Online food delivery platform Zomato Ltd is targeting to achieve the breakeven level in overall business between the fourth quarter of this fiscal and the second quarter of FY24 having cut losses gradually, according to company CFO Akshant Goyal. Zomato, which earlier this year gave an investment guidance of USD 400 million for the next couple of years on quick commerce, has now reduced it to about USD 320 million.
In an analyst call, Goyal said Zomato was already positive on cash flow with its adjusted EBITDA losses at INR 150 crore and other income was INR 170 crore in the first quarter of the ongoing fiscal. “So, in some ways, we are not losing cash in that business anymore…we got to adjusted EBITDA breakeven in the food delivery business,” he added.
The next milestone, he said, “is to get the overall Zomato business to adjusted EBITDA breakeven and we think we are close now.” In terms of timeline, he said, “Internally, we are aiming to get there by quarter four of this fiscal year. That is the internal goal that we have as a team but we think that if we slip on that, it should not be later than Q2 FY24, which is September 2023 quarter for getting to breakeven on adjusted EBITDA at the Zomato level.”
At a consolidated level, Zomato Ltd had reported a narrowing of net loss to INR 186 crore in the first quarter ended June 30, 2022, from a net loss of INR 360.7 crore in the year-ago period. Its consolidated revenue from operations was at INR 1,413.9 crore compared to INR 844.4 crore in the same period last fiscal.
When asked what will drive the march towards achieving EBITDA breakeven, he said, “It will primarily be driven by food delivery EBITDA growing. We have been working on bringing our fixed cost down as well, and I think that is the reason why we have been able to absorb a lot of increases on the salary front etc., which would have otherwise made this number much higher.”
On the instant delivery service Blinkit, Goyal said, “I think the business has surpassed our expectations so far in terms of growth as well as loss reduction to where we were 6-7 months ago. Given where the business is today and the path forward that we see, we think we should get that business also to break even with an investment of USD 320 million starting January 2022.”
He further said, “We have already invested about USD 150 million in that business so far – our estimate is USD 320 million for getting that business to break even. In terms of the timeline on Blinkit, we don’t have that kind of visibility that we have on the Zomato business. So, I would not venture into estimating by which quarter we get there.”
Replying to a query, he said losses at Blinkit are also coming down and it should continue going forward post the transaction as synergies kick in. In June this year, Zomato announced that it would acquire Blink Commerce Pvt Ltd (formerly known as Grofers India Pvt Ltd) for a total purchase consideration of INR 4,447.48 crore in a share swap deal.
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