Zomato, the online food delivery platform, on November 10 announced its July-September quarter results for the financial year 2021-22.
The company reported a net loss of Rs 430 crore on a consolidated basis compared to a loss of Rs 230 crore in the same period of last year, an increase of 87 percent. It had reported a net loss of Rs 356 crore in the previous quarter when it declared its maiden results as a public limited company. On a sequential basis, the loss for the company increased by 21 percent.
The online food aggregator recorded consolidated revenues of Rs 1,024 crore for the quarter compared to Rs 426 crore in the same period last year. The revenues increased by a robust 140 percent. Compared to the previous quarter, the revenues are up by 21 percent from Rs 844 crore.
Adjusted revenues for the quarter came in at Rs 1,420 crore, a 22.6 percent growth q-o-q and 144.9 percent y-o-y growth.
The revenues are up due to the opening up of almost all the restaurants across the country which increased the traffic on its platform.
“Overall customer traffic on our platform in India increased to 59 million average monthly active users (India MAU) in Q2 FY22 as compared to 45 million in Q1 FY22,” the company said.
“The company incurred higher losses because of investments in the growth of food delivery business.”
The company highlighted three reasons for the losses: increased spending on branding and marketing; increased investments and growing share of smaller/emerging geographies (which are less profitable); and increased delivery costs due to unpredictable weather and an increase in fuel prices.
“India food delivery Gross Order Value (GOV) in Q2 FY22 grew by 19 percent QoQ and 158 percent YoY to Rs 5,410 crore ($721 million). This growth was driven by an increase in the number of transacting users, number of active food delivery restaurants and active delivery partners on the platform," the company added.
The company attributes a large part of the increase in transacting users (and revenue) to an increase in branding and marketing expenses which were dominated by television and digital marketing.
The adjusted revenue for India food delivery contributed 88 percent to the total adjusted revenues and grew by 20.7 percent q-o-q to Rs 1,250 crore.
The contribution as a percentage of GOV was 1.2 percent in Q2 FY22 as compared to 2.8 percent in Q1 FY22. “The reduction in Contribution margin is on account of increased investments in growth geographies (emerging cities, less profitable than mature cities) and increase in delivery cost per order,” the company highlighted. The delivery cost per order increased by around Rs 5 in Q2 FY22 as compared to Q1 FY22.
“We don’t expect the delivery costs to go up further and overall feel confident about our Contribution margin staying positive in the mid, as well as long term,” the company stated.
Revenue from the B2B supplies business, Hyperpure, grew by 49 percent q-o-q to Rs 110 crore this quarter. Hyperpure is now present in eight cities and supplies were made to over 12,000 restaurants every month on an average in the quarter.
At EBITDA level (adjusted), the company incurred a loss of Rs 310 crore increasing by 82 percent from the loss of Rs 170 crore in the first quarter and by 143 percent from the loss of Rs 70 crore in the previous year.
On the investment front, in addition to the planned investment in Curefit, the company is making two new minority investments. It will be investing around $75 million in Bigfoot Retail Solutions Pvt Ltd (Shiprocket) for an eight percent stake.
Another investment of $50 million will be in Samast Technologies Pvt Ltd (Magicpin) for a 16 percent stake as part of a total round size of $60 million.
“Including our $100 million investment in Grofers earlier in August 2021, we have now committed $275 million across 4 companies over the past six months. We plan to deploy another $1 billion over the next 1-2 years, with a large chunk of it likely to go into the quick-commerce space,” the company confirmed.
The stock of Zomato declined Rs 1.60 (-1.16 percent) on November 10 and closed at Rs 136.05. The stock is up 8.6 percent in the past three months and flat during the past one month.