Zomato net loss triples to Rs 360 crore in Q4, revenue rises 75%

Food delivery firm Zomato said on Monday its consolidated net loss for the quarter ended March widened to Rs 360 crore compared to Rs 134.2 crore the same time last year.

Revenue from operations were at Rs 1,211.8 crore, up 75.01 per cent compared to Rs 692.4 crore in the same quarter last year. Deepinder Goyal, Zomato’s co-founder and chief executive officer, said the firm had a low QoQ (quarter-on-quarter) growth in Q3FY22 as dining-out and travel opened up post-Covid.

“We believe that was a one-time correction of our growth trajectory on the back of two strong quarters,” said Deepinder Goyal in a company blog post. “We think our growth trajectory is back on track, and we don’t foresee ‘post-Covid ramifications’ affecting our growth rate anymore. Having said that, even before Covid, growth in our business has been lumpy (and not linear) – so it is essential to take a long term view of our business.”

The company said it launched services in more than 300 new cities in Q4FY22. It is now present in over 1,000 towns and cities across India.

Akshant Goyal, Zomato’s chief financial officer, said the firm expects its adjusted revenue growth to accelerate to double digits in the next quarter and the adjusted EBITDA losses to also come down meaningfully. “Reduction in losses will be driven by improvement in contribution margin of the food delivery business and also operating leverage playing out as our revenue is growing faster than our fixed costs,” said Akshant Goyal.

Average monthly transacting customers were at an all-time high of 15.7 million last quarter growing from 15.3 million in the previous quarter. Likewise, average monthly active restaurant partners and delivery partners were at all-time highs as well.

The company’s AOV (average order value) for FY22 was Rs 398 as compared to Rs 397 for FY21. For the top 8 cities, the firm saw the AOV increase by 3 per cent in FY22 over FY21.

For the fiscal year 2022, losses of the company came in at Rs 1222.5 crore, compared to Rs 816.4 in the previous year. Revenue also increased to Rs 4192.4 crore from Rs 1993.8 crore.

The increase in fuel prices does increase Zomato’s delivery cost. “One could say that part of our progress on improving contribution margin is getting pulled back because of fuel price increase, as we haven’t yet fully passed on the incremental cost to customers,” said Deepinder Goyal.

The government has on Saturday cut levies on petrol and diesel—a step Zomato hopes will reduce costs.

Zomato is also seeing some stress on the availability of delivery partners in the current quarter in select large cities since the last week of April. Deepinder Goyal said this is short-term in nature, as the post-Covid economic recovery has brought back jobs in cities. “We lost some delivery partners to such jobs. On top of it, all the workforce which migrated to their hometowns (or villages) during the first Covid wave, hasn’t yet come back to the cities for work – thus hampering our Delivery Partner Acquisition Rate,” said Deepinder Goyal.

Zomato had made minority equity investments in companies where Deepinder Goyal had angel investments or ownership. When asked if these investments amounted to conflict of interest, Deepinder Goyal in the shareholders’ letter and results said: “Your question suggests that I am using Zomato’s balance sheet to enhance the value of private investments. I see it the opposite way. I am using my personal money to increase the value of our shares at Zomato.”

“My private investments help me learn, bring those learnings to Zomato, and transform Zomato for the better.”

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