Zomato Share Price Jumped 20% : Fall in Losses, 4 New CEOs to Drive Growth
Zomato reported its Q1FY23 numbers on Monday late evening. The losses have narrowed compared to last quarter. The share price of Zomato was trading at Rs 53.20 per share, up 14.90% on Tuesday morning. In 2022, the share price has fallen more than 60%.
Zomato Q1 FY23 Results: Key Highlights
- Net profit/loss: Loss of Rs 185.7 crore
- Revenue: Rs 1,413.9 crore, up 67.44% YoY
- EBITDA: (Rs 150) crore, compared to a loss of (Rs 220) crore in Q4FY22
Let us look at Zomato's Q1FY23 numbers in detail:
Zomato Q1 Results: Losses Narrow
Zomato, online food delivery, reported a net loss of Rs 185.7 crore for the June quarter, as against a net loss of Rs 356.2 crore in the March quarter. The losses have halved sequentially.
Zomato Q1 FY23 Results: Revenue Increases
Revenue from operation increased to Rs 1,413.9 crore in Q1FY23, a staggering growth of 67.44% from Rs 844.4 crore in Q1FY22. Sequentially, adjusted revenue increased by 16.68% from Rs 1211.8 crore. Revenue growth was driven by growth in Gross Order Value and growth in revenue per order.
Zomato Quarterly Results: EBITDA
Earnings before interest, tax, depreciation and amortization loss narrowed to (Rs 150) crore in the June quarter compared to a loss of (Rs 220) crore in Q4FY22 and (Rs 170) crore in the corresponding quarter last year.
Zomato Q1 FY23 Results: Gross Order Value
Company's Gross Order Value (GOV) increased 41.6% on-year and stood at Rs 6,430 crore for the Apr-Jun quarter. GOV growth was driven by robust growth in order volumes and mild growth in average order values as compared to the previous quarter. On the profitability front, Contribution as a % of GOV increased to 2.8% in Q1FY23 as compared to 1.7% in Q4FY22.
Zomato Q1 Results: Other Important Numbers
Average monthly transacting customers have increased by 36% in Q1FY23 while the average monthly order frequency has increased by 10% in the same period. Growth in monthly transacting customers will be a function of a higher repeat rate of the existing customer base and new customer addition which remains robust.
Zomato Q1 FY23 Results: Hyperpure Update
Hyperpure is a business segment of Zomato that allows restaurants to buy everything from vegetables, poultry, meats, fruits, groceries, and seafood to dairy and beverages. Hyperpure revenue grew 40% sequentially, and 260% year-on-year to Rs 270 crore in Q1FY23. Adjusted EBITDA loss margin improved from -20% in Q4FY22 to -13% in Q1FY23. Of the 10 cities, the business present in the top 4 cities contributes to ~75% of the business. It means that the business is still very nascent in most cities.
Zomato Q1 Results: Update on Blinkit Acquisition
97%+ votes were in favor of Blinkit's acquisition. They are now awaiting approval from stock exchanges. The financials of Blinkit will start getting consolidated into Zomato’s consolidated financials post the closing.
On Blinkit Deal criticism: Zomato has received criticism around corporate governance issues with regards to the Blinkit transaction. On this, the CEO, Deepinder Goyal, has said that if it is a bad deal for other shareholders, it would be equally bad for him as a shareholder. "My financial outcomes are 100% aligned to other shareholders."
On Blinkit Profitability: As per the company, losses are coming down every month. Losses have come down from Rs 204 crore in January 2022 to Rs 92.9 crore in July 2022. The losses have come down owing to operating leverage and improved execution. The company has good visibility on the various levers for achieving profitability in this business. Many dark stores the company operates are already moving towards contribution break-even.
Zomato Quarterly Results: Analysts' Views
Kotak Institutional Equities: The brokerage firm has given a target price of Rs 79 for Zomato. It said in its report that Zomato’s food delivery business is well-poised to grow at a strong pace over the next decade led by attractive market opportunities and strong execution capability.
We had done a detailed analysis of Zomato in one of our previous blogs. Don't Miss! Click here to read.
How was Zomato's Q1FY23 result?
Zomato continued to report losses but the net loss has narrowed compared to the March quarter. The net loss was Rs 185.7 crore and revenue was Rs 1,413.9 crore in Q1FY23.
When will Zomato become profitable?
According to the latest JM Financial report, the company may become profitable in FY25 if it reaches annual order volumes of 1 billion and a contribution margin of around Rs 21 per order.
How much cash reserve does Zomato have?
The cash balance is Rs 11,400 crore as of June 30, 2022