Higher expenses drag Zomato; Q3 net loss widens to Rs 346.6 crore

New Delhi: Online food delivery platform Zomato Ltd reported a widening of consolidated net loss at Rs 346.6 crore in the third quarter ended December 31, 2022 impacted by higher expenses and slowdown in food delivery business.

The company had posted a consolidated net loss of Rs 67.2 crore in the same quarter last fiscal, Zomato Ltd said in a regulatory filing.

Consolidated revenue from operations during the quarter under review stood at Rs 1,948.2 crore. It was at Rs 1,112 crore in the corresponding period a year ago, it added.

Total expenses were at Rs 2,485.3 crore in the third quarter. In the same period last fiscal, it was at Rs 1,642.6 crore.

"We have seen an industry-wide slowdown in the food delivery business since late October (post the festival of Diwali). This trend has been seen across the country but more so in the top eight cities," Zomato CFO Akshant Goyal said.

It remains a challenging demand environment for the food delivery business, he said, however, adding, "we are seeing green shoots of demand coming back in the recent weeks, which makes us believe that the worst may be behind us."

He said in January, Zomato exited from around 225 smaller cities which contributed 0.3 per cent of its gross order value in Q3FY23.

"Performance of these cities was not very encouraging in the past few quarters and we did not feel the payback period on our investments in these cities was acceptable," Akshant said.

On whether signs are emerging about a slowdown in the long term growth in the food delivery business, Zomato founder and CEO, Deepinder Goyal said, "We believe that the long term opportunity remains large and exciting."

The current slowdown is a result of a few temporary factors, including macro slowdown for the mid-market segment; boom in dining out for the premium-end and in travel at the premium-end, he added.

In order to revive growth, Deepinder said the company has taken steps such as launching a new membership programme called Zomato Gold and is also working on remodeling the Zomato Instant service to focus on offering customers home-style cooked meals at affordable prices.