Zomato targets Ebitda break-even by 2023

Zomato’s share price reacted positively to the good set of numbers and loss reduction projections.

Zomato targets Ebitda break-even by 2023
Zomato on Monday, halved its consolidated loss to Rs 186 crore for the June quarter from Rs 361 crore in Q1FY22.

Food tech platform Zomato is expected to break even on adjusted Ebitda level by March 2023 or latest by September next year.

“The next milestone is to get the overall Zomato to adjusted Ebitda (earnings before interest, tax, depreciation and amortisation) breakeven. We think we are close now, and in terms of timeline, I think internally we are aiming to get there by fourth quarter of financial year 2023. If we slip on that, it should not be later than Q2FY24, which is September 2023 quarter,” Akshant Goyal, chief financial officer, Zomato, told analysts over a virtual earnings call on Tuesday.

Goyal said the company is not losing cash in the business any more as including treasury and other income, the company was positive on cash flow last quarter itself, with adjusted Ebitda losses at Rs 150 crore and other income at Rs 170 crore. He said the company has already reached adjusted Ebitda break-even in the food delivery business in the March quarter.

Majority of the reduction in adjusted Ebitda losses for Zomato will come from incremental Ebitda from food delivery business going forward and Hyperpure losses coming down. The improvement in adjusted Ebitda food delivery will be a function of both revenues improving and efficiencies coming in on cost levers.

On Blinkit’s profitability and investments needed to reach there, Goyal said that the business would need lower investment to get to profitability of $320 million versus $400 million guidance given earlier. “The (Blinkit) business has surpassed our expectation so far in terms of growth as well as losses reduction to where we were six to seven months ago. The path that we see, we think we should get that business also to break-even with an investment of $320 million starting January 2022. This is not a guidance starting from today,” he said.

Zomato has already invested about $150 million in Blinkit. However, he refrained from giving a timeline for Blinkit’s profitability in absence of visibility that he said is there on Zomato. “We would not venture into guess estimating by which quarter we get there. These are still early days,” he added.

Commenting on the media reports regarding an internal restructuring of Zomato and the company being called ‘Eternal’, Goyal said, “We are looking at reorganising ourselves as we get into a place where we are more than food delivery as a business that we need to run, and at some point in the future we will give more clarity on the thought process behind this. It is internal restructuring just to get the teams, and incentives aligned, and all the structure aligned to the next three-four years going forward as a business.”

Zomato on Monday, halved its consolidated loss to Rs 186 crore for the June quarter from 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 level, while contribution as a percentage of the gross order value increased to 2.8%. The adjusted Ebitda loss (earnings before, interest, tax, depreciation and amortisation) for the quarter was down at Rs 150 crore from Rs 170 crore in the year ago period.

Zomato’s share price reacted positively to the good set of numbers and loss reduction projections. The company’s share price closed 19.96% up at Rs 55.60, on BSE, on Tuesday.

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