Zomato’s operating losses widen by 3x in first earnings report after IPO

Indian food delivery major Zomato in its first earnings report filed after its blockbuster initial public offering (IPO) last month saw its year-on-year losses widen in Q1 for financial year ended (FYE) 2022.

The company’s operating loss (its losses before tax) grew by over 3x to 3.6 billion rupees (US$48.2 million) as compared to 998 million rupees (US$13.4 million) during the same quarter last year. On a quarter-on-quarter basis, its net loss also widened by nearly 3x – the same figure for Q4 FYE 2021 stood at 1.3 billion rupees (US$17.9 million).

Zomato had 310,000 active delivery partners in July, its highest ever / Photo credit: Zomato

“This is largely on account of non-cash ESOP (employee stock ownership plan) expenses which have increased meaningfully in Q1 FYE 2022 due to significant ESOP grants made in the quarter pursuant to the creation of a new ESOP 2021 scheme. This divergence in reported profit or loss and adjusted EBITDA (earnings before interest, tax, depreciation, and amortization) will continue going forward,” said the company.

Nevertheless, the newly listed company’s revenues from operations jumped 217% year on year to 8.4 billion rupees (US$113.4 million) during the period. That figure is notably high because its June quarter last year was severely affected by the first wave of lockdowns. In comparison, its Q1 operational revenue rose by 22% year on year.

Zomato’s revenue growth was largely driven by its core food delivery business, which continued to see an uptick despite the impact of Covid-19, the company said.

See also: 8 takeaways from Zomato’s investor deck for its $1.3b IPO

Meanwhile, the firm’s total expenses saw a sharp rise, growing more than 3x during the June quarter to 12.6 billion rupees (US$169 million) from the same quarter a year ago. On a quarterly basis, it was a 42% increase in expenses.

Zomato also achieved a milestone: delivering its billionth order in the quarter. “The fact that over 10% of these billion orders were delivered only in the last three months makes us confident about getting to the next billion much sooner,” said the company’s co-founder and CEO Deepinder Goyal in a joint statement.

According to the food delivery firm, the June quarter saw a record high in gross order values, the number of orders, transacting users, active restaurant partners, and active delivery partners.