But COVID-19 has cast its shadow with the first quarter seeing only $40 million of revenue and a massive hit to Zomato dine out offerings despite a strong jump in Hyperpure
Online food delivery major Zomato has reported a 105 percent year-on-year jump in FY20 revenue to $394 million. In Q1 FY21, revenue has been affected by the novel coronavirus pandemic and the ensuing lockdown, with the restaurant aggregator and food delivery start-up reporting only $40 million.
While the last year numbers show Zomato has taken a few steps forward towards earning money in the delivery business, COVID-19 has completely turned its financials awry. If Q1 FY21 revenue at $40 million is anything to go by, Zomato could end up seeing its business being set back by a year.
In terms of EBITDA losses, Zomato has reported a slight increase to $293 million in FY20 compared to $277 million in FY19. The same for Q1 FY21 stands at $12 million. EBITDA stands for earnings before interest, taxes, depreciation and amortisation.
“In the last few quarters, we have fast-tracked our efforts towards making our business profitable and drive efficiency into our spends. While COVID-19 has impacted the size of our business, it has accelerated our journey to profitability,” Deepinder Goyal said in a July 10 blogpost published by the Gurugram-based company on its website.
The management estimates that COVID-19 will further help reduce the burn rate to less than a million dollars in July while revenue should touch almost 60 percent of pre-COVID levels, which was around $23 million per month.
“We expect to make a complete recovery over the next three to six months, while continuing to maintain tight control on costs and profitability,” said Goyal.
In terms of food delivery, gross merchandise value jumped over 108 percent YoY to $1.4 billion in FY20. Having acquired Uber Eats, Zomato has managed to retain 97 percent of the combined GMV into the Zomato app, thereby showing a successful integration.
While food delivery GMV fell 80 percent from the peak of mid-February, Zomato said orders have climbed back to 60 percent of their pre-COVID volumes. The management attributed this fall in volumes to a large chunk of young consumers returning home and consuming home cooked food. Once they return as offices resume, Goyal sees volumes climbing up.
For every delivery, the contributory margin has jumped to Rs 27 in Q1 FY21 on lower delivery and advertising costs. Zomato was losing Rs 47 per order in Q1 FY20. The management sees this number stabilising between Rs 15 and Rs 20 per order.
While food deliveries have somehow managed to remain operational, Zomato has seen its dine out segment slumping because of the pandemic and social distancing norms. Given that consumers are still wary of eating out, it sees a longer recovery curve for this segment.
In FY20, revenue from the dine out business stood at $56 million, up 20 percent YoY. EBITDA margin improved to 43 percent from 32 percent in FY19.
In the business-to-business deliveries space, Zomato said it has expanded the number of restaurants buying through Zomato Hyperpure to 2,256 from 486 last year. Revenue from this business has jumped manifold to $14.7 million compared to $1.8 million in FY19.
Zomato had laid off 13 percent of its staff in May and also reduced salaries for 75 percent of its employees. The company said that since July it has reinstated their salaries.