Zomato Q2 Results: Loss Up 35% QoQ To INR 251 Cr On Blinkit Acquisition

Foodtech giant Zomato on Thursday (November 10) reported a year-on-year (YoY) decline in its consolidated loss at INR 250.8 Cr during the September quarter of financial year 2022-23 (FY23) from INR 434.9 Cr in the corresponding quarter of previous year on the back of a meaningful growth across business verticals.

However, Zomato’s loss widened nearly 35% sequentially from INR 186 Cr in Q1 FY23 on the back of its Blinkit acquisition.

The company said it completed acquisition of the quick-commerce startup on August 10, and hence the results for Q2 also include Blinkit’s 50-days financials.

Zomato’s operating revenue increased 62% YoY to INR 1,661.3 Cr during the quarter from INR 1,024.2 Cr in the year-ago quarter. Sequentially, this was an over 17% increase from INR 1,413.9 Cr. 

Its food delivery business contributed the major portion to its revenue, registering a 33% YoY increase to INR 1,135.7 Cr during the quarter.

Meanwhile, its B2B Hyperpure business, which Zomato expects to grow bigger than the core food delivery business, earned a revenue of INR 334.1 Cr as against INR 116.1 Cr in Q2 FY22.

Zomato’s adjusted EBITDA loss also increased to INR 192 Cr in Q2 compared to INR 150 Cr in the prior quarter. However, it narrowed on a YoY basis from INR 310 Cr reported in Q2 FY22.

“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.

“As far as quick commerce is concerned, we haven’t seen any/much slowdown in the business. But that could be the low base effect, in addition to relatively low penetration due to the early stage nature of that business,” he added.

The foodtech giant’s GOV for food delivery business grew to INR 6,631 Cr, up 23% YoY from INR 5,407 Cr.

On the other hand, Blinkit’s gross order value (GOV) rose 26% quarter-on-quarter (QoQ) to INR 1,482 Cr, while its revenue grew 44% sequentially, Zomato said. 

“Quick commerce is turning out to be another opportunity for Hyperpure. It has begun supplying to the sellers on Blinkit’s marketplace post our acquisition of Blinkit. This has the potential to further accelerate revenue growth for Hyperpure going forward,” said Goyal.

Zomato’s total expenses rose about 31% to INR 2,091.3 Cr in Q2 from INR 1,601.5 Cr reported in the same quarter last year, with delivery and related charges contributing the major portion to it.

Zomato spent INR 590.3 Cr on delivery and related charges during the quarter as against INR 422.6 Cr in Q2 FY22.

On the other hand, its expenses on the purchase of finished goods rose 196% YoY to INR 347 Cr.

Answering whether Zomato’s focus on profitability is impacting growth in its food delivery business, Goyal said that the startup has strategically chosen to trade low quality growth for better unit economics. 

“That’s part of our long term strategy to build a high quality, high growth business. At the same time, we are not shying away from investing behind high quality compounding growth,” he said, adding that Zomato will continue investing in long-term capability building as well as market expansion initiatives like Hyperpure, Zomato Instant, and Intercity Legends.

Zomato launched Intercity Legends, which enables intercity food delivery across many Indian cities, in August this year.

However, after demonstrating rapid increase in its contribution margin in the food delivery segment, which stood at 4.5% in Q2 FY23 as against 1.2% in the year-ago quarter, Zomato said this pace of progress is set to slow down from here. 

Zomato’s consolidated cash balance, including cash on Blinkit’s balance sheet, stood at INR 11,500 Cr as on September 30, 2022 as against INR 11,400 Cr on June 30, 2022.