Zomato Ltd on Wednesday reported quarterly revenue that more than doubled as orders on its food delivery business zoomed, while higher expenses caused losses to balloon.
Zomato’s consolidated net loss widned to Rs 435 crore for the quarter ending September 30, 2021. The company had reported consolidated net loss of Rs 230 crore in the year-ago period.
Consolidated revenue from operations rose 140% to Rs 1,024 crore as against Rs 426 crore in Q2FY21.
“Why did our losses go up? This was due to investments in the growth of our food delivery business. Three reasons to be specific – a) increased spending on branding and marketing for customer acquisition, b) increased investments and growing share of smaller/emerging geographies in our business (which are less profitable today compared to more mature cities) and c) increased delivery costs due to unpredictable weather and increase in fuel prices,” the company said in a stock exchange filing.
“The delivery cost per order increased by Rs 5 per order in Q2FY22 as compared to Q1FY22. This was on account of prolonged and unpredictable rainy season (which still continues in many parts of the country, oddly) and sharp increase in fuel prices,” the company added.
However, the company said it doesn’t expect the delivery costs to go up further and overall feels confident about its contribution margin staying positive in the mid, as well as long term. It generates most of its revenue from food delivery and related fees it charges restaurants for using the company’s platform.
The company said it has 1.5 million members and over 25,000 restaurant partners in India as at the end of Q2FY22 while adding that its overall customer traffic on platform in India increased to 59 million average monthly active users in Q2. India’s food delivery Gross Order Value in Q2FY22 grew by 19% QoQ and 158% YoY to Rs 5,410 crore, said Zomato.
The Gurugram-based company also said it was investing in logistics-tech firm Shiprocket, savings app Magicpin and fitness firm CureFit and added it will invest $1 billion more over the next 1-2 years, with a large chunk likely going into the quick-commerce space.
“In order to cultivate a great long term partnership with Curefit, we are also investing cash in Curefit. Net $50 million cash investment plus value of the Fitso business (worth $50 million) will give us a cumulative shareholding worth $100 million in Curefit (6.4% shareholding in Curefit). This will help us potentially explore cross-selling benefits between Zomato and Curefit, as we see food and health becoming the same side of the coin in the long term,” said Zomato.
“We have signed definitive documents for investing $75 million in Bigfoot Retail Solutions Pvt Ltd (“Shiprocket”) for an 8% stake as part of a larger $185 million round. We have also signed definitive documents for investing $50 million in Samast Technologies Pvt Ltd (“magicpin”) for a 16% stake as part of a total round size of $60 million,” Zomato said.
“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,” said Zomato.
Shiprocket is a B2B logistics-tech company that enables online commerce by providing seamless shipping and fulfillment services to direct-to-consumer (D2C) brands and omni-channel sellers. magicpin drives omni-channel growth for local retailers.
On Wednesday, Zomato’s scrip on NSE closed 1.2% lower at Rs 136.
Business Standard has always strived hard to provide up-to-date information and commentary on developments that are of interest to you and have wider political and economic implications for the country and the world. Your encouragement and constant feedback on how to improve our offering have only made our resolve and commitment to these ideals stronger. Even during these difficult times arising out of Covid-19, we continue to remain committed to keeping you informed and updated with credible news, authoritative views and incisive commentary on topical issues of relevance.
We, however, have a request.
As we battle the economic impact of the pandemic, we need your support even more, so that we can continue to offer you more quality content. Our subscription model has seen an encouraging response from many of you, who have subscribed to our online content. More subscription to our online content can only help us achieve the goals of offering you even better and more relevant content. We believe in free, fair and credible journalism. Your support through more subscriptions can help us practise the journalism to which we are committed.
Support quality journalism and subscribe to Business Standard.