After managing to narrow ‘s quarterly loss to Rs 186 crore and making food delivery business hit break-even at EBITDA level, company CEO Deepinder Goyal today said the team is focussing on profitability but without compromising growth. In a letter to shareholders, he also explained the rationale behind the Blinkit deal, which analysts had criticised as a “poison pill”.
Here are 5 key highlights from Zomato CEO Deepinder Goyal’s letter to shareholders:
1) Under shareholder criticism for decisions related to capital allocation and minority investments, Goyal said there is no plan to make any more minority investments. “We are in cash conservation mode, and are busy executing what we already have on our plates right now,” he said.
2) Stating that the company has shut down many lines of business, cities and even country operations that no longer made sense, Goyal said, “operationally, we continue to say no to competing with our restaurant partners – we own zero restaurant brands or cloud kitchens, and have no investments or financial interest in any restaurant brand/kitchen.”
3) On Zomato’s food delivery business hitting break-even, Goyal said the focus on profitability has sharpened over the past few months with the change in market context, without compromising our focus on growth. “We are doing that by assessing everything with a critical lens and allocating resources by taking a long-term view to sustainable growth, as well as profit,” he said.
4) Going forward, the big driver of order volume growth, Goyal said, would be monthly transacting customers. “If you compare Q1FY23 with Q1FY22, average monthly transacting customers have increased by 36% while the average monthly order frequency has also increased by 10% in the same period. Growth in monthly transacting customers will be a function of higher repeat rate of the existing customer base of Zomato (50+ million annual transacting customers in FY22) and new customer addition which remains robust,” he said.
5) Replying to criticism Zomato has received around corporate governance issues with regards to the Blinkit transaction, Goyal said if it is a bad deal for other shareholders, it would be equally bad for me as a shareholder. “My financial outcomes are 100% aligned to other shareholders
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