Zomato said at its first annual general meeting (AGM) since going public that its business-to-business (B2B) supplies vertical Hyperpure might emerge to be as large as or bigger than its food delivery business.
“We think that this business has the potential of becoming as large or even larger than our food delivery business because the addressable market here is potentially larger than food delivery,” said Zomato Chairman Kaushik Dutta.
He also stated that Hyperpure is currently seeing ‘strong adoption’ by restaurant partners. Hyperpure’s revenue from operations increased 40% to INR 272.7 Cr in the first quarter (Q1) of fiscal year 2022-23 (FY23) from INR 194.2 Cr the previous quarter.
Zomato management also informed shareholders that the company does not intend to make any other strategic minority investments in the near future and has decided to focus its efforts on food delivery, Hyperpure, and the rapid commerce business Blinkit.
“We have made all the investments that we needed to for our future plans and we do not expect to make any other strategic minority investments for the foreseeable future,” a Zomato official stated at the AGM
Focus on Profitability
According to media sources, 41 shareholders were registered as speakers for the event, with approximately 10 of them questioning Zomato management on topics ranging from profitability to the acquisition of Blinkit. In response to the questions, Zomato stated that it aims to achieve adjusted EBITDA break-even between the fourth quarter of FY23 and the second quarter of FY24.
Despite several hurdles such as pandemic, macro-economic uncertainty, and rising prices, the Gurugram-based food tech company said it was able to keep its ‘adjusted EBITDA burn under control’ and achieve strong top line growth’ in FY22.
Zomato reassured shareholders by stating that its primary meal delivery operation is profitable. Blinkit, according to Dutta, has expanded the company’s addressable market.
“The good news is that the business has never been more solid than what it is today, fundamentally. While we continue to grow, our losses are reducing dramatically and we expect that trajectory to continue,” said CFO Akshant Goyal.
Driver Security & Share Prices
In response to questions regarding rider safety, CEO Deepinder Goyal stated that Zomato does not incentivize risky riding. He also stated that the corporation is considering implementing procedures to report erring riders.
“Delivery partner safety has always been a priority and no compromises have been or will be made here. We do not incentivise riders to be on time. We don’t even share the estimated time with the delivery partner. If anybody is speeding it is of their own accord. We will put phone numbers of the drivers on their bags and if they are speeding you (general public) can report it to us,” Deepinder stated.
When asked about the company’s share price decrease, CFO Goyal attributed it to a worldwide capital market correction and factors “out of our control”.
Zomato’s stock dropped when the company acquired Blinkit in June of this year. Zomato shares plunged to an all-time low of INR 40.55 on the announcement, but have since rebounded.
Zomato shares closed at INR 58 on Tuesday (August 30), down from a high of INR 169.10 in November last year. Due to market instability and unfavourable sentiment around the stock, marquee names including Uber, Tiger Global, Moore, and Sequoia sold their stakes in the firm.
The foodtech giant nearly halved its consolidated net loss to INR 186 Cr in the first quarter of FY23, from INR 360 Cr the previous year. Revenue from activities increased 63% year on year to INR 1,413.9 Cr.
