The online food delivery and restaurant discovery platform also reduced losses by about 48% sequentially, from Rs 359.70 crore in the fourth quarter last year, the company said in a stock exchange filing to the BSE late on Monday.
Quarterly revenue from operations grew to Rs 1,413.9 crore in the quarter ended June 30, a 67% jump from the year-ago period.
“The real driver here is focus and mindset,” cofounder and chief executive Deepinder Goyal wrote in a letter to shareholders, citing its 15% quarter on quarter increase in food delivery adjusted revenue, which is a sum of revenue from operations and customer delivery charges.
Chief financial officer Akshant Goyal said
’s food delivery business “hit an important milestone last quarter by getting to adjusted Ebitda (earnings before interest, tax, depreciation, and amortisation) break-even.”
The adjusted Ebitda (as a percentage of gross order value) in the food delivery business was at -1.3% and -2.2% in the March and December quarters, respectively.
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Zomato defines adjusted Ebidta as Ebidta less share-based payment expenses.
Deepinder Goyal said the company has sharpened its focus on profitability over the past few months with the change in market context, without compromising on growth.
“We are doing that by assessing everything with a critical lens and allocating resources by taking a long-term view to sustainable growth, as well as profit,” he said in a post-earnings report on Monday.
Revenue from operations for business-to-business (B2B) restaurant supply business Hyperpure increased 40% to Rs 272.7 crore compared to Rs 194.2 crore in the previous quarter.
Akshant Goyal said the company had established quality infrastructure in many cities which was leading to rapid growth in business.
“…as we go along, Hyperpure could become a much larger business than just supplying to restaurants. As we expand into quick commerce, the capabilities we have built in Hyperpure will also come in handy,” he added. “As we scale up in all our existing cities, and add a few more, we should see continued topline growth along with improving margins,” the CFO said.
Sequentially, Zomato’s total quarterly expenses increased marginally to Rs 1,767.7 crore compared to Rs 1,701.7 crore, due to multiple factors, including an increase in advertisement and sales promotion, purchase of stock-in-trade, and delivery and related charges.
Overall, the company’s revenue increased to Rs 1,582 crore in the April-June period, compared to Rs 1,350 crore in the previous quarter.
Zomato’s average monthly transacting customers increased to 16.7 million, and average monthly active restaurant partners stood at 208,000.
Blinkit deal
Deepinder Goyal also addressed criticism over the alleged poor corporate governance of Blinkit’s acquisition and the valuation at which Zomato agreed to buy it.
He said the deal underwent thorough due diligence and was vetted by multiple external stakeholders including EY and Morgan Stanley who reviewed the valuation and fairness of the deal, respectively.
Zomato acquired quick commerce platform Blinkit in a Rs 4,447 crore deal, which 97% of its voting shareholders approved last month.
The ultra-fast delivery platform is expected to close July at a revenue of Rs 74.9 crore, up nearly 30% compared to May.
While its average order value increased, the order frequency on the platform has fallen.
“We negotiated hard on valuation but at the same time, had no intention to be opportunistic since it is important to be fair to the team on the other side who is going to build this business going forward,” Goyal wrote in the letter.
On the alleged conflict of interest and poor governance by Zomato, since Akriti Chopra, cofounder and chief people officer of Zomato, is the wife of Blinkit founder Albinder Dhinsda, Deepinder Goyal said Chopra was not privy to discussions or decisions with respect to the transaction at any stage.
According to him, knowing the founder of the company it is acquiring was actually a good thing as it ‘significantly increases the chances of deal success and reduces the blind spots which could lead to value destruction post consummation of the transaction’.
“I would never take this large a bet on people whose motivations I do not know,” he added.
Minority investment
Last year, Zomato said it would invest up to $1 billion in startups over the next 2-3 years, with a significant chunk going into quick commerce firms.
“We understand the feedback we have been getting from our shareholders on our decisions. We stand by all decisions that we have made in the past, and we see us driving tremendous strategic value from these investments in the long-term,” Deepinder Goyal said. “Having said that, there is no plan to make any more minority investments as we are in cash conservation mode and are busy executing what we already have on our plates right now.”
