Zomato’s losses widen in first results since IPO

Food delivery firm Zomato posted 26% sequential growth in adjusted revenue for the first quarter of FY22 and a spike in net losses in part due to the employee stock option pool (ESOP) expansion.

In its first earnings report after listing, adjusted revenue came in at Rs 1,160 crore for the quarter in review, up from Rs 920 crore for the previous period. Adjusted revenue is revenue from operations plus delivery charges.

The company compared earnings sequentially as the financials for the first quarter of FY21 were severely impacted by COVID.  

Zomato reported employee benefits expense of Rs 390.7 crore for the June quarter against Rs 191.7 crore for the previous period.

The company said that core delivery services grew in the quarter under review but the dining-out services were adversely impacted. 

Food delivery gross order value grew 37% sequentially to Rs 4,540 crore ($605m).   

“Our India food delivery business continues to remain contribution-positive, although the contribution margin reduced slightly on account of growth investments in addition to the costlier business environment (due to lockdowns) in which this growth was achieved,” Zomato CEO Deepinder Goyal said.

The food delivery aggregator also said it had improved its payout to delivery personnel by adding an extra delivery fee for long distances, as a result of which staff is getting paid 15% more this year than the last year.   

“On average, the top 20% of our delivery partners who deliver on bikes and put in more than 40 hours a week receive a payout of more than Rs 27,000 per month,” Goyal said.

Goyal started the company in 2008 as a menu listings platform and grew it to a $13 billion publicly traded food delivery firm in 13 years. Zomato had a blockbuster initial public offering last month. Its stock listed at Rs 76 and closed at Rs 138.45 on that day.

Zomato shares closed on Tuesday at Rs 124.9 apiece with a market value of Rs 98,025 crore.