Zomato’s Q4 loss widens to Rs 360 crore; revenues rise

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Food tech player Zomato on Monday reported a bigger consolidated loss of Rs 360 crore for the March quarter compared with Rs 131 crore in Q4FY21. Revenues, however, jumped a strong 75% year-on-year to Rs 1,212 crore.

The net cash used for operating activities was lower at Rs 693 crore than the Rs 1,018 crore reported in the corresponding period last year.

Founder and CEO Deepinder Goyal said conserving cash is a priority right now and the company is being aggressive about it. Zomato currently has unrestricted cash of around Rs 12,200 crore.

The company’s CFO Akshant Goyal said the reduction in losses will be driven by improvement in contribution margin of the food delivery business and also operating leverage playing out “as our revenue is growing faster than our fixed costs”.

The company said in a stock exchange filing that the average monthly transacting customers were at an all-time high of 15.7 million in Q4FY22, growing from 15.3 million in the December quarter. Likewise, the average monthly active restaurant partners and delivery partners were at all-time highs as well, it added.

The company’s gross order value for the food delivery business grew 6% sequentially and 77% y-o-y to Rs 5,850 crore in Q4FY22. This was driven by healthy growth in order volumes while the average order value remained stable, the company said.

CEO Goyal conceded that there was some stress on availability of delivery partners in the current quarter in select large cities since the last week of April. “We think this is short-term in nature as the post-Covid economic recovery has brought jobs back in cities and we lost some delivery partners to such jobs,” he said. The workforce which migrated to hometowns (or villages) during the first Covid wave hasn’t yet come back to the cities, thus hampering the acquisition of delivery partners, he added.

Deepinder Goyal also said the company currently has no plans for any more minority equity investments.

CFO Akshant Goyal said there was also no plan to raise any further capital at this stage. “We are well-funded to fuel all our growth plans in all our businesses.”

On the Blinkit M&A deal, apart from a short-term loan of up to $150 million to fund the short-term capital requirements, the company said there is little to share at this point.

For quick commerce, the company had given an upper bound of $400-million investment for the next two years (CY22 and CY23) in the last quarterly letter. “As of now, we are on plan to stick to this outer limit. We are not planning to make any new minority investments as part of this $400-million outer limit,” Akshant Goyal said.

Ahead of the results announcement on Monday, the stock closed 2% lower at Rs 56.80.

There has been some concern about Zomato’s liquidity situation mainly because the core business does not generate cash and the company may need to spend some additional amount on the acquisition of Blinkit.

Analysts at Kotak Institutional Equities (KIE) point out that even assuming a high cash valuation paid for Blinkit, and also sustained high cash burn for the food delivery business, Zomato would be well-funded till FY25, and perhaps longer. “We estimate the company’s March 2022 cash balance at $1.5 billion, which provides comfort on future growth,” they wrote.