Zomato is an Indian multinational restaurant aggregator and food delivery company founded by Deepinder Goyal and Pankaj Chaddah in 2008. Zomato provides information, menus and user-reviews of restaurants as well as food delivery options from partner restaurants in select cities. As of 2019, the service is available in 24 countries and in more than 10,000 cities.
Zomato Limited is one of the leading online Food Service platforms in terms of the value of food sold. Its offerings include food delivery, dining-out services, Loyalty programs, and others.
Quarterly Earnings Walkthrough
Food delivery colossal Zomato’s consolidated loss has enlarged to Rs -347 crore year-on-year (YoY) for the December quarter as compared to a loss of Rs -67 crore in the year-ago period. The online food delivery services company had reported a net loss of Rs -251 crore in the previous quarter which ended in September.
The company’s revenue from operations have risen by 75% to Rs 1,948 crore for the December quarter versus Rs 1,112 crore in the corresponding period of previous fiscal year. On a sequential basis, revenue has enhanced by 17% as compared to Rs 1,661 crore reported for the September quarter.
Zomato’s adjusted EBITDA loss has widened to Rs -265 crore in the December quarter as compared with Rs -192 crore in the September quarter of the previous year. Apart from Blinkit, the operating loss was Rs -38 crore as against Rs -272 crore a year ago. Excluding the Blinkit business, Zomato came out with a positive performance on the operating level in January despite the food delivery business suffering from a slump.
The company’s gross order value has grown by 22% YoY and 1% quarter-on-quarter, which has been supported by growth in both order volumes and average order value.
Dream of profitability
Zomato CEO and Founder Deepinder Goyal said that “As a company we have been constantly re-evaluating and optimizing investments across the board, including taking a hard look at resource allocation across functions, shutting down non-performing markets, reassessing our headcount, among others,” he noted.
Goyal continued with “Taking some of these actions early in 2022 has helped us deliver on our own expectations of profit growth. In the last year or so, investors have been far more focused on profitability and we are doing our best to deliver on those expectations.”
Zomato Gold
Zomato relaunched its loyalty programme Zomato Gold in January, and revenue from subscriptions is likely to give its revenue a boost for the March quarter. In less than a month, the Zomato Gold program has spiked up to over 900k members.
Customer acquisition
Zomato has reported that the pace of new customer addition has remained healthy. The company said in a statement that “We added 23.0 million new customers in CY22 as compared to 23.6 million in CY21. These are customers who placed at least 1 order on Zomato in the year. Even in the last quarter of CY22, while the overall demand was soft, the pace of new customer addition was strong”.
Technical Analysis
Zomato stock price has been on a selling pressure since the launch of its IPO. The price level at Rs 40 represents a strong support level. MFI is at 60 points which makes the stock unattractive for a long trade. Investors may take an entry when the stock corrects and MFI is under 30.
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