Zomato Q4 Results: Net Loss Narrows; Consolidated Profitability In Sight

Zomato's fourth-quarter net loss narrowed, beating analysts' estimates.

The company's net loss narrowed to Rs 188.2 crore as the Gurugram-headquartered food delivery giant turned adjusted Ebitda positive, excluding its quick commerce acquisition, Blinkit. That compares with a Bloomberg forecast of Rs 361.6 crore in losses.

 Key Highlights (Consolidated, QoQ)

• Revenue up 5.5% at Rs 2,056 crore. (Bloomberg estimate: Rs 2,076.47 crore)

• Ebitda loss at Rs 225.4 vs Rs 366.2 crore (Bloomberg estimate: Rs 360.73 crore)

The Deepinder Goyal-led restaurant aggregator said the food delivery business generated Rs 78 crore in adjusted Ebitda in Q4FY23.

"In August 2022, we announced that this business would break even within the next three to five quarters, and we are pleased to have delivered on that goal in the third quarter after that announcement," Chief Executive Officer Deepinder Goyal said in the shareholders' letter.

The next aim is to be profitable on a consolidated basis—including quick commerce—within the next four quarters. Goyal said. "We're aiming to get there by increasing profits in the food delivery business and reducing losses in the quick commerce (Blinkit) business."

In food delivery, over the last five quarters, Zomato has improved margins "meaningfully" while further strengthening its market position, he said.

"We will continue with the same mindset as we look to further expand the adjusted Ebitda margin (from the current 1.2%) to our stated goal of +4-5% of gross order value, which would translate to about Rs 1,000–1,300 crores of annual cash operating profit at the current scale of the food delivery business."

Interestingly, on May 18, Swiggy's Chief Executive Sriharsha Majety announced that the company's food delivery business has turned profitable after factoring in all corporate costs but excluding employee stock option costs.