Amid the current largely depressed global macro-economic scenario, tech startups are facing an even intensified pressure. Gone are the merry money-guzzling days, with even the riskiest of investors now pushing startups for all-in profitability. Zomato is no strange to that pressure, specially post its wobbly IPO, and it seems that pressure is bringing in decent results.
Apart from Blinkit (its quick commerce unit), the food delivery aggregator announced that it has turned adjusted EBITDA positive. In its letter to the shareholders for Q4 FY23, the company noted that this was driven by a strong performance of its food delivery business.
Zomato reported that its consolidated revenue clocked a growth of 70% to jump to ₹2,056 crores, as compared to the ₹1211.8 crores it recorded in the year-ago period. Furthermore, the company reported a consolidated net loss of ₹188 crore, a substantial reduction compared to the loss of ₹345 crore recorded in the previous quarter and a drop from the ₹360 crore it recorded as a loss in the corresponding quarter in the previous year. This narrowing of losses, Zomato says, is due to the company “optimizing its operations, improving efficiency, and driving sustainable growth”.
Its food delivery business generated ₹78 crores of EBITDA, it noted, adding that it plans to get positive adjusted EBITDA and PAT on a consolidated basis including quick commerce in the next four quarters. “I would rate our current confidence level at 9/10 on achieving profitability for the entire business within the next four quarters. We are approaching this target by increasing profits in the food delivery business and reducing losses in the quick commerce (Blinkit) business,” Deepinder Goyal, Zomato CEO, said.
Coming to Zomato’s business units, we find that its food delivery business witnessed a fall in its revenue for Q4 FY23 – ₹15.3 billion – while its Hyperpure vertical clocked a rise to reach ₹4.78 billion in revenue for the same period. Blinkit – its quick commerce business – saw its revenue rise to ₹3.63 billion for the same period as well. Goyal said that over 65% of the GOV of Blinkit came from contribution-positive stores in March 2023.
The gross order value in the food delivery business rose to ₹6,569 crores for the quarter (as compared to ₹5,853 crores in the corresponding quarter a year ago). Goyal noted that the food delivery aggregator improved its margins over the past five quarters, while simultaneously strengthening its position in the market (where it competes with Swiggy, among others).
Despite this, however, the quarterly growth of the business unit was a slow one, and Zomato attributes it to the drop in demand from late October to January 2023, and in time, the firm noticed “green shoots of recovery” in the first week of the following month. “We are expecting QoQ GOV growth to be in the high single digits in Q1 FY24. This could have been higher if not for the industry-wide slowdown that continues to weigh on growth,” Akhshant Goyal, Zomato CFO, added.
Q4 FY23 saw Zomato also relaunch Zomato Gold – its loyalty programme – so that customers could use it to save money while ordering food and during in-restaurant dining. Deepinder Goyal noted that its membership base rose to 1.8 million during the quarter. He added, “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.”
