The company also reiterated its focus on growing its topline and reassured shareholders about its path to profitability.
“Our core food delivery business is headed for profitability. We think Hyperpure may become as large as or larger than even food delivery… Quick commerce (through Blinkit) also increases our addressable market,” Kaushik Dutta, chairman of Zomato’s board of directors, told shareholders on Tuesday.
For the first quarter of the fiscal year 2022-23 (FY23), revenue from operations for Hyperpure increased 40% to Rs 272.7 crore from Rs 194.2 crore in the previous quarter.
For the whole of FY22, adjusted revenues of Hyperpure stood at Rs 540 crore, while that of Zomato’s food delivery business stood at Rs 4,760crore.
While announcing the latest quarterly results, Zomato chief executive Deepinder Goyal also said Hyperpure could be a much larger opportunity than simply supplying to restaurants.
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Last year, Zomato said that as part of its investments in its core offering, it would
pour $50 million into Hyperpure in the next 18-24 months.
During the AGM, which was streamed online, shareholders quizzed the management about the company’s share price outlook, how it plans to use its cash, its path to profitability, and its outlook on growth and future plans. A common concern among shareholders was the rapid decline in Zomato’s share price and how it might recover.
Focus on cash flows
Zomato said it was focused on generating cash flows and would thereafter consider either returning cash to investors or looking at new avenues for investments “if that makes most sense”. Zomato CFO Akshant Goyal indicated that Blinkit,
which it acquired for Rs 4,447 crore earlier this year, would be in investment mode for more than 12 months.
“I think overall at a company level, we would say roughly about six months to one year is when we think we should become breakeven without Blinkit. Blinkit is a relatively new business. It’s a very large opportunity. And we think that the business will be in investment mode for slightly longer than the 12-month period indicated,” Akshant Goyal said.
He attributed the sharp decline in Zomato’s stock, which is currently trading 20% lower than its issue price, to the global capital market correction and “factors that are beyond our control”.
“The good news is that the business has never been more solid than what it is today, fundamentally. While we continue to grow, our losses are reducing dramatically and we expect that trajectory to continue,” Akshant Goyal added.
Zomato’s food delivery business achieved adjusted-Ebitda (earnings before interest, tax, depreciation, and amortisation) breakeven in Q1 FY23. Zomato defines adjusted Ebitda as Ebitda minus share-based payment expense.
“We are playing our role in part here and making sure we work extra hard to make progress here on both top-line growth and profitability, which should hopefully result in the share price going up in the future. We’ll continue to do our best as much as we can, and control and influence things that we can, given the situation,” Deepinder Goyal said.
Rider safety concerns
Amid concerns about rider safety at quick commerce companies, Deepinder Goyal said the company does not incentivise quick delivery, penalise riders for delays, or even share the estimated delivery time with them.
“Anybody who’s doing that [riding dangerously]… it’s actually on their own. We’re also going to put up phone numbers on our riders’ bags, so if you actually spot them riding fast, you can report them,” Deepinder Goyal said.
Zomato’s consolidated losses nearly halved to Rs 186 crore in the first quarter of FY23 from Rs 360.7 crore in the same period last year.
It also reduced losses by about 48% from Rs 359.70 crore in the fourth quarter of FY21, the company said in a stock exchange filing with BSE late on Monday.
Quarterly revenue from operations grew to Rs 1,413.9 crore in the quarter, a 67% increase from the same period last year.
