JOIN USZomato Q4 net loss narrows to Rs 187.6 crore
Online food delivery platform Zomato on Friday said its consolidated net loss narrowed to Rs 187.6 crore in the fourth quarter ended March 2023 on the back of robust revenue growth.
The company had posted a consolidated net loss of Rs 359.7 crore in the same period previous fiscal, Zomato said in a regulatory filing.
Its consolidated revenue from operations during the period under review stood at Rs 2,056 crore against Rs 1,211.8 crore in the year-ago period.
The total expenses in the fourth quarter were higher at Rs 2,431 crore compared to Rs 1,701.7 crore in the corresponding period a year ago, the company said.
For the fiscal ended March 31, 2023, the consolidated net loss was Rs 971 crore, down from a consolidated net loss of Rs 1,222.5 crore in 2021-22.
In FY23, consolidated revenue from operations stood at Rs 7,079.4 crore compared to Rs 4,192.4 crore in FY22, the company said in a filing.
Zomato said it has appointed Rakesh Ranjan as CEO-Food ordering and delivery business, while Rinshul Chandra has been designated as COO-Food ordering and delivery business.
In addition, Rishi Arora has been appointed as CEO-Zomato Hyperpure, a subsidiary of the company.
Ranjan, Chandra and Arora have been with Zomato/ Blinkit for more than 5 years across various roles, it added.
In a letter to the shareholders, Zomato Managing Director and CEO Deepinder Goyal asserted that the company is confident of achieving profitability for the entire business within the next four quarters.
Zomato is aiming to get there by increasing profits in the food delivery business and reducing losses in the quick commerce (Blinkit) business, he added.
"In food delivery, over the last five quarters, we have improved our margins meaningfully while further strengthening our market position," Goyal said, adding the company would continue with the same mindset as it looks to further expand the adjusted EBITDA margin from the current 1.2 per cent to the stated goal of over 4-5 per cent of gross order value (GOV).
It would translate to Rs 1,000 crore to Rs 1,300 crore of annual cash operating profit at the current scale of the food delivery business, he added.
"On the quick commerce side, while there is still a long way to go in terms of margin improvement, we are pleased with the outcomes so far in a short period of time. In the month of March 2023, more than 65 per cent of the GOV was from contribution-positive stores," Goyal said.
On the issue of delivery charges, he said keeping them low has been a part of the strategy to drive growth.
He cited the example of orders from Zomato Gold members with free delivery benefits, which now comprise as much as 30 per cent of the company's total GOV as of March 2023 and the order frequency of these customers on an average increased by around 60 per cent post becoming members.
"Delivery costs haven't seen significant improvement in the last year in spite of a lot of effort and great work done by the team. Our efforts to increase the efficiency of our delivery network were reversed to some extent by factors like high inflation, investing in increasing choice for customers by increasing delivery radius, etc," Goyal said.
He further said, "Anyway, we are going to continue trying harder to bring our delivery cost down (without impacting the earnings of our delivery partners), and are hopeful of making progress over the next few quarters".
Last month operations of the company's quick commerce business Blinkit were affected by the strike of its delivery partners, who were protesting against a reduction in payouts per order, which according to reports had come down to Rs 15 per order with a distance-based fee component, down from a peak of Rs 50 per order last year that was further reduced to Rs 25.
On the slowdown in the food delivery business, Zomato CFO Akshant Goyal said, "The quarterly growth is low because of the demand slowdown we witnessed in our business from late October last year till the end of January this year".
However, he said, "As we had mentioned in our last letter, we had started seeing green shoots of recovery in the first week of February 2023. That recovery has continued and the business has grown well since then and the same should reflect in better GOV growth in the next quarter".
Akshant said there is an industry-wide slowdown that continues to weigh on growth.
Deepinder said Zomato's B2B business Hyperpure has reduced losses in the fourth quarter, during which it introduced a delivery charge for orders below a certain minimum value.
It led to some churn in restaurants ordering from Hyperpure, he said, adding, "While the number of unique restaurants billed fell from 44,000 in Q3FY23 to 42,000 in Q4FY23, the overall profitability of the business improved as a result of this".
The company shut down Hyperpure operations in Chandigarh as it did not see the right demand density in that location, Deepinder noted.
On reports of Blinkit entering the domain of providing home services similar to Urban Company, its CEO Albinder Dhindsa said it is an "experiment where we are exploring whether we can make our neighbourhood services like electricians, plumbers, etc. more accessible to customers".
"At this point, this is not a big decision at our end," he added.