this year, CFO Akshant Goyal said. However, the company saw “green shoots of recovery” since February 2023 and expects the recovery to continue and reflect in better GOV growth in the next quarter, he added.
A shorter February and the shutdown of operations in 225 cities in January 2023 also caused a slowdown in growth last quarter, Akshant added. However, Zomato has gained market share in FY23, the company said.
Zomato Gold
The company re-introduced its loyalty programme, Zomato Gold, in January this year, hoping it would help its food delivery business grow in the long term. Zomato had warned during the Q3 FY23 results announcement that food profitability will be impacted in the short term while the company focuses on driving up Gold memberships.
Zomato Gold registered 1.8 million sign-ups last quarter, Deepinder said. “While that had some negative impact on our contribution margin, it was more than compensated for by progress across other revenue and cost levers, which we have been working on in the last couple of quarters,” he added. It had over nine lakh sign-ups in the first month, the company said during the Q3 results.
Orders from Zomato Gold members (with free delivery benefit) now comprise as much as 30% of Zomato’s total GOV as of March 2023, CFO Akshant added.
Referring to ONDC, CEO Deepinder also said Zomato welcomes any innovation in the restaurant industry and continues to observe and learn from it.
Blinkit’s performance
Zomato's quick commerce division Blinkit posted a revenue of Rs 362 crore last quarter.
In March 2023, more than 65% of Blinkit’s GOV came from contribution-positive dark stores, and the firm expects a few stores in the mature parts of the network to cross the 5% mark in terms of contribution margin going forward.
Goyal added that Blinkit still has a long way to go in terms of margin improvement, but is “pleased with the outcomes so far in a short period of time,” noting that higher throughput per dark store and efficiencies in warehousing and middle mile have helped bring down the cost per order.
GOV of Blinkit stood at Rs 2,000 crore last quarter, while monthly transacting customers rose to 3.9 million from 2.2 million last year. recorded a total of 39.2 million orders, with an average order value (AOV) of Rs 522 last quarter.
Addressing the declining AOV, CEO Albinder Dhindsa said that the AOV will continue to swing up and down due to multiple seasonal factors.
“For example, AOVs will go down when there is a good harvest of vegetables (which leads to lower prices for F&V). Over time, as we scale, we hope to be able to predict such swings better and mitigate the impact of these swings on our margins,” Dhindsa said.
Blinkit expects the AOV to increase QoQ in the current quarter (Q1FY24).
Zomato's shares on Friday closed 1.3% higher at Rs 64.35 apiece.
(The story was updated with more details and infographics.)
Edited by Kanishk Singh