ETERNAL LIMITED

Ankur Rudra

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Ankur Rudra

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Ankur Rudra

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Ankur Rudra

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Akshant Goyal

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Vivek Maheshwari

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Vivek Maheshwari

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Al binder Singh Dhindsa

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Vivek Maheshwari

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Akshant Goyal

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Is Zomato beginning to hit any penetration challenge due to reversal of consumer behavior?

— Ankur Rudra

Is there any concern that there could be an issue from the penetration side and any kind of reversal in consumer behavior, which might impact sustainable growth on a multiyear basis, not for next quarter or next year?

— Ankur Rudra

Now I understand in 4Q, you'll probably have an impact of the number of working days, but you had that last year as well.

— Ankur Rudra

Also because of Zomato Gold , the MTUs have come down and not gone up because we do see an impact of clubbing of some orders in the same households, which might have just a single membership.

— Akshant Goyal

So, ifI'm a non-Gold member and a Gold member in the same household, we do see some negative impact of the non Gold member doing lesser orders.

— Akshant Goyal

Secondly, on food delivery itself, you have articulated, and you have been mentioning these things for the last couple of quarters in terms of the profitability ambition and all of that, with growth being elusive recently, how much of that is to be blamed to macro environment slowdown?

— Vivek Maheshwari

I know these are again fast-moving products, but I'm sure there will still be a fair amount of balance sheet risk that your partners and therefore, you carry directly or indirectly, how do you ensure that the inventories are the ABC criteria or FIFO.

— Vivek Maheshwari

It looks to me at least like some of the ordering frequency has maybe improved a little bit Q-o-Q, your MTUs obviously declined and likely the ordering frequency did not decline.

— Vijit Jain

Second question, we did see an impact of Zomato Gold on contribution margin, and you did point out to the fact about the frequency increasing and MIU decreasing.

— Sachin Salgaonkar

Now, whether that leads to a decline in MTUs further or not, it's a function ot: again, multiple other things, including the number of new users that we add going forward as well as how we are able to increase the frequency of the existing customer base.

— Akshant Goyal

And with respect to your working capital now, I see that there was a change ofINR 140 crores, negative INR 140 crores in this quarter, whereas in the previous quarter, it was a positive impact of INR 114 crores.

— Swapnil Potdukhe

But how do you think about this impacting your own ability to charge 18%, not for this quarter, but if you take a medium-term view, how do you see this as a kind of risk?

— Aditya Suresh

Q

Congratulations on the great execution and hitting the profit milestone for the ex-Blinkit business. The first question I had was on what drove the profitability this time. Clearly, on a quarterly basis, it appears that it's come from a lot more cost management in both, in the food business, in the Blinkit business on utilization and also rationalization of staff and A&P (advertising and promotion) costs. The question I think we have to an extent is when do we see sustainable growth? And what is sustainable growth for this business after seemingly 3 quarters of ve1y limited volume growth? Is Z

Akshant Goyal

Hi Ankur, Thanks for your question. Akshant this side. So , we've given a breakup of key contributors to margin improvement in the food delivery business. I would say it's a combination of both growth in revenue as well as reduction in cost per order. And as you can see in that chart on Page 5 of the letter, it's all across the board. So, as we've been saying over the last few quarters that we've been hying to look at all levers of efficiency in the business. The team has been executing well across the board and we just started to see a little bit of bounce back which is going to lead to a mod

Q

Hi , good evening team. A couple of questions. First, Akshant, ifI look at your release, it says that about 30% of your users have opted for Gold, right? And their frequency has gone up by about 60% and on top of that, there is an MIU reduction on a sequential basis, right, slightly. So, if I just do a rough math, it looks like that I would have thought that the customers who would have dropped off would be the low-value customer from that standpoint. But ifI do the math of Gold , the residual customer base, it looks like the frequency has gone down by about between 10% and 15% sequentially. W

Akshant Goyal

Vivek, the 30% is the share of orders, it's not actually the number of customers. So number of customers will be lower than 30%. And if you do the math that way, you will perhaps not get to the same answer. So I did run up some permutations, even if 30% is the GOV number, I have made some assumptions on AOV, but that number still is declining reasonably, Akshant. With 0.8 million customer users or MTUs in the base lower this time around, why should that frequency go down? Shouldn't frequency go up if you don't have those 0.8 million customers? This 30% again is for the month of March, not for

Q

Hi Akshant, just a question on Gold program. Since you have started charging for the program, do you continue to see sign-ups at a similar kind of pace? And how do you think in general about the pricing plus frequency mix in the sense that, at what kind of band, does it become accretive versus your current contribution margins?

Akshant Goyal

We've been always charging , Vijit. It was never for free. And we'll will keep optimizing the pricing basis the customer behavior, we see. So, the specific answer to your question will be ve1y difiicult for us to share. It's also competitively sensitive. Sure. My second question is on the dine-out business. Now I can see in your other revenues, ifI strip out the one-off from, I think, Talabat that there is some improvement Q-o-Q and you did start some initiatives on the dine-out side this quarter. So can you talk a little bit about that and how to think about that in FY24. And ifI can add a fo

Q

Congrats with a great set of numbers, fantastic execution. First question, Akshant, just wanted to go to the Page 5 chart. And we look to extrapolate this chart from, let's say, FY23 to FY24 , what as per you guys could be the top 3 levers which could lead to further improvement in the margins out here? Could it be some of the areas which we have not yet seen much improvement like a decrease in delive1y cost? Or would it be the same stuff like an improvement in, let's say, commissions and so on and so forth?

Akshant Goyal

Hi , Sachin. So yes, we expect improvement to contribution from all of these things as we move from INR 18.5 per order contribution to whatever we get to by the end of next year. We've also mentioned in the letter that delive1y cost has not changed much despite a lot of what we have done in the past because of various reasons. But going forward , we do expect that to change. So, we are hoping that reduction in delive1y costs will be more than what we've seen in the last year. And likewise, revenue should continue to increase, and we also expect our other variable costs to continue to come down

Q

Good set of numbers, so congratulations on that. So just wanted to start with the first question which I had asked last time also, where are we accounting the Gold revenue that you are getting right now, exactly which line items are we showing that?

Kunal Swarup

Hi , Swapnil. This is Kuna! here. We are accounting for this revenue in the food delive1y business essentially. Sony, we were experiencing some trouble with our conferencing system. Swapnil, you have to tell us till what point did you hear Kunal's answer, and we'll pick it up from there. I think you mentioned that it was accounted in the food delive1y vertical , but beyond that, I think we lost it. Yes, that's correct. Essentially, it's been accounted for in the food delivery business. But the revenue is recognized net of the discounts as per accounting standard 115. So eventually, ve1y little

Q

So, in your last letter, you had shared a chart on power customers. Just wanted to get a sense on how does the AOV on orders from these customers compare with those of the remaining MTUs on the platform? That's my first question. Kuna! Swarup: We don't share that data, Sneha. But just to give you some broad color, they tend to be slightly higher as compared to the other customers.

Sneha Satyamoorthy

Okay. Sure. And my second one is that could you also give some additional context around some of the recent key EV partnership announcements that have been made. What do they entail? And what's the likely impact on driver payouts or delive1y cost over the next few years as we scale the number of EV-based deliveries. Kuna! Swarup: That entire ecosystem is very early , Sneha. What we are trying to do is essentially further the adoption ofEVs by helping some of these third-party EV providers connect with our riders and offer a solution to our riders that works for them from an economic standpoint

Q

I just had one topic to ask. So, your restaurant take rates have clearly improved fairly nicely over the past couple of years and is up about 200 basis points. We're now close to about 18%, right? So, few subtopics within this. So, if you look at the number of restaurants, who are there as partners on your platform. That's been steady over the past several quarters. I guess it's an element of the better paying restaurants on your platform. Do you see scope for further gains here as that mix improves, Akshant?

Akshant Goyal

Broadly, with our take rates, the mission is to be competitive, and we are lower than what the competition is charging. So , as we continue to add more value to restaurant businesses, we expect some improvement in commission revenue going forward. And then I guess in terms of the industiy structure, just a bit more short term. We've seen kind of headlines about, say, someone like Coke take a stake in Thrive, etc. I fully appreciate there are significant scale differences. But at the margin, are you seeing any increase in competitive pressures at all? Or do you still see this as a duopoly? It's

Q

Hello, can you hear me?

Management

Q

Congrats to the team on generating first quarter of cash surplus. Bulk of my questions have been answered. But just on Hyperpure, Akshant, this business has now achieved reasonable scale. So , what are the growth and profitability plans for this business going forward?

Akshant Goyal

We expect the growth momentum to continue in this business. It's still reasonably small in size compared to the opportunity here. And as we continue to scale, given that it is fairly high operating leverage business, we also expect the losses to continue coming down. So yes, both from a top-line and bottom-line perspective, we are excited about this business. In terms of just this number of cities presence, how do we expand this to the number of cities that we are present right now? At this point, we're not necessarily thinking of expanding into more cities. Within the 9-10 cities that we are

Q

Now ifI see your 4Q FY22 results release, you very clearly told us that 60% of your GOV for that quarter for the food delivery business was contributed by top 8 cities. So, could you give us an update of how much is that contribution? I mean, now or for 4Q FY23? Kuna! Swarup: That number hasn' t changed too much, Garima. We don ' t report it, but it's not changed much. Essentially, the growth has been pretty secular across our top 8 cities and the cities beyond them as well. So, it's no meaningful change there.

Garima Mishra

Okay. And with the advent of Gold, this proportion has not changed at all , Kuna!. I mean I would have expected that the uptake of Gold, and you also selectively give out these invites, I would have thought that the sort of run rate of orders from the top 8 cities just increases a little bit higher. So, is there any impact on that at all visible in the, let's say, first quarter? Garima, Gold is already live in almost 50 cities now. So that contributes to almost around 75% -80% of our business. So that alone will not be a factor in the bigger cities gaining share in our overall business. Okay.

Q

So, one question for Albinder. IfI look at your cost of dark store and replenishment, that over the last 3, 4 quarters has been stable on a per dark store basis at somewhere closer to INR 50 lakhs. So is it more like a fixed expense. How do we kind of get that down?

Albinder Singh Dhindsa

Sure, the overall dollar number for that is primarily because we will build capacity to a certain level for the dark store and replenishment network, and there is a base level of cost that you run for it. We are still at the stage where we have not reached a meaningful enough utilization of some of these assets where we will start seeing this number go down as a percentage of the throughput that we put through, but this is sort of the base network that we need to build in order to be able to service 400 stores and to be able to serve 4 million customers, so far. And I think we still haven't me