Zomato’s losses widen in first quarterly earnings since IPO

Zomato’s losses more than tripled in its first quarterly earnings report since its listing last month as the company’s expenses grew and the pandemic hit the firm’s dining-out business.

The Gurgaon-headquartered firm reported (PDF) a net loss of $48 million in the quarter that ended in June, up from about $13.5 million during the same period last year.

The 12-year-old firm also reported strong revenue growth, moving from $35.7 million to $113.4 million during the aforementioned period as more people in the country began to order food online.

The firm said it delivered more than 100 million food orders last quarter and has surpassed a billion orders in the past six years.

“This is largely on account of non-cash ESOP expenses which have increased meaningfully in Q1 FY22 due to significant ESOP grants made in the quarter pursuant to creation of a new ESOP 2021 scheme. This divergence in reported profit/loss and Adjusted EBITDA will continue going forward,” a blog post signed by top Zomato executives read.

The executive said in the post that the second wave of the coronavirus, which hit the country beginning in April, “significantly impacted the dining-out business in Q1 FY22 reversing most of the gains the industry made in Q4 FY21.”

Shares of Zomato, which had a stellar debut on the Indian stock exchanges last month, fell 4% on Tuesday ahead of the results and ended at slightly below the original issue price of $1.68 a share on July 23, which valued Zomato then at $13 billion.

The company said it will hold one call with analysts a year — instead of the typical four — and address questions through blogs and quarterly shareholder letters.

In India, Zomato competes with Swiggy, which is backed by SoftBank and Prosus. Last month, the Indian food delivery startup said it had raised $1.25 billion in a new financing round. SoftBank Vision Fund 2 evaluated Zomato before making its bet on Swiggy, people familiar with the dealflow said.

Both the firms in recent quarters have expanded to new categories, including grocery delivery.

Zomato is the first Indian consumer internet startup in the current wave to go public. India’s financial services Paytm and MobiKwik, as well as online insurer PolicyBazaar and online beauty products firm Nykaa, have filed the paperwork to go public later this year.