SUMMARY
Zomato reiterated that the company was poised to achieve a full EBITDA break-even quarter, excluding quick commerce business, by Q2 FY24
Falling consumer demand hit the core food delivery business as the vertical’s adjusted revenue fell to INR 1,565 Cr in Q3 FY23
Months after top-level exits, CEO Goyal said that Zomato was not currently looking to fill the roles of CTO and the head of food delivery business
Foodtech giant Zomato released its financial results for the third quarter (Q3) of the financial year 2022-23 (FY23) on Thursday (February 9).
Here are the key highlights of its hits and misses during the quarter:
Headline Numbers: Zomato’s consolidated losses widened to INR 346.6 Cr in Q3 FY23, up 38% from INR 250.8 Cr in Q2 FY23. However, the operating revenue stood at INR 1,948.2 Cr during the period, up from INR 1,661.3 Cr in the previous quarter.
Food Business: The slowdown and falling consumer demand hit Zomato’s core business. The food delivery vertical generated an adjusted revenue of INR 1,565 Cr in Q3 FY23, down 1% from INR 1,581 Cr in Q2 FY23. Average monthly transacting users also fell QoQ to 17.4 Mn in the quarter under review from 17.5 Mn in Q2 FY23.
Zomato’s Blinkit Woes: The cash guzzling quick-commerce venture burdened the foodtech giant with losses. While average order value (AOV) plummeted 2.6% QoQ in Q3 FY23, all other key operational and financial metrics saw improvements.
Adjusted revenue from the quick commerce vertical surged 27% QoQ to INR 301 Cr in Q3 FY23 and gross order value (GOV) rose 18% on a quarterly basis to INR 1,749 Cr. Meanwhile, average monthly transacting customers grew to 31 Lakh in the quarter and average GOV per day, per dark store improved QoQ to INR 524 from INR 422.
Hyperpure On Growth Mode: B2B supplies business Hyperpure continued to scale heavily as the vertical generated an adjusted revenue of INR 421 Cr in Q3 FY23, up 26% from INR 334 Cr in Q2 FY23. Adjusted EBITDA margin improved 3% in the quarter ended December 2022 from -16% in Q2.
EBITDA Profitability: Assuaging the shareholders, the top executives reiterated that the company was poised to achieve a full EBITDA, excluding quick commerce business, break-even quarter by Q2 FY24, or before.
Interestingly, the company also claimed that it already achieved EBITDA break-even, sans the quick commerce business, in January 2023. The company achieved the target despite an overall slowdown that appears to have gripped the tech ecosystem.
Mired In Exodus Of Top Leadership: Reacting to a slew of top-level exits from the company in the past few months, CEO Deepinder Goyal said that it was necessary for some people to take a break when their mindset and skill set do not converge with the company’s context.
Goyal added that the company did not currently need a chief technology officer (CTO) or a head of food delivery business, and it was not looking to fill these two spots. The veiled jabs comes months after head of food delivery Rahul Ganjoo left the company, followed by Gunjan Patidar who quit as the CTO and cofounder of Zomato last month.
Zomato Instant Rebranding: The unicorn is currently working on ‘remodelling’ its home cooked meals service, Zomato Instant. It plans to revamp the service and rebrand it as Zomato Everyday to tap into new markets. Zomato plans to launch the offering in the next few weeks.
Scaling Zomato Gold: In a sneak peek into how Zomato Gold has scaled up since its launch in January, the company said that the new offering so far counts more than 9 Lakh members. Going forward, Zomato expects the product to drive loyalty and higher frequency of ordering.
The company claims to be focussed more on long-term growth plans rather than short-term growth pressures.
“Having a profitability mindset is the key. As a company, we have been constantly re-evaluating and optimising investments across the board, including taking a hard look at resource allocation across functions, shutting down non-performing markets, reassessing our headcount, among others… In the last year or so, investors have been far more focused on profitability and we are doing our best to deliver on those expectations,” Goyal said.
