SUMMARY
Zomato’s consolidated loss widened nearly 35% quarter-on-quarter (QoQ) to INR 250.8 Cr during the September quarter of FY23
Gross order value of Zomato's food delivery business rose to INR 6,600 Cr in Q2 FY23
Blinkit saw its order grow 17% QoQ to 26.1 Mn in Q2 FY23, while AOV rose nearly 8% QoQ to INR 568 during the same period
Foodtech giant zomato
released its financial results for the quarter ended September 2022 on Thursday (November 10). Here are the key highlights:
Headline Numbers: Zomato’s consolidated loss widened nearly 35% quarter-on-quarter (QoQ) to INR 250.8 Cr during the September quarter of the financial year 2022-23 (FY23). Revenue from operations grew 17% on a quarterly basis to INR 1,661.3 Cr during the quarter under review.
Expenses surged 60.4% from INR 1,599.4 Cr in Q2 FY22 to INR 2,561.4 Cr in Q2 FY23. Of this, delivery and related charges contributed a major chunk, accounting for INR 590.3 Cr during the quarter under review.
Food Delivery, The Hero Product: Zomato’s food delivery vertical accounted for a major portion of its revenue, registering a 33% YoY increase to INR 1,135.7 Cr during the quarter.
On similar lines, average monthly transacting users grew to 17.5 Mn while average monthly active restaurant partners fell marginally to 2.07 Lakh. Average monthly active delivery partners hovered around the 3.41 Lakh mark.
Gross order value rose to INR 6,600 Cr in Q2 FY23. In the quarter, 248 cities out of Zomato’s 1,000+ serviced cities were ‘contribution positive.’ These 248 cities generated approximately 91% of the startup’s overall gross order value in Q2FY23.
The food delivery business had an adjusted EBITDA of INR 2 Cr in the quarter ended September 2022, against an EBITDA loss of INR 113 Cr in the previous quarter.
Hyperpure Gains Big: Zomato’s B2B supplies business Hyperpure earned a revenue of INR 334.1 Cr in Q2 FY23, compared to INR 116.1 Cr during the corresponding period last year. Its adjusted EBITDA worsened over the quarter to INR 53 Cr from INR 30 Cr in Q2 FY22.
The startup also billed more than 40,000 unique restaurants during the period under review.
Other Businesses Take A Hit: Zomato CEO Deepinder Goyal conceded that revenues from its ‘Others’ segment had fallen substantially. The top executive blamed this on discontinued efforts by the foodtech giant to monetize its dine-out products, including ad sales and sale of Zomato Pro memberships.
The ‘Others’ segment includes the startup’s dining-out business in India and UAE.
The Gurugram-based foodtech giant now plans to revamp the entire vertical and expects the losses to further expand in the segment in the near term.
As part of the relaunch, Zomato is already piloting the project in 12 cities across India and the UAE. Additionally, the revamp involves a new interface largely catering to the short form content consuming audiences. The foodtech major also intends for most of its customers to pay at restaurants using the Zomato app to pad its bottomline. Restaurants associations have widely panned the controversial in-app payments move.
Blinkit Drags The Foodtech Down: Blinkit reported a revenue of INR 236 Cr in the quarter under review, up 43% from INR 164 Cr in Q1 FY23.
The quick commerce startup’s adjusted EBITDA loss reduced to INR 259 Cr in Q2 FY23 from INR 326 Cr in the previous quarter. This stood in stark comparison with Zomato’s total adjusted EBITDA loss, excluding the quick-commerce entity, which hovered around INR 60 Cr.
The number of orders grew 17% QoQ to 26.1 Mn, while average order value (AOV) rose nearly 8% to INR 568 on a quarterly basis. Average monthly transacting users also surged 15%, while gross order value saw an uptick of 26% QoQ to INR 1,482 Cr in Q2 FY23.
The Break-Even Brainteaser: For the second successive quarter of Q2 FY23, Zomato claimed to have achieved break-even. But, some of those claims rang hollow as the foodtech major revised its adjusted EBITDA for the food business in the June quarter from zero to a loss of INR 113 Cr.
“Based on feedback received from a number of shareholders, from Q2FY23 onwards we have allocated these costs (Unallocated Costs) to different business segments (basis logical assumptions) and have also reflected this change in the numbers for the past 4 quarters. As a result of this exercise, ~86% of the unallocated costs in Q2 FY23 have been allocated to the food delivery segment,” the letter to shareholders added.
This was the result of the misallocation of tech, salary and rental costs, and approximately 86% of those costs have now been allocated to the food delivery business.
“While our food delivery business has been growing and steadily moving towards profitability, I believe there is room for the business to grow much faster than what it is currently trending at,” said Deepinder Goyal, MD and CEO of Zomato.
