INDIA – Indian multination food delivery company Zomato has seen its net losses jump 168% from the previous quarter to Rs 360 crore (US$48m) despite the company recording a 22% rise in revenues.
According to a statement from the company, the triple-digit rise in losses was attributed to non-cash Esop (employee stock ownership plan) expenses, which increased in Q1 of FY22 due to significant Esop grants made.
India, the company’s largest market delivered a significant chunk of the revenues as Rs806 crore (US$108m) while revenue of Rs 31 crore (US$4.17m) was logged from the UAE, and the balance from other markets.
As the food delivery platform presented its maiden quarterly earnings as a public company, it noted that its adjusted revenue increased 26% to Rs 1,160 crore (US$156m) in the June quarter, compared to around Rs 920 crore (US$124m) in March quarter.
“Revenue growth was largely on the back of growth in our core food delivery business, which continued to grow despite the severe Covid-19 wave starting April,” said cofounder and chief executive Deepinder Goyal in the company’s filings to the Bombay Stock Exchange.
The company said the domestic food delivery business reported the highest ever gross order value (GOV) in the quarter under review, increasing by 37% to around Rs 4,538 crore (US$610.7m), compared to Rs 3,315 crore (US$446.1m) in the previous quarter.
GOV is the total monetary value of all food delivery orders placed on Zomato India, including taxes, customer delivery charges, gross of all discounts, excluding tips.
Zomato said it has delivered 1 billion orders since it entered the business in 2015, with more than 100 million orders delivered in the past three months itself.
“The fact that over 10% of these billion orders were delivered only in the last three months makes us confident about getting to the next billion much sooner,” Goyal stated.
The Gurgaon-based company, which listed successfully on the BSE last month, has never posted a profit since inception, reporting total losses of Rs 134 crore (US$18m) in the March quarter and losses of nearly Rs 100 crore (US$13.4m) in the quarter ending June.
Beyond its core business, Zomato also saw its losses widening in the business-to-business (B2B) supplies segment for restaurant partners, Hyperpure, “due to investment in growth,” while revenue from dining out continued to decline.
During the earnings call, Goyal said the company has taken a host of initiatives to increase earnings and improve the working conditions of its delivery partners.
This announcement comes amid Zomato and its rival Swiggy facing increased scrutiny and pressure on social media from food delivery partners in recent days over poor pay and other operational practices.
The company claims the revised payout structure has guaranteed a 15% increase in earnings per order, compared to a year ago. Goyal said the top 20% of those who deliver on bikes and put in more than 40 hours a week receive a payout of more than Rs 27,000 (US$363m) in a month.
Meanwhile, Zomato has divested its stake in NextTable Inc for US$100,000 due to the small overall size of the business of the table reservation and management in USA.
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