Zomato Q3 Results: Loss narrows to Rs 67 crore YoY; revenue jumps 82%

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NEW DELHI: Zomato on Thursday reported a December quarter consolidated net loss at Rs 67.2 crore, narrowing it from Rs 352.6 crore reported in the same quarter last year.

Revenue from operations came in at Rs 1,112 crore, up 82.47 per cent against Rs 609.4 crore in the year-ago quarter.

The company said its revenue from operations grew by about 9 per cent quarter-on-quarter (QoQ), while the customer delivery charges fell by 22 per cent. This was driven by Rs 7.5 per order reduction in customer delivery charges in Q3FY22 as compared to Q2FY22, it added.

“We re-distributed our growth investments more in favour of discounts on customer delivery charges vis-à-vis food coupons. Why? Because we are seeing a higher return on investment with discounted delivery charges compared to coupons. As a result, discounts per order were reduced by Rs 5 per order in the last quarter as compared to Q2FY22,” said Deepinder Goyal, CEO of Zomato.

Zomato’s gross order value (GOV) grew by 84.5 per cent YoY and 1.7 per cent QoQ to Rs 5,500 crore ($733 million) in Q3 FY22. Goyal said the weak QoQ growth in GOV was primarily due to a reduction in customer delivery charges, as mentioned above, in addition to a soft impact of post-covid reopening (including some shift from delivery to dining out).

The number of orders grew 93 per cent YoY and 5 per cent QoQ. Average order value (AOV, which includes customer delivery charges) shrunk by 3 per cent QoQ, mostly on account of a reduction in customer delivery charges. Goyal also answered the often asked profitability question, indicating the company was very close to achieving Ebitda break-even.

“Over the years, unit economics in our food delivery business has improved with scale. The contribution margin (as a percentage of GOV) has improved steadily from minus 15 per cent back in 2019 days to 1 per cent today. A 5 per cent contribution margin in our food delivery business should get us to EBITDA break-even as a company,” he said in a letter.

He pointed out that two of its top five cities have consistently seen more than a 5 per cent contribution margin for the last seven quarters. These two cities jointly contribute 15 per cent to Zomato’s GOV today. Another top 5 city (an additional 15 per cent of our GOV) is also at a 4.3 per cent contribution margin.

The company said it has $1.7 billion cash on its balance sheet, and it will continue to spend in the core food business and quick commerce.

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