Online food delivery platform Zomato on Thursday reported a loss of Rs 63.2 crore for the third quarter ended December 31, 2021. In the corresponding quarter last year, the company posted a loss of Rs 352.6 crore.
Total revenue for the quarter rose 82.5 percent YoY to Rs 1,112 crore from Rs 609.4 crore in the year-ago quarter.
The company’s revenue from operations grew by 9 percent QoQ, while the customer delivery charges de-grew by 22 percent. This was driven by Rs 7.5 per order reduction in customer delivery charges in Q3 FY22 as compared to Q2 FY22.
The Gross Order Value (GOV) grew by 84.5 percent YoY and 1.7 percent QoQ to Rs 5,500 crore in Q3 FY22. “We believe that the weak QoQ growth in GOV was primarily due to reduction in customer delivery charges, in addition to a soft impact of post-covid reopening (including some shift from delivery to dining out),” the company said.
Number of orders grew 93 percent YoY and 5 percent QoQ. Average order value (AOV, which includes customer delivery charges) shrunk by 3 percent QoQ, mostly on account of a reduction in customer delivery charges. Contribution as a % of GOV for our food delivery business was 1.1 percent in Q3 FY22 as compared to 1.2 percent in Q2 FY22.
“We re-distributed our growth investments more in favor of discounts on customer delivery charges vis-a-vis food coupons. Why? We are seeing a higher return on investment with discounted delivery charges as compared to coupons. As a result, discounts per order were reduced by Rs 5 per order in the last quarter as compared to Q2 FY22.
Part of the reduction in customer delivery charges is also because we started operations in 180 new cities (we are now in a total of 700+ cities), where we introduced temporary free delivery to cultivate a culture of ordering food from restaurants,” Zomato said.
Customer delivery charges over the years have grown steadily as a strong validation of the convenience that our platform offers. Given the meaningful size of customer delivery charges today, we are now able to use this as a lever (in addition to food coupons) to drive growth on our platform.
The average order value (AOV) has inched up over the last couple of years to Rs 400 as the business is showing early signs of maturity. Profitability – over the years, unit economics in our food delivery business have improved with scale.
The contribution margin (as a % of GOV) has improved steadily from 15 percent back in 2019 days to 1 percent today. A 5 percent contribution margin in our food delivery business (at the current scale) should get us to EBITDA break-even as a company (covering all common corporate costs as well).
The results came after the close of the market hours. Shares of Zomato ended at Rs 94.50, up by Rs 0.30, or 0.32 percent on the BSE.
(Edited by : Jomy Jos Pullokaran)
First Published: IST