At its annual general meeting on Tuesday, Zomato’s management reiterated that the food delivery company expects to return to profitability within the next six months.
In the first meeting of the General Assembly last year, the founder and key management raised the issue of the unified economy and lowering the stock price. Zomato CFO Akshant Goyal told shareholders that the company expects the food delivery business to show profitability in the next few quarters. Goyal was quoted in the Moneycontrol report as saying, “At the enterprise level, we should have a break of six months to a year … Without Blinkit (in addition) it will take some time.” As Mint reported in May this year, Goyal emphasized the drive for profitability. We want to achieve profitability without further cuts. We think so. With $1.6 billion in the bank now, we need to build a profitable business as a whole… on a group basis. As investors, companies look to strong unit economics and pressure from the private and public sectors to work for profitability, India’s new-age economy companies are struggling to balance strategy and avoid cash burn.
Zomato founder and CEO Dipinder Goyal said on the call that the company will try not to spend more capital once it becomes profitable. He added: “In the 2018-2019 financial year, attracting new users in this category was key. More than 90% of Zomato’s business comes from monthly customers. Despite a 75% growth in revenue, the Ant Group-backed company posted a net loss of Rs 359 crore in FY22.
The company is working on various new initiatives to drive horizontal growth. Apart from acquiring food delivery company Blinkit (formerly Gropress), the company has also launched in-city food delivery services in select cities in India.
Shares of Somato, which went public last year, are now trading at Rs. 58.3, a 20% discount to the IPO issue price of Rs 76 per share.