{"id":161151,"date":"2024-05-14T11:49:44","date_gmt":"2024-05-14T15:49:44","guid":{"rendered":"https:\/\/44.250.171.167\/?p=161151"},"modified":"2024-05-14T11:49:46","modified_gmt":"2024-05-14T15:49:46","slug":"zomato-ltd-q4-fy24-earnings-conference-call-insights","status":"publish","type":"post","link":"https:\/\/alphastreet.com\/india\/zomato-ltd-q4-fy24-earnings-conference-call-insights\/","title":{"rendered":"Zomato Ltd Q4 FY24 Earnings Conference Call Insights"},"content":{"rendered":"<p><strong>Key highlights from Zomato Ltd (ZOMATO) Q4 FY24 Earnings Concall<\/strong><\/p>\n<ul>\n<li><strong>Quick Commerce Expansion<\/strong>\n<ul>\n<li>Blinkit plans to double its store count in the next 12 months.<\/li>\n<li>Expansion will be focused on top metro cities like Bangalore, Hyderabad, and Mumbai.<\/li>\n<li>Target is to increase penetration in under-served areas within these cities.<\/li>\n<li>Delhi NCR will remain the largest market, but other metros are expected to catch up.<\/li>\n<\/ul>\n<\/li>\n<li><strong>Breakeven Timeline<\/strong>\n<ul>\n<li>New stores are expected to take slightly longer than 2 months to reach contribution breakeven.<\/li>\n<li>Exact timeline to depend on whether the store is in an existing or new location.<\/li>\n<li>Blinkit has accounted for the longer breakeven period in their projections.<\/li>\n<\/ul>\n<\/li>\n<li><strong>GOV Growth<\/strong>\n<ul>\n<li>Blinkit believes their GOV could potentially grow 4 times in the long term.<\/li>\n<li>4x growth an aspirational goal, not a specific timeline commitment.<\/li>\n<li>It will be a function of the store expansion and market penetration over time.<\/li>\n<\/ul>\n<\/li>\n<li><strong>Monthly Transacting Users Trends<\/strong>\n<ul>\n<li>Quick commerce MTUs have seen acceleration, while food delivery MTUs have been volatile.<\/li>\n<li>Blinkit expects quick commerce MTUs to continue growing, aligned with GOV growth of 20%+.<\/li>\n<li>MTU growth is expected to be driven by a combination of AOV increase and new user acquisition.<\/li>\n<\/ul>\n<\/li>\n<li><strong>Hyperpure Profitability and Growth<\/strong>\n<ul>\n<li>Hyperpure&#8217;s EBITDA margins improved from -9% in Q4 last year to -2% in Q4 this year.<\/li>\n<li>Growth rates have moderated from 146% YoY to 99% YoY in Q4, but still remain healthy.<\/li>\n<li>Focus is on driving growth rather than immediate profitability, as the business is still subscale.<\/li>\n<\/ul>\n<\/li>\n<li><strong>Blinkit Store Throughput<\/strong>\n<ul>\n<li>Directionally, average throughput per store is expected to increase over time.<\/li>\n<li>However, expansion can be lumpy, leading to potential one-off quarters of lower throughput.<\/li>\n<li>Overall, throughput per store is not expected to decline significantly.<\/li>\n<\/ul>\n<\/li>\n<li><strong>Zomato Everyday Expansion<\/strong>\n<ul>\n<li>Scaling the Everyday (daily essentials) use case for over 1.5 years.<\/li>\n<li>Currently live in Gurgaon, with plans to expand to Mumbai and Bangalore in the next few months.<\/li>\n<li>Expansion to other cities will be gradual, based on customer experience and economics.<\/li>\n<\/ul>\n<\/li>\n<li><strong>Blinkit Expansion Strategy<\/strong>\n<ul>\n<li>Expansion driven by confidence in business fundamentals and capabilities, not competition or margins.<\/li>\n<li>Focused on intensifying density in top 8 urban locations and plugging coverage gaps.<\/li>\n<li>75% of new stores opened in top 8 cities, 25% in non-top 8 cities.<\/li>\n<li>Growth in top 8 cities balanced by continued expansion in smaller cities.<\/li>\n<li>AOVs are higher in top 8 cities compared to smaller cities.<\/li>\n<li>Q4 witnessed a dip in AOV, but lower than the dip in the previous year&#8217;s Q4.<\/li>\n<li>Zomato expects Blinkit MTUs to eventually cross Zomato&#8217;s food delivery MTUs.<\/li>\n<li>Expanding the footprint of existing dark store partners in cities.<\/li>\n<li>Methodology for partner selection and engagement to remain largely the same.<\/li>\n<\/ul>\n<\/li>\n<li><strong>ESOP Costs<\/strong>\n<ul>\n<li>Total employee cost as a percentage of revenue reduced from 29% in FY22 to 12% in FY24, showing operating leverage.<\/li>\n<li>The recent 2% ESOP pool expansion is expected to suffice for the next 5 plus years.<\/li>\n<li>ESOP cost of \u20b9160 crore in Q4 is expected to increase further going forward.<\/li>\n<\/ul>\n<\/li>\n<li><strong>Blinkit Income and Margin<\/strong>\n<ul>\n<li>Zomato expects advertisement revenue on Blinkit to increase from current levels.<\/li>\n<li>Advertisement income has been a major driver of Blinkit&#8217;s unit economics so far.<\/li>\n<li>Zomato has indicated a steady state adjusted EBITDA margin of 4-5% for Blinkit.<\/li>\n<li>The fixed cost as a percentage of GOV is expected to be broadly similar to food delivery business.<\/li>\n<\/ul>\n<\/li>\n<li><strong>Increasing Take Rates<\/strong>\n<ul>\n<li>Zomato does not have specific targets for increasing take rates through ad sales or customer initiatives.<\/li>\n<li>The approach is to optimize overall profits while providing the best customer experience.<\/li>\n<li>The company aims to juggle multiple levers to drive growth and achieve desired margin levels.<\/li>\n<\/ul>\n<\/li>\n<\/ul>\n","protected":false},"excerpt":{"rendered":"<p>Key highlights from Zomato Ltd (ZOMATO) Q4 FY24 Earnings Concall Quick Commerce Expansion Blinkit plans to double its store count in the next 12 months. Expansion will be focused on top metro cities like Bangalore, Hyderabad, and Mumbai. Target is to increase penetration in under-served areas within these cities. Delhi NCR will remain the largest [&hellip;]<\/p>\n","protected":false},"author":1767,"featured_media":154818,"comment_status":"open","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"jetpack_post_was_ever_published":false,"footnotes":"","jetpack_publicize_message":"","jetpack_publicize_feature_enabled":true,"jetpack_social_post_already_shared":true,"jetpack_social_options":{"image_generator_settings":{"template":"highway","default_image_id":0,"font":"","enabled":false},"version":2}},"categories":[9825,392,12],"tags":[10169,8610],"class_list":["post-161151","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-earnings-call-highlights","category-earnings","category-other-industries","tag-earnings","tag-food-delivery"],"jetpack_publicize_connections":[],"jetpack_featured_media_url":"https:\/\/alphastreet.com\/india\/wp-content\/uploads\/2023\/10\/CC_Image_1.jpg","jetpack_likes_enabled":false,"jetpack-related-posts":[{"id":132191,"url":"https:\/\/alphastreet.com\/india\/zomato-ltd-q1-fy23-earnings-conference-call-insights\/","url_meta":{"origin":161151,"position":0},"title":"Zomato Ltd Q1 FY23 Earnings Conference Call Insights","author":"Praveen","date":"August 3, 2022","format":false,"excerpt":"Key highlights from Zomato Ltd (ZOMATO) Q1 FY23 Earnings Concall Q&A Highlights: Analyst asked about path to profitability for ZOMATO. 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