Zomato Q1FY22 Results: Bad News not Quantified!

India’s first listed unicorn, Zomato, reported net loss of Rs. 360 cr for Q1 FY22, as against Rs. 134 cr loss for Q4 FY21 and Rs. 816 cr for full FY21, even as revenue gre 22% QoQ to Rs. 844 cr. Company attributes higher losses to higher non-cash ESOP cost (which are guided to continue) and investments towards growth.  

Zomato clocked approximately 10 cr order deliveries in the past 3 months, up from 24 cr orders of FY21, but just about, at the FY20 level, when 40 cr orders were delivered. Thus, company has now reached pre-pandemic level, in terms of order deliveries, which is its key business, despite all the lockdown related tailwinds. Active delivery partner count has nearly doubled to 3.1 lakh from 1.7 lakh in March 21.

In a 3-page letter to shareholders attached to the result, which is essentially like a press release, company has detailed Good news or areas where it has grown, with supporting graphs etc, like Gross Order Value (GOV) of India food delivery business up 37% QoQ or Adjusted Revenue higher by 26% sequentially. But the Bad news, or where operating matrix has deteriorated, there is just a small mention, without quantifying, like (i) contribution margin on India food delivery business reduced slightly in Q1FY22 (ii) India dining-out revenue down (iii) Hyperpure losses expanded.

Company talks about transparently addressing all meaningful questions around its business, through letters to its shareholders (so many adjectives!), but plans for an analyst meet, only once a year, at the end of each fiscal.

While company is in compliance with all regulatory disclosures, given its mcap of > Rs. 1 lakh cr size, an investor presentation detailing Q1 business performance or an analyst meet after every quarter, like most listed companies do, would help shareholders take more informed decisions, both institutional and retail.  

While company’s business is new age, is its shareholder engagement philosophy is decade-old? 

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