Zomato says food delivery segment has broken even in Q1

In its first quarter result announcement on August 1, Zomato said its food delivery segment has hit break even with an adjusted EBITDA of 0. It had registered an adjusted EBITDA loss of Rs 80 crore in the March quarter and a loss of Rs 30 crore in the year-ago period in this segment.

However, at the company level, it registered an adjusted EBITDA loss of Rs 150 crore in the June quarter (Q1). Adjusted EBITDA is defined by the company as EBITDA without accounting for ESOP (employee stock option) costs.

The company’s net loss in the quarter almost halved (narrowed by 48 percent) on a year-on-year basis at Rs 186 crore whereas revenue grew 67.5 percent to Rs 1,414 crore.

"On the profitability front, the food delivery business hit an important milestone last quarter by getting to Adjusted EBITDA break-even. Contribution as a % of GOV increased to 2.8% in Q1FY23 as compared to 1.7% in Q4FY22 driven by improvements on both cost and revenue side, as we had indicated in the past," said CFO Akshant Goyal.

The company said there is a negative impact of inflation on the demand side but it is hard to quantify that in the business at this point given multiple moving parts.

"Similarly, on the cost side, the margins are getting negatively impacted due to higher fuel costs and wage inflation. Having said that, the overall efficiency gains have helped us make good progress on improving contribution margins," said the CFO.