Business / Zomato's net loss widens to ₹430 crore in September quarter

New Delhi: Online food delivery giant Zomato Ltd's consolidated loss widened to ₹430 crore for the quarter ending September (Q2FY22) as against a loss of ₹229 crore in the last year period.

The company had posted a loss of ₹356 crore in the previous June quarter.

Zomato said the losses went up due to investments in the growth of food delivery business, increased spending on branding and marketing for customer acquisition.

The losses were also mainly due to hiked investments and growing share of smaller or emerging geographies in the business and high delivery costs due to unpredictable weather and increase in fuel prices.

The company said the delivery cost per order increased by ₹5 per order in the September quarter as compared to the previous quarter.

The food delivery platform said it doesn't expect the delivery costs to go up further and feels confident about the contribution margin staying positive in the mid, as well as long term.

Adjusted revenue during the quarter stood at ₹1,420 crore ($189 million), a 22.6% growth quarter-over-quarter (QoQ) and 144.9% growth year-over-year (YoY).

At the end of the reporting quarter, Zomato has 1.5 million members and over 25,000 restaurant partners in India, while overall customer traffic on the platform in the country increased to 59 million average monthly active users (India MAU) in Q2FY22 as compared to 45 million in Q1FY22.

Zomato's India food delivery Gross Order Value (GOV) in Q2FY22 grew by 19% quarter-on-quarter and 158% year-on-year to ₹5,410 crore, driven by an increase in the number of transacting users, active food delivery restaurants and active delivery partners on Zomato.

Gross Order Value (GOV) is defined as the total monetary value of all food delivery orders placed online on Zomato in India including taxes, customer delivery charges, gross of all discounts, excluding tips.

The contribution as a percentage of GOV was 1.2% in Q2 FY22 as compared to 2.8% in Q1FY22.

Meanwhile, adjusted revenue for India food delivery grew by 20.7% QoQ to ₹1,250 crore ($166 million). This represents ~88% of the total adjusted revenue for the company in the same quarter.

Adjusted EBITDA (earnings before interest, tax, depreciation and amortisation) loss during the quarter increased to ₹310 crore ($41 million) as compared to ₹170 crore ($22 million) in the previous quarter (Q1 FY22) and ₹70 crore ($10 million) in Q2FY21 last year.

Zomato has also announced a slew of agreements to scale up its business.

The company said it is in the process of selling Fitso to Curefit (Curefit Healthcare Pvt Ltd) for $50 million, with an additional investment of $50 million in net cash in Curefit plus, which will give it a cumulative shareholding of 6.4% worth $100 million 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," Zomato said in an exchange filing.

Further, Zomato has signed definitive documents for investing $75 million in Shiprocket for a 8% stake as part of a larger $185 million round.

The company has also inked a pact with magicpin, $50 million in Samast Technologies Ltd for a 16% stake as part of a total round size of $60 million.

Including the $100 million investment in Grofers earlier in August 2021, Zomato has now committed $275 million across 4 companies over the past six months.

The company further plans 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.

On Wednesday, ahead of the results, Zomato shares were down 1.20% to close at ₹136 apiece on NSE.

Zomato, since the bumper listing recently on exchanges, has seen its shares surge by 8%. The scrip hit an all-time high of ₹152.75 and the market cap crossed ₹1 lakh crore during the period.

Zomato said it attributes a large part of the increase in transacting users (and adjusted revenue) to an increase in branding and marketing expenses.

During the reporting quarter, Zomato invested incremental ₹40 crore ($5.4 million) in branding and marketing as compared to the previous year period.

Most of these spends were on television and digital marketing. The company said the idea was to capitalize on the Covid-led Q1FY22 growth momentum and acquire more new users as well as get a large number of lapsed users back on our platform.