Not so good news for the restaurant aggregator Zomato as its losses widened to Rs 346.6 crore for the quarter that ended in December (2022-23, or FY23).
How Did This Happen?
This is a much wider gap compared with Rs 63.2 crore in the corresponding period of the previous financial year (2021-22).
Second quarter for the food delivery giant had also reported a net loss of Rs 250.8 crore in the second quarter (Q2) of FY23.
Further, the losses widened nearly 5.5x year-on-year (YoY) owing to the inclusion of Blinkit.
This seems to be the first full quarter after the completion of the acquisition of Blinkit.
In fact, the revenue for the food delivery company has surged 75 percent to Rs 1,948.2 crore, compared with Rs 1,112 crore in the year-ago period.
It appears that the food delivery business was sequentially flat owing to the gross order value (GOV) for the third quarter (Q3) of FY23 was only 0.7 per cent in an otherwise strong quarter.
The adjusted revenue declined 1 percent quarter-on-quarter (QoQ) largely driven by a decline in order volumes.
YoY, the adjusted revenue grew 30 percent.
Why Did This Happen?
This fall is perceived to be caused by an industry-wide slowdown in the food delivery business since October 2022, the company said.
For the current slackening, it was chalked up to a macro slowdown for the mid-market segment, coupled with a boom in dining out and surge in travel at the premium end.
But the food aggregator is confident that they would reach adjusted earnings before interest, tax, depreciation, and amortization (Ebitda) break-even (excluding quick commerce) by Q2 of 2023-24.
Focus On Profitability
Pouring more light on the subject, the chief financial officer Zomato, Akshant Goyal said, “Our business was already at break-even (excluding quick commerce) in January.
There is a good chance of getting to adjusted Ebitda break-even (excluding quick commerce) in the current quarter if we can bank some execution-related wins in the next few weeks.”
The company’s chief executive officer (CEO), Deepinder Goyal said, “Having a profitability mindset is key. As a company, we have been constantly re-evaluating and optimizing investments across the board, including taking a hard look at resource allocation across functions, shutting down non-performing markets, and reassessing our headcount, among others,”.
Further adding, “In the past year or so, investors have been far more focused on profitability. We are doing our best to deliver on those expectations,”.
“We continue to stay focused on our long-term growth vectors without worrying too much about near-term growth pressures, ” Deepinder said, while talking about reviving growth.
