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Zomato narrows losses to Rs 99.8 crore in Q3; posts weak revenue growth

Overall, total expenses went up marginally from Rs 1,393 crore in the last quarter to around Rs 1,411 crore in Q3 FY22.

Zomato narrows losses to Rs 99.8 crore in Q3; posts weak revenue growth
Its food delivery businesses reported a GOV of Rs 5,500 crore, which is an increase of just 1% q-o-q. In the same quarter last year, Zomato’s GOV stood at Rs 2,980 crore.

By Salman SH

Foodtech platform Zomato on Thursday narrowed its losses to Rs 99.8 crore during the October-December quarter against a net loss of Rs 419.2 crore in the preceding quarter. This was on account of an exceptional gain of Rs 225.4 crore due to a sale of an investment holding from one of its subsidiaries.

The company’s operating revenue saw a marginal 5% quarter-on-quarter increase to Rs 941.2 crore during the quarter due to weak growth in gross order value (GOV) in its core food delivery business .

Its food delivery businesses reported a GOV of Rs 5,500 crore, which is an increase of just 1% q-o-q. In the same quarter last year, Zomato’s GOV stood at Rs 2,980 crore.

Overall, total expenses went up marginally from Rs 1,393 crore in the last quarter to around Rs 1,411 crore in Q3 FY22.

The company said that the weak growth in revenues in Q3 was primarily due to ‘reduction in (income from) customer delivery charges…in addition to a soft impact of post-covid reopening including some shift from delivery to dining out’.

On a y-o-y basis, Zomato’s adjusted revenue grew by 78% to Rs 1,420 crore. Although on a quarterly, basis, adjusted revenue growth remained flat. Zomato’s adjusted revenue includes the sum of revenue from operations (from all businesses) and customer delivery charges collected from customers in the food delivery business.

The company said in its quarterly filing that it had begun re-distributing its growth investments more in favour of discounts on customer delivery charges instead of food coupons. The foodtech firm also incurred further expenses in Q3 FY22 after it temporarily waived off delivery charges in 180 new cities it recently expanded into.

“We are seeing higher return on investment with discounted delivery charges as compared to coupons. As a result, discounts per order reduced by Rs 5 compared to Q2 FY22,” the company added.

“During the quarter ended December 31, 2021, the company (Zomato) acquired the remaining 35.44% stake in Jogo Technologies from the remaining shareholders and sold full 100% stake in Jogo Technologies to Curefit Services and Curefit Healthcare for a total consideration of 3,750 million,” Zomato said in quarterly result filing.

Monthly transacting user (MTUs) base reduced marginally to 15.3 million users compared to 15.5 million reported in the previous quarter. Acquisition of new users also slowed down in Q3 FY22 to just 5.5 million new users, compared to a higher user addition of 7.4 million in the last quarter.

Further, the number of orders grew 93% y-o-y and 5% q-o-q in Q3 FY22. While the average order value (which includes income from customer delivery charges) shrunk by around 3% q-o-q, mostly on account of reduction in customer delivery charges.

Despite the flat growth in AoV and operational revenue in Q3 FY22, Zomato remains bullish on its core food delivery business as well as the quick commerce grocery delivery sector. The company reported cash and cash equivalents of close to $1.7 billion in the third quarter, of which its plans to set aside $400 million in cash for potential investments in the quick commerce sector.

To date, Zomato has made cash investments worth $225 million in the past year across three companies including Blinkit (formerly Grofers), Shiprocket and Magicpin towards its objective of building out quick commerce in India. The company further added that it will continue to step up its equity investments and potentially scout for more M&A deals in the upcoming months.

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