Amidst a period of near-term global uncertainty, we at Zomato remain focused on our long-term strategy of better serving our customers and our community. Our goal remains to be the preferred food company in India and we believe we are in a stronger position than ever before – confident in our recent execution and well capitalized for future growth.

In this letter, we will discuss three important topics –

  • Last quarter’s performance
  • Recapping the bigger picture for our food ordering and delivery business (given our short history as a listed company)
  • Our capital allocation strategy going forward (including our thoughts on quick commerce)

Our performance in the last quarter

(Q3 FY22 update)

Adjusted Revenue – on a year-on-year (“YoY”) basis, we saw a 78% growth in Adjusted Revenue to INR 14.2 billion ($190 million). On a sequential quarter-on-quarter (“QoQ”)  basis, we saw a flat quarter. 

Adjusted Revenue is the sum of Revenue from operations (from all businesses) and customer delivery charges in our food delivery business. 

Our Revenue from operations grew by ~9% QoQ, while the customer delivery charges de-grew by 22%. This was driven by INR 7.5 per order reduction in customer delivery charges in Q3 FY22 as compared to Q2 FY22. 

We re-distributed our growth investments more in favor of discounts on customer delivery charges vis-a-vis food coupons. Why? We are seeing higher return on investment with discounted delivery charges as compared to coupons. As a result, discounts per order reduced by INR 5 per order in the last quarter as compared to Q2 FY22.

Part of the reduction in customer delivery charges is also because we started operations in ~180 new cities (we are now in a total of 700+ cities), where we introduced temporary free delivery to cultivate a culture of ordering food from restaurants.

Customer delivery charges over the years have grown steadily as a strong validation of the convenience that our platform offers. Given the meaningful size of customer delivery charges today, we are now able to use this as a lever (in addition to food coupons) to drive growth on our platform.

Adjusted EBITDA loss reduced to INR 2.7 billion ($36 million) in Q3 FY22 as compared to INR 3.1 billion ($41 million) in the previous quarter (Q2 FY22) driven by rationalizing spends across various businesses and functions. 

Gross Order Value (“GOV”) grew by 84.5% YoY and 1.7% QoQ to INR 55.0 billion ($733 million) in Q3 FY22. 

We believe that the weak QoQ growth in GOV 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). 

Number of orders grew 93% YoY and 5% QoQ. Average order value (AOV, which includes customer delivery charges) shrunk by ~3% QoQ, mostly on account of reduction in customer delivery charges. 

Contribution as a % of GOV for our food delivery business was 1.1% in Q3 FY22 as compared to 1.2% in Q2 FY22.

Few more KPIs below –

Magic of countdown – New Year’s Eve 

The day of December 31 is usually our highest GOV day in a year. We exited the quarter on a high with our December 31, 2021 GOV at ~$18 million, which was ~78% higher than the same day last year. This is the highest YoY growth we have seen on December 31 in the past 3 years.

We are very proud of our tech, and how it held up during the highest peaks on New Year’s Eve. We hit ~2.6 million orders on that day.

Going by past trends, our volume on New Year’s Eve is a leading indicator of the growth we expect during the next year.


Hyperpure is growing well and revenue from this business grew by 168% YoY and 40% QoQ to INR 1.6 billion ($21 million) in Q3 FY22. Hyperpure is now present in 9 cities and we supplied to over 27K unique restaurants in this quarter – up 50% from ~18k unique restaurants in Q2 FY22. 

Dining-out and Zomato Pro

The revival of in-restaurant dining in Q3 FY22 led to some green shoots in our dining-out ad-sales business. Our focus here for now is on improving our product and customer engagement while putting monetization on the backburner for a while.

The bigger picture

Zooming out from the current quarter, we remain focused on the bigger picture and the long-term growth potential of our food ordering and delivery business in the years ahead.  Zomato continues to benefit from the changes we are helping to drive in the overall restaurant industry.

The consumption of restaurant food has grown manifold in India on the back of higher accessibility, choice and affordability of restaurant food. The restaurant industry in India is highly fragmented with ~90% of the revenue coming from standalone restaurants and only ~10% from chains. In this ecosystem, we have played our part by helping small restaurants level the playing field for themselves and get discovered by new customers. 

As a result, average monthly active food delivery restaurants have grown by 6x and average monthly transacting customers have grown by 13x on Zomato over the past 5 years.

As we match supply and demand of restaurant food on our platform, the food delivery GOV has grown by 17x on Zomato over the past 5 years.

Almost half of the annual transacting customers in CY21 were ‘new customers’ for Zomato, indicating a large untapped market. 

As new customers age on our platform, we have seen their ordering frequency go up. 

Along with frequency, the average order value (AOV) has inched up over the last couple of years to ~INR 400 as the business is showing early signs of maturity.

Profitability – over the years, unit economics in our food delivery business have improved with scale. Contribution margin (as a % of GOV) has improved steadily from –15% back in 2019 days to 1% today. A ~5% contribution margin in our food delivery business (at the current scale) should get us to EBITDA break-even as a company (covering all common corporate costs as well). 

Two of our top five cities have consistently seen >5% contribution margin for the last 7 quarters. These two cities jointly contribute ~15% to our GOV today. Another top 5 city (additional ~15% of our GOV) is also at ~4.3% contribution margin (Q3 FY22).

Capital allocation

We are currently well capitalized with ~$1.7 billion cash on our balance sheet, and we don’t envisage raising cash in the foreseeable future. With this capital, we plan to focus on two key areas of investment in our business – 

  1. Core food businesses – including food ordering and delivery, dining-out and our B2B supplies business Hyperpure. We will need to continue to fund the growth investments here till the business becomes profitable. 
  2. Quick commerce this category offers a huge addressable market and is also very synergistic with our food delivery business in the long term giving us a right to win over standalone players.

    We made cash investments worth ~$225 million in the past year across three companies – Blinkit (erstwhile Grofers), Shiprocket and Magicpin – towards our objective of building out quick ecommerce in India.

    Of these investments, Blinkit is the closest to how we all know the quick commerce business today. Blinkit pioneered 10-minute grocery delivery in India post our ~$100 million investment in August 2021. Since then, the platform has scaled rapidly to ~$450 million annual run rate GMV (January 2022 annualized) and now operates with 400+ dark stores across 20 cities in India. 100% of Blinkit’s business now is in quick commerce format with a median delivery time of ~12 minutes. Delightful customer experience is leading to high customer retention, ordering frequency and willingness to pay for the service. 

    We are very bullish on the product-market fit, unit economics, as well as the growth trajectory of the quick commerce category. It reminds us of the food delivery category a few years ago when many platforms competed over a large and growing market but ultimately only the few who delivered exceptional experience to their customers survived. We are becoming increasingly confident in our decision to invest behind market leadership here with healthy unit economics. As a result, we are updating the upper bound of our potential investments in this category to $400m cash over the next two years.

One question we are often asked – “are you going to continue making investments in more companies (in the two categories above) in the future?”

Yes, we want to continue making minority equity investments in businesses that will accelerate growth of our business. We aim to work together with founders of other companies in a symbiotic relationship and utilize their expertise to strengthen and support our business. In an otherwise competitive VC ecosystem, trust and partnership drive our investments and being one of the top internet companies in India makes us a partner of choice for other founders. 

In this quarter, we have so far made two additional minority equity investments in UrbanPiper ($5 million) and Adonmo ($15 million) – 

– UrbanPiper is a neutral tech infrastructure layer helping restaurants become “food delivery-ready”. With our investment, we hope to leverage UrbanPiper’s penetration in the restaurant industry which will drive efficiencies of scale for all food delivery players in the country. 

– AdOnMo is building a unique tech-enabled hyperlocal ad-network, which can serve targeted and contextual ads to hyperlocal audiences. Since Zomato was originally a local advertising business, we believe we can drive significant value to our shareholders through our investment in AdOnMo.

Also, we are in the process of setting-up our own non-banking financial company (NBFC) which will allow us to extend short term credit to our ecosystem – our delivery partners, customers and restaurant partners. We believe we can add significant value to, and improve the experience of, our platform partners with this initiative without requiring Zomato to allocate significant capital. Over the next few years, our focus will remain creating a great experience for our stakeholders and helping to grow our overall ecosystem rather than optimizing for revenues or profits.

That is it from our side, for now. 

As always, we remain grateful to our shareholders, who believe in us and in the long-term view of our business. 

Stay well,

Deepinder (Founder & CEO) and Akshant (CFO)

Note: If you have any questions or clarifications or want to talk to us, please write to


  1. Adjusted Revenue and Adjusted EBITDA reconciliation 

The following table reconciles audited revenue from operations and stated loss for the period (as per IND AS) with Adjusted Revenue and Adjusted EBITDA.

  1. INR / USD exchange rate assumed to be at 75
  2. Zomato Limited’s financial year ends on 31 March of every year
  3. Glossary


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