Zomato narrows losses as food orders rise

Indian food delivery major Zomato had narrowed its adjusted losses compared to the last quarter, driven by higher food orders and returning customer numbers.

Zomato’s delivery executives / Photo credit: Zomato

The firm saw its adjusted EBITDA losses narrowing to 1.5 billion rupees (US$19 million) in the first quarter of its 2023 financial year, down from US$27.9 million in the previous quarter.

Zomato’s adjusted revenue for the quarter stood at US$229.3 million, up from US$146.9 million a year ago. The bulk of it came from food delivery, which contributed US$186.1 million, with the rest coming from its restaurant supply procurement service Hyperpure (US$34.2 million) and other businesses (US$8.9 million).

Akshant Goyal, the company’s CFO, said the food delivery business hit a milestone in the reported period by getting to adjusted EBITDA breakeven. A year ago, Zomato logged US$3.8 million in adjusted EBITDA losses.

Gross order value (GOV) also increased to US$814.5 million in the quarter compared to US$576.4 million a year ago. Akshant added that the surge in GOV was driven by “robust growth in order volumes,” though he added that average order values only saw a mild increase.

Meanwhile, Hyperpure’s revenue grew more than 260% year on year. Moving forward, Akshant believes that the unit can get up to 5% to 10% EBITDA margins – which measures its operating profit as a percentage of its revenue.

See also: Zomato’s financial health in 5 charts

Deepinder Goyal, Zomato’s CEO, said that while the business is currently loss-making, it will be in “cash conservation mode.” The firm also does not plan to make other minority investments.

Zomato is set to acquire quick commerce firm Blinkit for US$570 million in an all-stock deal, with the transaction expected to close in early August. It will also spend US$8 million in cash to acquire Blinkit’s warehousing business.

Currency converted from Indian rupee to US dollar: US$1 = 78.9 rupees.