Zomato looking at profitability sans further dilution
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Online food delivery aggregator Zomato is looking at profitability without raising more capital, Akshant Goyal, chief financial officer, said on Tuesday.

“We want to get to profitability without diluting any more. That’s how we’re thinking about it. With the current $1.6 billion that we have in the bank, we should get to a profitable business on an aggregate basis on a group basis,” Goyal told analysts during Zomato’s first financial earnings call since it went public.

Zomato’s founder and chief executive Deepinder Goyal added that the company will try not to spend most of the funds by the time it turns profitable. “In FY18-19, it was largely about acquiring more users who were new to this category,” he added. More than 90% of Zomato’s business is from repeat monthly customers. The Ant Group-backed firm incurred a net loss of ₹359 crore in FY22 despite a 75% growth in revenue.

Akshant Goyal said the competitive intensity will be a good window for Zomato to scale up quickly without higher expenditure. "Had we been in the same environment as 2021 in terms of capital markets, we could have seen three, four more e-commerce startups getting funded, and that would have made the environment way more competitive than what it is today. So, on the competitive intensity bit, we are actually happier than what we were five-six months ago,” he added.

As it recovers from the covid-led stress, Zomato plans to build on consistency of service to beat competition.

Zomato’s customer base is meaningful, Deepinder Goyal said, "We don’t spend money on subsidies any more. People are coming to the platform for convenience, assortment and the choice that they get. The business actually doesn’t need to be subsidized.”

More than 50% of Zomato’s new customers every quarter are organic, it claimed, unlike standalone food delivery players.

“Over time, the order density will go up. Essentially it means that the neighbourhood will mature with more restaurants and orders,” said an executive.

On the potential acquisition of Blinkit (formerly Grofers), the CFO said that after it gave $150-million emergency loan to the quick commerce startup, “whether we give the remaining amount will depend on if they need the money. Some investments are done with the objective of working closely with companies and aligning with them more, going forward.”

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