Zomato’s customers are happy, but investors are not

• Zomato’s loss has reduced sharply in the last months to ₹63 crore from ₹352 crore last year.
• However, investors were still disappointed as the company’s drop in customer delivery charges affected its revenue growth.
• As a result, shares of the company slipped 6% to ₹88 on Friday morning.

Online food delivery firm Zomato’s loss is finally declining, but that is not enough to please investors.

The company’s consolidated loss narrowed sharply to ₹63 crore for the quarter ended December as against a loss of ₹352 crore in the same period last year.

The company had reduced its customer delivery charges, which had impacted its adjusted revenue and gross order value in the quarter. Gross order value grew merely by 1.7% quarter-on-quarter to ₹55 billion in October to December.

“We believe that the weak QoQ [quarter-on-quarter] growth in gross order value was primarily due to reduction in customer delivery charges as mentioned above, in addition to a soft impact of post-COVID reopening (including some shift from delivery to dining out),” said Zomato.

Also, average order value (which includes customer delivery charges) shrunk by close to 3% quarter-on-quarter, mostly on account of reduction in customer delivery charges.

Analysts at Credit Suisse reportedly said that this was a weak quarter for the company as growth in gross order value slowed down.
Following this, shares of the company slipped 6% on February 11 to ₹88, very close to its issue price of ₹76.

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