Earnings before interest, taxes, depreciation and amortisation (ebitda) turned positive at Rs 28 crore, excluding the quick commerce business. The company said it aims to achieve net profit on a consolidated level in the next four quarters.
“I would rate our current confidence level at 9/10,” founder and chief executive Deepinder Goyal said, commenting on the new guidance. “How are we aiming to get there? By increasing profits from the food delivery business and reducing losses in the quick commerce (Blinkit) business.”
The stock ended at Rs 64.54, up 1.72%, on the BSE.
For the full year ending March 31, 2023, Zomato’s loss narrowed to Rs 971 crore from Rs 1,209 crore a year ago. Revenue grew 69% to Rs 7,079 crore, in FY23.
Sequentially, Zomato’s food delivery business reported an over threefold jump in adjusted ebitda to Rs 78 crore in the March quarter from the October-December period, as adjusted revenue for the vertical fell marginally to Rs 1,530 crore from Rs 1,565 crore.
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ETtechZomato’s Bengaluru-based rival Swiggy had on Thursday said that its food delivery business turned profitable in March, excluding employee stock option costs.
The company also announced three key appointments. Rakesh Ranjan and Rinshul Chandra were named chief executive officer and chief operating officer, respectively, of the food ordering and delivery vertical. Rishi Arora, who was elevated to Blinkit cofounder last July, was appointed CEO of the company’s B2B grocery vertical Hyperpure.
While Ranjan was business head of new businesses at Zomato, Chandra was vice president of product at the company. Arora has been with Blinkit, formerly known as Grofers, for almost nine years and held the position of senior vice president of operations before being elevated to cofounder of Blinkit in July last year.
Food delivery
The company’s mainstay food delivery business reported a revenue of Rs 1,530 crore for the quarter, compared with Rs 1,284 crore a year ago. The B2B vertical reported revenue of Rs 478 crore compared with Rs 194 crore a year ago. Blinkit reported revenue of Rs 363 crore against Rs 301 crore in the previous quarter.
Zomato chief financial officer Akshant Goyal indicated that the company gained market share in food delivery during the March quarter as well as FY23.
Food delivery gross order value (GOV) stood at Rs 6,569 crore in the March quarter, down from Rs 6,680 crore in the December quarter.
“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,” Zomato’s CFO 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.”
Two other factors impacted growth in the quarter, he said. February being a shorter month had a negative impact of 2.2%. Second, the shutdown of operations in approximately 225 cities by the company in January had a negative 0.3% impact.
Normalised for these factors, the company would have seen a quarter-on-quarter GOV growth of 0.8% in the final quarter of FY23, instead of a decline of 1.7%.
The company said the launch of loyalty programme Zomato Gold did not affect its overall profitability timeline.
“Zomato Gold membership base scaled to 1.8 million members during the quarter and while that had some negative impact on our contribution margin, it was more than compensated for by progress across other revenue and cost levers which we have been working on in the last couple of quarters,” the company’s CEO said.
The company’s focus on profitability hasn’t impacted growth, CFO Akshant Goyal said on the post-earnings conference call.
Quick commerce
Quick commerce business Blinkit saw revenue jump 20% to Rs 363 crore in the three-month period ending March 31 from the preceding quarter. Gross merchandise value (GMV) rose 17% to Rs 2,040 crore.
Although Blinkit’s total orders rose 25% to 39.2 million, average order value (AOV) fell to Rs 522, down from Rs 553 in the December quarter. Blinkit founder and CEO Albinder Dhindsa said that AOV was a function of seasons and several other factors.
“We have learnt that the AOV in this business will continue to swing up and down in the near to mid-term due to multiple (mainly seasonal) factors,” he said. “For example, AOVs will go down when there is a good harvest of vegetables. Over time, as we get scale, we hope to be able to predict such swings better and mitigate the impact of these swings on our margins.”
The Gurgaon-based Blinkit saw its contribution margin improve significantly, from -4.5% to -2.7% sequentially to post a contribution loss of Rs 56 crore for the quarter.
“The improvement in contribution margin was driven by both revenue and cost levers,” said Dhindsa. “On the revenue side, better ad monetisation and higher customer delivery charges partially offset the drop in revenue per order due to lower AOVs. On the cost side, higher throughput per dark store and efficiencies in replenishment drove down the cost per order (operating leverage).”
Zomato’s B2B vertical Hyperpure also saw sequential improvement in adjusted ebitda during the March quarter to negative Rs 45 crore, compared with negative Rs 53 crore each in the quarters ending December and September 2022.
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