Zomato Ltd Q4 FY22 Earnings Conference Call Insights

Key highlights from Zomato Ltd (ZOMATO) Q4 FY22 Earnings Concall

Q&A Highlights:

• Chirag Shah from CLSA asked what proportion of incremental customer acquisition is organic. Akshant Goyal CFO replied that more than 50% of new users every quarter are still organic, which means CAC is lower vs. standalone food delivery players. This makes the economics going forward healthier, leading to the improvement seen in the overall P&L in the last 3-4 years.

 

• Chirag Shah of CLSA enquired that as ZOMATO looks for adding adjacencies to its core food delivery business, what are the thoughts on the super app structure. Deepinder Goyal MD answered that ZOMATO haven’t seen the super app work in India so far. So ZOMATO is still figuring it out.

 

• Sachin Salgaonkar from Bank of America asked about the unit economics of quick commerce business. Akshant Goyal CFO answered that it’s too early for ZOMATO to give color on specific unit economics levers and how they’re trending. ZOMATO is not authorized to share the data right now, because the only access is the Blinkit data as a shareholder.

 

• Sachin Salgaonkar with Bank of America asked about any potential acquisition in a quick commerce business. Akshant Goyal CFO said there is no definite timeline. ZOMATO will take it as it comes, and ZOMATO doesn’t necessarily need to acquire every businesses that it invest in also.

 

• Sachin Salgaonkar from Bank of America asked about the statement of no plans on making any more minority investments, but the existing companies might need more capital. Akshant Goyal CFO answered that most of the companies are doing really well. ZOMATO doesn’t think there is an imminent need for raising money in these companies. ZOMATO will take a call if it comes to that point of funding.

 

• Sachin Salgaonkar of Bank of America asked about the impact of higher inflation on ZOMATO’s business. Akshant Goyal CFO replied that it’s very hard to be able to isolate the impact of these things. What ZOMATO is seeing is that its business continues to grow and cost is still coming down. But there are definitely some headwinds on inflation, which could be impacting consumer demand.

 

• Sachin Salgaonkar from Bank of America enquired what all goes into unallocated costs. Akshant Goyal CFO said that these are essentially server and tech infra costs, these are corporate salaries and corporate overheads, costs which are not allocable to any business that ZOMATO runs.

 

• Garima Mishra of Kotak Securities asked about the quantification of growth of the top 10 or top 20 cities vs. some of the other cities in the mix. Akshant Goyal CFO said that the top rated cities is 60% of ZOMATO’s business. So the overall business cannot grow without these cities growing. They’re growing at a healthy rate, which is not very different from ZOMATO’s average growth rate right now.

 

• Garima Mishra of Kotak Securities asked about the progress on restaurant subscriptions, Zomato Pro, Hyperpure businesses. Akshant Goyal CFO answered that ZOMATO’s dining-out business is profitable even now, although it’s very small in scale and size today and hope to scale profitably going forward. Hyperpure is growing nicely; the focus on profitability there is no different than food delivery.

 

• Abhishek Bhandari from Nomura asked to share some timeline around ZOMATO’s internal vision of taking it to EBITDA-neutral business on the core food, excluding the hyperlocal. Deepinder Goyal MD said the company doesn’t have any timeline for this and is operating on an as soon as possible mode.

 

• Vijit Jain with Citi asked that when one looks at some of the marketing expenses, if all discounts are above contribution margin or absolute new users are accounted differently. Akshant Goyal CFO answered that all its discounts and subsidies are above contribution. And in ZOMATO’s parlance, marketing spends (spend on digital marketing, ATL, or any other channel) is below contribution.