Shares Tumble as Zomato Delivers Lukewarm Q3 Results

Indian food delivery group Zomato delivered lukewarm third-quarter results, causing shares to tumble almost 9% on Friday (Feb. 11), with just a 1.7% uptick in sequential gross order value (GOV) as pandemic restrictions eased and indoor dining resumed. Total GOV escalated 84.5% over last year.

“We believe that the weak QoQ growth in GOV was primarily due to reduction in customer delivery charges … in addition to a soft impact of post-COVID reopening (including some shift from delivery to dining out),” according to Zomato’s shareholder letter.

See also: Zomato Adds Minority Stakes in UrbanPiper, Adonmo Through NBFC

While the company started operations in 180 new cities, it offered free delivery as a way to attract consumers. Zomato is now operating in more than 700 cities.

“Customer delivery charges over the years have grown steadily as a strong validation of the convenience that our platform offers. Given the meaningful size of customer delivery charges today, we are now able to use this as a lever (in addition to food coupons) to drive growth on our platform,” said the financial report.

Revenue from operations edged up to Rs11.1 billion ($147 million) for the quarter ending in December, up Rs10.2 billion ($135 million) from the previous quarter. Customer delivery charges fell, leaving adjusted revenue the same as the second-quarter ending in September.

Read more: India’s Delivery App Zomato To Launch Payments Service

Adjusted earnings before interest, taxes, depreciation, and amortization (EBITDA) loss reduced to INR 2.7 billion ($36 million) in Q3 FY22 as compared to INR 3.1 billion ($41 million) in the previous quarter (Q2 FY22) “driven by rationalizing spends across various businesses and functions.” Year on year, the company saw a 78% growth in adjusted revenue to INR 14.2 billion ($190 million).

“Zooming out from the current quarter, we remain focused on the bigger picture and the long-term growth potential of our food ordering and delivery business in the years ahead. Zomato continues to benefit from the changes we are helping to drive in the overall restaurant industry.”