New Delhi, Oct 22
Online food aggregator Zomato on Tuesday reported over 30 per cent loss in net profit at Rs 176 crore (quarter-on-quarter) in the July-September period, from Rs 253 crore in the previous quarter (Q1 FY25).
Zomato's board also approved the plans to raise Rs 8,500 crore via the qualified institutional placement (QIP) route, as per a regulatory filing, as the competition in the quick commerce space grows.
"While the business is now generating cash (vis-a-vis a loss-making business at the time of IPO), we believe that we need to enhance our cash balance given the competitive landscape and the much larger scale of our business today," said Deepinder Goyal, Founder and CEO, Zomato.
"We believe that capital by itself does not give anyone the right to win (and that service quality is the key determinant of success), but we want to ensure that we are on a level playing field with our competitors, who continue to raise additional capital," he added.
In Q2, the cash balance reduced by Rs 1,726 crore as compared to the previous quarter on account of the deal consideration (of Rs 2,014 crore) for the acquisition of Paytm's entertainment ticketing business, the company said in its financials.
Goyal said that the company's consolidated annualised adjusted revenue has grown 4 times in a period of about three years -- from Rs 4,640 crore at the time of its IPO in July 2021 to Rs 20,508 crore now (Q2FY25 annualised).
"In the same time period, our cash balance has reduced from Rs 14,400 crore to about Rs 10,800 crore (mainly on account of funding past quick commerce losses and some equity investments and acquisitions). While the business is now generating cash, we believe that we need to enhance our cash balance given the competitive landscape and the much larger scale of our business today," Goyal explained.
He said that the quick commerce business (Blinkit) continues to operate at near adjusted EBITDA break-even and the food delivery business margins continue to remain steady.
"There is also no plan for any minority investments or acquisition. The fund raise is meant to strengthen our balance sheet at this point," he added.
According to the company, while most of its stores are profitable with expanding margins, "we are not seeing margin expansion at aggregate level at this moment because of the investments we are making towards scaling our infrastructure".
"This includes not just the stores that we are adding, but also the back-end large warehouses. For example, in Q2FY25, we added 152 net new stores and 7 warehouses. Since new stores and warehouses take a few months to ramp-up, they end up being margin dilutive in the short term," said Akshant Goyal, Chief Financial Officer.