Q2 report cards: Zomato’s net loss widens to Rs 435 crore; total expenses increase 27.1% q-o-q

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November 11, 2021 6:20 AM

Zomato also announced three important strategic deals in its quarterly results including a disinvestment in Fitso, which the company acquired for Rs 80 crore in January 2021.

Zomato said in a statement that its increased marketing and promotions has resulted in a higher average monthly transaction users (MTU) at 15.3 million in Q2FF22, compared to 12.3 million MTUs in the previous quarter.Zomato said in a statement that its increased marketing and promotions has resulted in a higher average monthly transaction users (MTU) at 15.3 million in Q2FF22, compared to 12.3 million MTUs in the previous quarter.

Foodtech start-up Zomato, which recently went public, reported a higher net loss of Rs 434.9 crore during the second quarter of the ongoing financial year (Q2FY22), compared to a loss of Rs 360.7 crore reported in the previous quarter.

Losses widened even as revenues increased by 21.2% to Rs 1,024.2 crore in Q2FY22, compared to the Rs 844.4 crore revenue reported in the previous quarter.

In addition, total expenses of Zomato widened by 27.1% quarter-on-quarter from Rs 1,259.7 crore in Q1FY22 to Rs 1,601.5 crore in Q2FY22. The majority of Zomato’s expenses include employee-related expenses which stood at Rs 424.1 crore in the second quarter.

Adjusted EBITDA loss increased to Rs 310 crore in Q2FY22 as compared to Rs 170 crore in the previous quarter (Q1FY22) and Rs 70 crore in the same quarter last year (Q2FY21).

The company attributed higher losses to increased investments in the growth of its food delivery business especially in areas like branding, marketing, geographical expansion, and due to increased delivery cost arising from “unpredictable weather and increase in fuel prices”.

Zomato said in a statement that its increased marketing and promotions has resulted in a higher average monthly transaction users (MTU) at 15.3 million in Q2FF22, compared to 12.3 million MTUs in the previous quarter.

“During Q2 FY22, we invested incremental ~INR 0.4 billion ($5.4 million) in branding and marketing as compared to Q1FY22. Most of these spends were on television and digital marketing,” the company said. Revenue from Zomato’s B2B supply business Hyperpure, which sells raw materials to restaurants, stood at Rs 110 crore in Q2FY22, which grew by 49% q-o-q compared to the previous quarter. Zomato said that Hyperpure is now present in 8 cities supplying raw materials to over 12,000 restaurants every month on an average in Q2 FY22.

Zomato also announced three important strategic deals in its quarterly results including a disinvestment in Fitso, which the company acquired for Rs 80 crore in January 2021.

The foodtech unicorn is in the process of selling Fitso to fitness platform Curefit for $50 million along with an additional $50 million investment directly into Curefit. This will give Zomato a cumulative shareholding of 6.4% in Curefit.

“This will help us potentially explore cross-selling benefits between Zomato and Curefit, as we see food and health becoming the same side of the coin in the long term,” the company said.

Apart from this, Zomato signed definitive documents for investing $75 million in B2B logistics platform Shiprocket for a 8% stake as part of a larger $185 million round. It is also in process to acquire a 16% stake in hyperlocal discovery platform Magicpin for $50 million.

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