Zomato quarterly loss nearly halves as orders surge
Indian food delivery firm Zomato, backed by China’s Ant Group, posted a smaller quarterly loss on Monday, helped by an increase in orders for restaurant meals on its platform.
The company’s net loss stood at US$23.52 million for the three months ended June 30, compared with a loss of $45.1 million a year ago, the company said in a regulatory filing.
Zomato’s revenue from operations, which mostly comes from its mainstay food delivery and related fees it charges restaurants for using its platform, rose to $179 million from $107 million a year ago.
The Gurugram-based company, which operates in more than 1000 towns and cities in India, also offers online table booking and special discounts at select restaurants.
Gross order value – or the total value of all food delivery orders placed online on Zomato’s platform – for the first quarter rose 41.6 per cent to $814 million from a year ago, with average monthly transacting customers at 16.7 million.
While Zomato has disclosed quarterly losses since going public in 2021, it has seen a consistent rise in orders.
“Margins are getting negatively impacted due to higher fuel costs and wage inflation,” CEO Deepinder Goyal said in a statement, adding that monthly transacting customers were likely to drive volume growth.
The domestic food delivery market is expected to grow three times over the next five years, helped by rising order frequency and user addition, with Zomato expected to maintain a market share in the range of 45-50 per cent, analysts at Credit Suisse said in a note last month.
Management reorganisation tipped
Meanwhile, Zomato is considering reorganising its management so that each of its individual businesses would have its own CEO, while the parent company would be renamed “Eternal”, an internal company memo seen by Reuters said.
In the memo, Goyal said the company was now not only running the Zomato food delivery business but also other large businesses, including its proposed purchase of grocery-delivery startup Blinkit, kitchen and food ingredients supply business Hyperpure, and Feeding India, a not-for-profit firm that aims to reduce hunger in India’s poor communities.
“We are transitioning from a company where I was the CEO to a place where we will have multiple CEOs running each of our businesses…all acting as peers to each other,” Goyal said in the memo.
A source familiar with the matter said the memo was posted by Goyal last week. It was first reported by the Indian news portal Moneycontrol on Monday.
Zomato’s shares plunged to a record low last week as a one-year share lock-in period for promoters, employees and other investors expired.
The company made a stellar debut on July 23, 2021 on the Mumbai stock market, but its shares have lost more than 60 per cent of their value since then on concerns about valuations and growth amid turmoil among global growth stocks.
Goyal also said in the memo that “Eternal”, the proposed name for the parent organisation, would remain an “internal name for now.”
- Reporting by Rama Venkat, M Sriram and Nallur Sethuraman in Bengaluru; Editing by Shailesh Kuber, Aditya Kalra and Jane Merriman, of Reuters, and Inside Retail.