Mohit Gupta, co-founder of Zomato has quit the company after a four-and-half-year stint, denoting the third high-profile exit from the food delivery major in recent weeks.
Zomato’s new initiatives head and former food delivery chief Rahul Ganjoo resigned earlier this week while Siddharth Jhawar, the head of its Intercity Legends service, announced that he had left the company a week back. Entrepreneur Mohit Gupta joined Zomato in 2018 as the head of food delivery. He was subsequently elevated to co-founder in 2021 to regulate new businesses when Ganjoo was made the CEO of food delivery. Before joining Zomato, he was the chief operating officer of the online travel company MakeMyTrip.
Amid an implosion of tech stocks, the food delivery company has suffered in the public market this year as its stock cost has fallen by more than 50 percent from its peak of Rs 162 on the BSE. Besides, the growth of its food delivery business has slowed as it has become bigger – quarterly sales have grown only 22 percent from Rs 5,410 crore in Q2 of FY21 to Rs 6,631 crore in Q2 of FY22. In contrast to this, quarterly sales grew 158 percent from Q2 of FY21 to Q2 of FY22.
Nonetheless, there could also be a bright spot. Marketing cost has come down 23 percent year-on-year to Rs 300 crore in Q2 and delivery costs have dropped 28 percent to Rs 283 crore.
Given that the company’s income has grown 62 percent over this period, it would seem that the operating leverage and scale impacts that investors have been longing to see are finally kicking in. Zomato’s overall loss for the quarter narrowed to Rs 250.8 crore against Rs 434.9 crore registered in the same quarter last year. Meanwhile, revenue from operations zoomed 62.20 percent to Rs 1,661.3 crore. In contrast to this, quarterly sales grew 158 percent from Q2 of FY21 to Q2 of FY22.
However, there might also be a bright spot. Marketing cost has come down 23 percent year-on-year to Rs 300 crore in Q2 and delivery expenses have dropped 28 percent to Rs 283 crore.
Given that the company’s revenue has grown 62 percent over this period, it would seem that the operating leverage and scale effects that investors have been longing to see are finally kicking in.
In August, Zomato said that its food delivery business had broken even at a working level as it reported that Adjusted EBITDA for the fragment was zero in the June quarter (Q1). But it has now revised that metric to an Adjusted EBITDA loss of Rs 113 crore for Q1. Zomato has again claimed to break even in food delivery in the September quarter as it recorded an Adjusted Ebitda of Rs 2 crore for the segment.
Adjusted Ebitda is a metric that many tech companies utilize even as each one of them characterizes it differently. Typically, expenses that are not considered operational for the business such as employee stock option costs are kept out of it.