Zomato got listed in July 2021. The food delivery platform’s share price has tanked by nearly ~42% since then. Amidst tough economic conditions, the company is trying to expand into the B2B segment with Hyperpure, growing breakneck, and keeping up with peers like Swiggy, Zepto, and Dunzo.
Zomato had recently announced its Q4 results for the quarter ended March 2022. The company has seen an 11-15% jump in share prices in the past few days. This article explores how the food delivery giant performed last quarter and how it plans to expand its wings.
Q4 FY22 Results
- In the quarter ended March 2022, Zomato’s consolidated net loss jumped 434% QoQ and 168% YoY to Rs 360 crore. The company had a net loss of Rs 134 crore in the previous fiscal year. In Q4 FY22, consolidated revenue from operations increased 75% YoY and 9% QoQ to Rs 1,212 crore, up from Rs 692 crore last year.
- Zomato’s expenses outweighed its revenue. The company’s total expenses almost doubled to Rs 1,701 crore from Rs 880 crore in the same quarter the previous year.
- Average monthly transacting customers were at an all-time high of 15.7 million in Q4 FY22, growing from 15.3 million in the previous quarter. The average monthly active restaurant partners and delivery partners were at all-time highs as well. The Average Order Value (AOV) for FY22 was Rs 398 as compared to Rs 397 for FY21. For the top 8 cities, AOV increased by 3% YoY. Gross Order Value (GOV) grew by 6% QoQ and 77% YoY to a record high of Rs 5,850 crore
- The company’s B2B segment (Hyperpure) saw an 18% QoQ increase in revenue to Rs 160 crore in Q4 FY22. Hyperpure delivers fresh, hygienic, high-quality ingredients and supplies to restaurants and other businesses.
- The e-commerce, last mile, and hyperlocal delivery platforms currently face a shortage of workers due to high fuel prices and the post-COVID effect. “We are seeing some stress on the availability of delivery partners in the current quarter in select large cities since the last week of April. This is short-term in nature, as the post covid economic recovery has brought back jobs in cities. We lost some delivery partners to such jobs”, said Deepinder Goyal, Founder & CEO of Zomato.
- Labour-intensive companies worldwide are doubling employee benefits to retain employees who are resigning in a phenomenon known as “The Great Resignation”. Similarly, Zomato’s employee benefit expenses have nearly doubled, increasing by 92% YoY to Rs 406 crore in Q4 FY22.
What Lies Ahead
Zomato has recovered measurably from the post-COVID lull. While we do see a jump in the company’s revenue, we also see increasing expenses led by rising fuel costs, delivery costs, and acquisition costs. The company has a negative working capital. Cash is collected upfront from customers and paid to delivery and restaurant partners in a few days. Zomato also has a small capital expenditure (CAPEX).
The company has been acquiring minority equity investments in relevant businesses to expand its own horizons. According to Founder CEO Deepinder Goyal, “The rationale behind making minority investments has been twofold – 1) put the building blocks for a robust quick-commerce business in India, and 2) accelerate digitisation and growth of the food and restaurant industry which accelerates our core food business”.
While still being in loss, the company is on its way to growth and prosperity after a long period of doldrums. It could be in an investor’s best interest to look at the company’s growth in a positive light. Certain factors could drive Zomato towards profitable growth. These include a stable labour market, decreasing fuel costs, and declining marketing and customer acquisition costs. high expenses.
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