Food tech player Zomato on Monday narrowed its consolidated loss to Rs 186 crore for the June quarter from a loss of Rs 361 crore in Q1FY22. Revenues during the quarter jumped a strong 68% y-o-y to Rs 1,414 crore.
The food delivery business achieved break-even at adjusted Ebitda (earnings before, interest, tax, depreciation and amortisation) level, while contribution as a percentage of the gross order value increased to 2.8%. The adjusted Ebitda loss for the quarter was down to Rs 150 crore from Rs 170 crore in the year-ago period.
Founder and CEO Deepinder Goyal said the company stands by its capital allocation decisions and sees “tremendous strategic value from these investments in the long term”.
He said no more minority investments were being made as the company is in cash conservation mode. Zomato had about Rs 11,400 crore in cash balances at the end of June.
CFO Akshant Goyal said inflation had hurt demand, though it was hard to quantify this given multiple moving parts. “The margins are getting negatively impacted due to higher fuel costs and wage inflation. The overall efficiency gains have helped us make good progress on improving contribution margins,” he said.
The company’s gross order value for the food delivery business grew 10% sequentially, but slowed to 42% y-o-y to Rs 6,430 crore in Q1FY23, aided by better volumes and values. There was also a rise in revenue per order.
Zomato’s average monthly transacting customers reached a new high of 16.7 million in Q1FY23, a growth of 36% y-o-y. Goyal said the average monthly active restaurant partners and delivery partners were at all-time highs as well.
The management said 97% of shareholders were in favour of the Blinkit M&A deal and the financials being consolidated with Zomato’s. Deepinder Goyal said all applicable laws, on related party transactions had been followed and external agencies had validated the transaction.
Zomato plans to experiment with cross-leveraging its customer base for Blinkit and vice versa. While the Blinkit app will continue to operate independently, Zomato will also start working on integrating the delivery fleet back-ends.
Akshant Goyal said in terms of geographical presence, the plan is to stay focused on the top 15 cities and deepen Blinkit’s presence in these markets. He said losses for Blinkit are coming down every month, from Rs 204 crore in January to an estimated Rs 93 crore in July, due to operating leverage and improved execution.
In July, Blinkit registered 8.3 million orders compared with 7.9 million in May and 5.1 million in January. The company’s average order value was Rs 580 in July versus Rs 509 in May. Monthly transacting customers were at 2.5 million against 2.3 million in May.
The revenues of Zomato’s supplies platform Hyperpure grew 40% sequentially and over 260% y-o-y to Rs 270 crore in Q1FY23. Adjusted Ebitda loss margin improved from -20% in Q4FY22 to -13% in Q1FY23.
Deepinder Goyal said Hyperpure can get to 5-10% Ebitda margins in a steady state, and become a much larger business over the next three years than just supplying to restaurants. Its capabilities will help as Zomato expands into quick commerce, he said.
He conceded that the company has shut down many lines of business, cities and even country operations that no longer made sense. He reiterated that the company continues to say no to competing with its restaurant partners and owns no restaurant brands or cloud kitchens, and has made no investments or financial interest in any restaurant brand or kitchen. However, he said that the acute shortage of delivery partners called out by him in the March quarter was a temporary phase which lasted for 45-odd days.