Zomato turned adjusted EBITDA positive in Q4FY23 excluding quick commerce business Blinkit, the company said on May 19 as it announced its results for Q4FY23. The timing is important to note, as it comes just a day after its rival Swiggy also declared that its food delivery business was also profitable as of March, but excluding employee stock option (ESOP) expenses.
While announcing its results for Q3FY23 in February, Zomato said its business, excluding the acquisition of Blinkit, had turned adjusted EBITDA positive for the month of January, as reported earlier.
Further, in its letter to shareholders, Zomato said its next goal was to get to full profitability in the next four quarters, or by March 2024. That would include even Blinkit-related expenses.
On May 19, Zomato reported that its consolidated net loss in Q4FY23 narrowed to Rs 188.2 crore from Rs 359.7 crore that it reported in the same quarter last year. In the quarter gone by, its revenues from operations jumped 70 percent to Rs 2,056 crore, from Rs 1,211.8 crore in the corresponding quarter a year ago.
The company’s prediction was despite Blinkit’s average order value (AOV) being on the downward trend. The AOV from quick-commerce was even below what it was in Q1FY23. In Q1FY23, Blinkit’s AOV was Rs 528, which increased to Rs 568 in Q2FY23 but fell to Rs 553 in Q3FY23, and then dropped to Rs 522 in the last quarter.
“We are aiming to get to positive Adjusted EBITDA (and also PAT) on a consolidated basis (including quick commerce) within the next four quarters. The difference between Adjusted EBITDA and Profit after Tax (PAT) has narrowed significantly over time,” Zomato’s letter to shareholders said.
Zomato completed the acquisition of Blinkit for Rs 4,447 crore in August 2021.
“We have learnt that the AOV in this business will continue to swing up and down in the near to mid term due to multiple (mainly seasonal) factors. For example, AOVs will go down when there is a good harvest of vegetables (which leads to lower prices for F&V),” Albinder Dhindsa, co-founder of Blinkit said.
“Over time, as we get scale, we hope to be able to predict such swings better and mitigate the impact of these swings on our margins. We expect the AOV to increase QoQ in the current quarter (Q1FY24),” he concluded.
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