Zomato net loss narrows to ₹188 crore in Q4, revenue rises 70% YoY

• Zomato’s Q4 consolidated net loss narrowed to about ₹188 crore in the March quarter.
  
• The company reported consolidated revenue at ₹2,056 crore, a 70% jump from ₹1,212 crore in the year-ago period.
  
• In FY23, Zomato's loss shrunk to ₹971 crore from ₹1,209 crore a year ago as revenue increased around 70% to ₹7,079 crore.
  

Online food delivery platform Zomato on Friday said that its consolidated net loss narrowed to about ₹188 crore in the March quarter. In the same quarter last year, it posted a net loss of ₹360 crore. In the third quarter, its net loss was at ₹345 crore.

The company reported consolidated revenue at ₹2,056 crore, a 70% jump from ₹1,212 crore in the year-ago period.

In FY23, Zomato's loss shrunk to ₹971 crore as compared to ₹1,209 crore in FY22. Its annual revenues also increased around 70% to ₹7,079 crore in FY23.

"In food delivery, over the last five quarters, we have improved our margins meaningfully while further strengthening our market position. We will continue with the same mindset as we look to further expand the adjusted EBITDA margin (from the current 1.2%) to our stated goal of +4-5% of gross order value," said Deepinder Goyal, Zomato Founder and CEO.

Meanwhile, Zomato's arch rival Swiggy declared on Thursday that its food delivery business has become profitable, without giving any more details.

Zomato now aims to get to positive adjusted EBITDA (and also profit after tax) on a consolidated basis (including quick commerce) within the next four quarters.

"On the quick commerce side, while there is still a long way to go in terms of margin improvement, we are pleased with the outcomes so far in a short period of time. In the month of March 2023, more than 65% of the GOV was from contribution positive stores," said Goyal.

Blinkit average order value sees a decline

Regarding its quick delivery service Blinkit, contribution margins improved despite a seasonal drop in average order value (AOV) to ₹522 in Q4 as compared to ₹553 in the previous quarter.

"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)," said Blinkit founder and CEO Albinder Dhindsa.

"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)," Dhindsa added.

ONDC not an immediate risk to Zomato and Swiggy

Despite the chatter about ONDC (Open Network for Digital Commerce) providing food delivery, analysts believe that it is still not an immediate risk to Zomato and its peer Swiggy which dominate the market.

“The cost of ordering food on ONDC, at least in some cases, seems to be lower than on Zomato or Swiggy, though this is largely on account of ONDC-funded discounts, which may not sustain,” said the analysts at Kotak Institutional Equities.

The brokerage noted that while the impact in near-term is limited, the long-term impact is not known yet.

(With inputs from IANS)

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