Food delivery company Zomato halved its consolidated net loss on annual basis at the end of three months to June 2022, narrowing quarterly losses to ₹185.7 crore during the period with a rise in revenue. The Deepinder Goyal-led food aggregator had posted a consolidated loss of ₹356.2 crore a year ago and ₹359.7 crore crore in the previous quarter, shows an exchange filing.
Zomato registered a 67.44% jump in revenue from operations at ₹1,413.9 crore at the end of Q1 FY23, up from ₹844.4 crore seen in the year-ago period. Revenue from operations also grew in comparison to ₹1,211.8 crore in the March quarter.
"Our adjusted revenue grew by 18% quarter-over-quarter and 56% year-over-year to ₹1,810 crore in Q1FY23. At the same time, adjusted EBITDA loss reduced to ₹150 crore (-8% of adjusted revenue) in Q1FY23 as compared to ₹220 crore (-15% of adjusted revenue) in Q4FY22," says Akshant Goyal, chief financial officer, Zomato.
The substantial growth in revenue was driven primarily by an approximately 10% sequential growth in gross order value (GOV), which rose to ₹6,430 crore in Q1FY23, as well as growth in revenue per order, shows figures shared by Zomato. This rise in GOV was in turn driven by robust growth in order volumes and mild growth in average order values as compared to the previous quarter.
"On the profitability front, the food delivery business hit an important milestone last quarter by getting to adjusted EBITDA break-even. Contribution as a percentage of GOV increased to 2.8% in Q1FY23 as compared to 1.7% in Q4FY22 driven by improvements on both cost and revenue side, as we had indicated in the past," the Zomato CFO avers.
The improvement in growth and unit economics is consistent across large and small cities, informs Akshant.
On the impact of growing inflationary pressures and subdued demand, Akshant confirms these factors having a negative impact on demand side, as well margins being adversely affected on the cost side “due to higher fuel costs and wage inflation”. “Having said that, the overall efficiency gains have helped us make good progress on improving contribution margins,” he adds.
On the outlook for the September quarter, Akshant assures that there is no reason to be alarmed. “Things are fine so far in this quarter — nothing alarming to report. Directionally, as we mentioned last quarter, we are aiming for revenue growth along with reducing losses. We cannot share more at this stage for the next quarter.”
CEO Deepinder Goyal expects both monthly transacting customers as well as monthly order frequency to grow, but the former will be the larger growth driver. “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.”
