Ladies and gentlemen, a very good evening and welcome to Zomato Limited's earnings conference call. From Zomato's management team, we have with us today Mr. Akshant Goyal, Chief Financial Officer, Mr. Albinder Singh Dhindsa, Founder and CEO of Blinkit, and Mr. Kunal Swarup, Head of Corporate Development. Before we begin, a few quick announcements for the attendees. Anything said on this call which reflects outlook for the future or which could be construed as a forward-looking statement, may involve risks and uncertainties. Such statements or comments are not guarantees of future performance, and actual results may differ from those statements. Additionally, please note that this earnings call is scheduled for a duration of 45 minutes, and we will be starting directly with the Q&A section of the call. If you wish to ask a question, please use the Raise Hand feature available on your Zoom dashboard.
We will announce your name on the call and unmute your line, post which you can proceed with your question. We will wait for a minute while the question queue assembles. The first question is from the line of Mr. Ankur Rudra from J.P. Morgan. Please go ahead.
Hi. Hi, guys. Congratulations on the great execution on 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 both in the food business, in the Blinkit business on utilization and also rationalization of staff and AMP 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, you know, seemingly three quarters of, you know, very limited volume growth? Is Zomato beginning to hit any penetration challenge due to reversal of consumer behavior?
Yeah. Hi, Ankur. Thanks for your question. Akshant this side. You know, we've given a breakup of key contributors to margin improvement on the food delivery business. Right? I think I would say it's a combination of both growth in revenue as well as improvement in or reduction in cost per order. As you can see in that chart on page five of the letter, it's all across the board. As we've been saying over the last few quarters that we've been trying to look at all levers of efficiency in the business and I think the team has been executing well across the board.
And the incremental gains are leading to [audio distortion] I think post we started to see a little bit of bounce back, which is what, you know, is going to lead to a modest high single digit growth in the current quarter sequentially, which is what we've indicated in our letter, right? I think what we'll have to wait and watch is whether this momentum sustains beyond Q1. And that's something, you know, we'll have to wait and watch. At this point, I think we've shared whatever we could on what we're seeing on the growth front in our letter
I appreciate that and appreciate the forward-looking things you've mentioned in the letter about the Q1 . My question was a bit more, you know, taking a step back about penetration and where we are, from an India perspective. Is there any concern that there could be an issue from a penetration side and any kind of reversal in consumer behavior which might impact sustainable growth, you know, on a multi-year basis, not for next quarter or next year?
Yeah. No, I think, we've been, saying that in the past that from a long-term perspective, we're pretty bullish on the fact that, we are still underpenetrated in this market in India. I think that view hasn't changed, if that was your question.
Okay. The second question is on MTUs. You have given a clarification in the letter. You also highlighted that Zomato Gold drove a frequency increasing of 60% in that cohort of customers. Now, I understand, you know, in Q4 you'll probably have an impact of the number of working days. You had that last year as well. I just couldn't entirely understand why MTUs should drop if your Zomato Gold drove up frequency so sharply.
I think, you know, year-on-year, I think the MTUs have still grown. I think the drop in MTU is in comparison to the previous quarter. And we've addressed that in the letter that it's a function of few things, including lesser number of days. Also because of Zomato Gold, actually the MTUs have come down, not gone up, because we do see a impact of clubbing of some orders in the same households which might have just single membership. Zomato Gold, in fact, we think has led to reduction in MTUs and not an increase. While the frequency goes up, but number of people ordering, typically we've seen in the past goes down.
We also shut down 225 cities in that quarter, which we reported last time. That also had an impact, a one-time impact of MTUs reducing on our platform.
Okay. The reason for the question was I thought MTUs normally reflects frequency also of your average users, which is why the question. I understand what you're saying. On Blinkit, can you talk about how the business is evolving on an SKU mix, footprint and network design at a city level over the last four quarters, given we've seen significant improvement?
Hi, Ankur, this is Albinder. I'll take this one. In terms of SKU mix, I think we are still very much tied to our philosophy of keeping high moving, low involvement purchases on the platform. Essentially these are SKUs where consumers have a lot of brand trust and they need those things frequently as well. We are squarely focused on making sure that that is a need that we serve to our customers within ten minutes.
I think a lot of the gains that you are looking at, what we pointed out also is a mix of both, you know, more customers adopting the quick commerce platform as their go-to buying channel and as a range of products is also increasing, we are basically cautiously increasing it to still stay within the principles that we've set for ourselves for the assortment.
Understood. Any change in the, you know, footprint network design as you're thinking about scaling this up going forward, Albinder?
I think we are still very much focused on going deeper in our existing cities. Even our, you know, larger city, which is Delhi NCR, we are still nowhere close to being able to cover it even 70%. I think our primary focus will be scaling up our existing cities in the near future, and then we will look at footprint expansion.
Sure. I think when I just look at the CM level performance, at the level you're reducing the CM losses, you should be profitable on a CM basis next quarter.
I really hope so.
Okay. Just last question, maybe for Deepinder. You know, we've obviously seen a lot of departures, Deepinder, in the last year. Your business performance at least or profit business has not been impacted. I wanted to maybe, I mean, ask you if you could address any kind of comments about how it's impacted the Tier 4 main access for the business, restaurant partners, delivery partners, customers and tech.
Well, Ankur, Deepinder is not on this call, right? I think, I think that, to answer your question, I think, the team is doing well, and it's also visible in the results. We think, you know, things are looking good from a, business as well as employees' perspective.
Okay, appreciate it. Thank you. Best of luck.
Thank you.
Thank you. Next question is from the line of Mr. Vivek Maheshwari from Jefferies. Please go ahead.
Hi, good evening, team. A couple of questions. First, Akshant, if I look at, you know, your release says that about 30% of your users have opted for gold, right? Their frequency has gone up by about 60%. On top of that there is an MPU reduction on a sequential basis, right? Slightly. If I just do a rough math, it looks like that, you know, I would have thought that, you know, the customers who would have dropped off would be the low, you know, would be the low-value customer from that standpoint. But if I do the math of gold, the residual customer base, it looks like their frequency has gone down by about between 10% and 15% sequentially.
Why would that be the case if, you know, let's say 0.8 million customers have dropped off, you know, from the MTU base?
Vivek, the 30% is the share of orders. It's not actually the number of customers. Number of customers will be lower than 30%. If you do the math that way, you will perhaps not get to the same answer.
So I did run a, you know, some permutations, even if, you know, because, you know, 30% is the GOV number, I have, you know, made some assumptions on AOV. That number still is declining, you know, reasonably, Akshant. With 0.8 million customer, users low, or MTUs, you know, in the base lower this time around, why should that frequency come down? Shouldn't frequency go up if you know, if you don't have those 0.8 million customers?
This 30% again is for the month of March, not for the quarter. I think if you will do the same maths like to like across quarter, you know, for a fact that the frequency hasn't reduced. It's in fact, stayed flat. There's also an impact of, as I mentioned, clubbing of some orders. If I'm a non-Gold member and a Gold member in the same household, we do see some negative impact of the known non-Gold member doing lesser orders, right? Net of that, the frequency for the non-Gold members has stayed flat in the last quarter.
I see. Okay. Okay. You know, secondly, on food delivery itself, you know, you have articulated and you have been mentioning these things for the last couple of quarters in terms of, you know, the profitability ambition and all of that. With, you know, with growth being, you know, elusive, recently, how much of that is to be blamed to macro environment slowdown? How much of this is because of your own focus on profitability? In that context, how do you see this, you know, panning out over the next, let's say, 1 or 2 years, Akshant?
Yeah. Vivek, I mean, if you look at really, what drives or which are the levers we control as a business which drives growth on the platform, they're largely, I think, either customer delivery charges or to some extent indirectly also delivery cost, right? You know, because if we increase the delivery radius, you will see customers will have more choice and we typically see them ordering more. Similarly, if the delivery charges are lower, that stimulates demand, right? You know, if you look at the chart on page five again, and we've mentioned this, that both these, whether it's customer delivery charges or delivery cost, they've not changed much over the last year, right?
The, I think, point we're trying to make here is that, we're not really, the improvement in profitability is not therefore coming at the cost of, growth. That's what we believe. The efficiency and the improvement in margins has been on account of levers which does not necessarily impact customer growth.
At least our view is that, you know, our improvement in profitability has a very, very little to no impact on what the growth would have been had we not had these changes.
Got it. Got it. You know, a couple of questions on Blinkit as well. First is, you know, with, you know, the, the media articles talking about some of the disruption to Blinkit business, you know, a few weeks back, how much of its impact could we see in the first quarter of Fiscal Year 2024?
Hi, Vivek.
Was it impacted fully? Hi, Albinder.
Hi, Vivek. This is Albinder. We also said this in our filings, we expect the impact to be fairly minimal. We had some store shutdowns for a very few days. In fact, in most of the cases it was less than two days. The primary reason that we made this change was because we had, you know, old constructs that were put in place in 2020 when we started the dark store business, which allowed some partners to be able to earn a lot more without putting in the same effort that all the other partners are putting in. We wanted to remove that, and that led to some unrest on the ground.
We expect that not to be a factor in our overall financial performance for the quarter.
Got it. Are you back to 100% levels, you know, before this disruption? Are you back to full normalcy?
I think, right now, in terms of rider logins, we are still not 100% there, but that is not just because of disruption. It's also summertime, and during this time, we typically see at the onset of summer that rider logins are lower as people are adjusting to higher temperatures in Northern India. We do expect that, overall, in terms of our ability to supply to customers, we are back to 100%.
Okay, got it. One question, Albinder. If I look at, you know, the retail journey in India over the last 20 years, one of the There was a phase where, you know, retail was growing very well in, let's say early part or middle of 2000s. We are seeing very strong growth in, you know, quick commerce business in general for the industry. Now, I know that, you know, you have third party who manages inventory and it's on their books, but how do you ensure that the system doesn't choke? I know these are again, fast-moving products, but I'm sure there will still be a fair amount of, you know, balance sheet risk that your partners and therefore you carry directly or indirectly.
How do you ensure that, you know, the inventories are, the ABC criteria or FIFO? How are those things managed given that, you know, the intensity of action at each of the dark stores will be very, very high?
See, I think, Vivek, what you're comparing the Blinkit business to, the offline retail business, fundamentally the difference is Blinkit is primarily a tech-focused business that has built the entire system of, not just, you know, managing inventory for our sellers, but also the entire supply chain end-to-end. All of that was built in-house. When it came to the retail businesses, there are obviously a lot more factors, including on-ground operations. There was a lack of technology maybe back in, you know, 18 years ago or 20 years ago that was not helping in having a great visibility into what was happening across the entire supply chain.
I think one of the fundamental reasons Blinkit is the most efficient quick commerce business in the country is because we have spent a lot of years building the technology and the backbone that actually powers all of that for us, provides us visibility at every step of the supply chain. We take a lot of pride in being a, you know, very heavily tech-focused supply chain company that runs an efficient org.
Got it. Got it. Thank you for the clarifications and wish you all the best, team.
Thank you.
Thank you. Next question is from the line of Mr. Vijit Jain from Citigroup. Please go ahead.
Yeah. Hi. Thank you. Hi, Akshant. Just a question on Gold program. Now, since you started charging for the program, do you continue to see sign-ups at a similar kind of pace? How do you think in general about the, you know, pricing plus frequency mix? In the sense that at what kind of bands does it become accretive versus your current contribution margins?
We've been always charging, Vijit. It was never for free. I think we'll keep optimizing the pricing basis, you know, what we see, what are the basis the customer behavior we see. Yeah, I think like beyond that, I think the specific answer to your question will be very difficult for us to share. It's also competitively sensitive.
Fair. Sure. My next, my second question is, just in the dine out business, now I can see in your other revenues if I strip out the one-off from, I think Talabat, that there is some improvement QoQ. You did start some initiatives on the dine outside this quarter. Can you talk a little bit about that, and how to think about that, in FY24? If I can add a follow-up question on just the services side, is there any natural fit in some segments in local services where you think you guys are well suited to add that as an extension?
To answer the second question first, at this point, no. I think we are just, like, focused on restaurants, as far as the offline business is concerned. On the dining outside, I think we continue to make progress, both in terms of the number of restaurants we cover and our value proposition both for customers and restaurants. You know, at this point it is still.
Very, very small compared to our overall business, and we don't expect that to change much even in FY24, right? I think it'll take perhaps few more quarters, you know, before that business becomes meaningful and at that point we'll of course share more details about how that how that business is shaping up.
Got it. Akshant, one last question. It looks to me at least like, some of the, if, you know, the ordering frequency has maybe improved a little bit QoQ. Your, your MTUs obviously declined, likely the ordering frequency didn't decline. Is that fully attributable to the Gold program, do you think?
Yeah, part of it is. I think, I think both the MTUs coming down and frequency going up, there's some, as Zomato Gold has definitely impacted both of these things.
Like we've said, part of it has also come from the shutdown of those, 225 cities.
I see.
with
Got it.
-that and churn in the bottom percentile of customers.
Got it. Understood. Thank you. Those are my questions.
Thank you. Next question is from the line of Mr. Sachin Salgaonkar from BofA. Please go ahead.
Hi, thank you for the opportunity, and congrats for a great set of numbers. Fantastic execution. First question, you know, Akshant, just wanted to go to the page five chart.
Mm-hmm.
We look to extrapolate this chart from, let's say, FY23 to FY24. What as per you guys could be the top three 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 delivery cost? You know, could it be the same stuff like, you know, improvement in, let's say, commissions and so on and so forth?
Yeah. Hi, Sachin. Yes, I think we expect improvement or, rather 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. I think, we've also mentioned in the letter that delivery cost has not changed much despite a lot of work we've done in the past, because of various reasons. Going forward, we do expect that to change. We're hoping that delivery cost, the reduction in delivery cost will be more than what we've seen in the last year.
Likewise, I think, revenue should continue to increase and we also expect our other variable cost to continue to come down, as the efficiency in the business goes up in general, and also because of a little bit of operating leverage that we have in some of these things.
Got it. Thanks. Second question. You know, we did see an impact on, you know, Zomato Gold on contribution margin, and you did point out to the fact about frequency increasing and MTU decreasing. Is a large part of that impact largely behind, or could we continue to see that similar kind of an impact going ahead as well?
No, I think as the program scales, that impact will continue to be there. Whether that leads to a decline in MTUs further or not, I think is a function of, 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, right? You know, we don't expect MTUs to go down further on a net basis and we're hoping that they will grow from here.
Incrementally, the impact on cost could be a bit more negative before the inflection point reaches and starts improving?
Yes. One could say that.
Got it. Maybe, you know, a couple of questions on Blinkit. Again, if you look at, the chart on page seven, one sees a huge improvement coming from decrease in dark store and replenishment expenses. Albinder, that would be great if you could give a bit more color what happened in this entire 48.9, and how much room is there to further improve this?
Hi, Sachin. Look, Sachin, we are primarily a supply creation business, all of this improvement is basically can be attributed to increasing number of orders on the platform. On the same fixed cost basis, we are just able to do more throughput for every store, and that's what leads to this improvement. Instead of looking at it as a cost reduction, this is just same cost and we are just able to push through a lot more throughput through these stores. Like we've also mentioned, we have stores, our average is about INR 15,000, the GOV of about INR 15,000 per sq ft for the entire quarter. We have stores which are already doing INR 30,000 of GOV per sq ft.
That shows you kind of the operating leverage even within our existing network that is still there. What you're seeing here is basically the journey that we probably did from going from INR 7,500 to INR 15,000.
Got it. Last question, you know, of course, last year, Akshant, you know, food inflation was high, perhaps one of the reasons why, let's say, AOV moved up. As we go into this year, should we see that normalizing and hence, perhaps an impact being seen on the business?
Yeah. So far, look, I think we've not seen that much. I mean, like, inflation has been pretty range-bound last few months, but I think AOV is still strong, and if at all trending upwards. At this point, you know, it feels like, if you look forward next 1 year, we don't expect the AOVs to fall. Maybe they'll remain flat.
Got it. Thank you, and all the best.
Thank you, Sachin.
Thank you. Next question is from the line of Mr. Gaurav Rateria from Morgan Stanley. Please go ahead.
Mr. Rateria, are you in the line? No worries, we can circle back to Mr. Rateria later. Next question is from the line of Mr. Swapnil Potdukhe from JM Financial. Please go ahead.
Hey. Hi, guys. Thanks for the opportunity and good set of numbers, so congratulations on that. Just wanted to start with the first question, which I had asked last time also. It's like, where are we accounting the Gold revenue that you're getting right now? Exactly which line items are we showing that?
Hi, Swapnil. This is Kunal here. We are accounting for this revenue in the food delivery business essentially.
Hello? Hi, guys. Sorry, we were experiencing some trouble with our conferencing system. Swapnil, would you like to tell us till what point did you hear Kunal's answer, and we'll pick it up from there?
I think he mentioned that it was accounted in the food delivery vertical. Beyond that, I think we lost it.
Yeah, that's correct. Essentially, it's been accounted for in the food delivery business.
The revenue is recognized net of the discounts, as per accounting standard,
115.
Yes, 115.
Right. eventually, I think, very little of that is left as revenue. I think most of it gets knocked down from the cost-
Almost 50% is knocked down due to discounts. Right. Right. That's, that's helpful. The second question is on your employee expenses. Now, they seem to have come down sequentially quite a bit, and I assume that is because of ESOP expenses, too, going down. Is that related to some of the senior management moving out in the last quarter, or, like, there is some other reason, and is that sustainable?
You're right, to the extent that it is on account of reduction in the ESOP charge, but it is not necessarily related to the exits that we saw.
This will go up and down, Swapnil. I think there are sort of various assumptions here when you come to this number from an accounting standpoint. Don't expect this to be linear. That's the reason we've in our letter indicated what we think could be a potential accounting charge on account of ESOPs in FY24.
Right. With respect to your working capital, now I see that there was a change of INR 140 crores, negative INR 140 crores in this quarter, whereas in the previous quarter it was a positive impact of INR 114 crores. My presumption is that only Hyperpure business has impacted, right? Why are we seeing such drastic changes on a quarter-on-quarter basis in your working capital?
Yeah. Swapnil, essentially the increase in working capital that you see in Q4 is related to a reduction in the current liabilities in the business. Rather, most of it is on account of reduction in current liabilities. I'll explain why. For example, in the food delivery business, there's a weekly settlement cycle with our restaurants. If you look at the last quarter, Q3, that ended on a Saturday, whereas Q4 ended on a Friday. Effectively, you know, in the Q3, we carried one extra day of tables on our balance sheet as at the end of 31st December. That reduced in Q4. That essentially reduced the current liability number. That caused the increase in working capital largely.
You know, in our business, therefore, you know, you will see these variations depending on the day of the week on which the quarter ends. Therefore we put out that note saying that it is a little unpredictable as to how working capital changes going forward.
Right. Just one last question, if I can squeeze in. With respect to store additions or guidance that we had here in the last quarter, now, if I were to calculate your numbers basis what is available, I think, there has been not much of an addition in this quarter. Given that background, would it be fair to say that your improvement in margins is mainly because of improvement in throughput, but as and when you add those stores that you have guided for, the improvement in EBITDA margins would slow down significantly?
No, Swapnil, I think, even through this quarter, we did add the stores pretty much at the run rate at which we had guided for the year, that the total number of stores what we will add. That effect is already existent in the numbers that we have presented. There's unlikely that there is deviation from this trend over the next couple of quarters at least that I see. We did add stores in this quarter as well at the pace that we had guided on.
The average number seems to be flattish. That's why my question. Yeah.
The net.
If I would.
Yeah. There are some stores that we also end up closing occasionally, but we are on track to open the number of stores that we had guided at the beginning of the year.
Got it. I'll be there. Cool. Thanks a lot for taking my questions.
Thank you.
Thank you. Next question is from the line of Ms. Neha Satyamurty from Axis Capital. Please go ahead. Ms. Neha, are you on the line?
Sorry, can you hear me?
Yeah. Please go ahead.
Yeah. Thank you. 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 MPUs on the platform? That's my first question.
We don't share that data, Neha, but just to give you some broad color, they tend to be slightly higher than the rest of the users.
Okay. Sure. 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? What's the likely impact on driver payouts or delivery costs over the next few years as you scale the number of EV-based deliveries?
The entire ecosystem is very early, Neha. What we're trying to do is essentially further, you know, the adoption of EVs by essentially 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. At this point, we are not looking at this as a way of sort of reducing our delivery cost, but it is more from a perspective of actually, you know, impacting the carbon footprint that we have. Eventually when the adoption reaches high levels and the ecosystem matures from a EV infrastructure standpoint, we may see some improvement in cost, but at this point we don't see any of that justifying.
Sure. Thank you. Best wishes.
Thank you.
Thank you. Next question is on the line of Mr. Aditya Suresh from Macquarie. Please go ahead.
Thank you. I just had one topic to ask on. Your restaurant take rates have clearly improved fairly nicely over the past couple of years, up about 200 basis points. We're now close to about 18%, right? A few subtopics within this. 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 there's an element of the better paying restaurants that are on your platform. Do you see scope for further gains here as that mix improves, Akshant?
Hi, Aditya. I think, yeah. I think broadly, I think we want our take rate commission rates to be competitive, and we still think we are lower than what the competition is charging. I think as we continue to add more value to restaurant businesses, we expect some improvement in commission revenue moving forward.
I guess in terms of the industry structure, we've seen headlines about some like Coca-Cola take a stake in Thrive, et cetera. 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, as a to your view?
I think it's a fairly competitive market and, I think, there's a lot of innovation happening around us, across the board. I think we continue to watch it and learn from it and see how we can run our business better to make sure that we continue to grow.
I guess related to that was, again, just a similar question to Thrive was, like platforms like Baayu and ONDC that are coming out. They... the headline view which they take is that we're gonna try it on restaurant take rates, meaningfully lower. I guess there's a trade-off here between delivery costs versus take rates, but how do you think about this impacting your own ability to charge this 18%? Not through this quarter, but if you take a medium-term view, how do you see this kind of risk?
You see, I think direct ordering anyway exists, and we do believe a lot of our restaurant partners get a large number of orders directly placed with them either through phone or through their own websites or apps, right? Take rate on those orders is technically 0, right? I think, like, as I said, you know, we welcome any change or any innovation that helps the restaurant industry grow and there are a lot of bunch of innovation happening out there, and we'll continue watching it and learning from it. At this point, you know, we don't feel anything is going to come at the cost of our growth. I think the penetration is low, and therefore there's room for everyone to grow in this market right now.
Thanks, Akshant. If I can, I had a question for Albie. So Albie, in your recent kind of, one of your LinkedIn posts, you spoke about ChatGPT and how you're seeing kind of positive use cases being built, for Blinkit. Can you just elaborate on that a little bit?
Yeah. Hi, Aditya. Yeah, we primarily use the, you know, the generative AI, both from ChatGPT and for Midjourney and Stable Diffusion to create a recipe discovery platform on Blinkit. That is an additional use case that we think customers really think is adjacent for them and using AI we've been able to build that. We already use a significant amount of AI within our both our supply chain systems as well as within our customers' personalization and recommendation systems. We're fairly excited about, you know, what generative AI is doing. As right now, I think our best bet was actually launching it for, you know, recipe generation. We are also looking at other parts of the business where some of this might be useful.
As of now, we really wanna focus on one thing and get it right first before we start scaling it to other parts of the supply chain or the customer service ecosystems.
Great. Thank you so much.
Thank you. Next question is from the line of Mr. Chirag Shah from CLSA. Please go ahead. Mr. Chirag, are you on the line?
Hello, can you hear me?
Yeah. Please go ahead.
Yeah, hi. 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. What are the growth and profitability plans for this business going forward?
I think we expect the growth momentum to continue in this business. I think it's still reasonably small in size compared to the opportunity here. As we continue to scale, given that it's a fairly high operating leverage business, we also expect the losses to continue coming down. So yeah, I think both from a top-line and bottom-line perspective, I think we are excited about this business.
In terms of just this number of cities presence, how do we expand this to, you know, the number of cities that we are present right now?
At this point, we're not necessarily thinking of expanding into more cities. I think the within the 9, 10 cities that we are present in, the focus is just gonna continue to grow in those cities and get to profitability first before we think of expanding outside these 10 odd cities. I think the business model may need to be different in the smaller cities for this to work. While we might experiment in one or two small cities in the next few months, largely the focus is on the top 10 cities right now.
Got it. When I look at the delivery partners number, there's a good 7% reduction that we have seen since Q2. Is there much to read into this or, you know, Albinder Singh Dhindsa that did make a statement that there is some seasonality also involved in this, in terms of riders being on the platform?
I think, look, eventually, the number of delivery partners is not the only metric which one should look at. I think, as these delivery partners are gig workers in nature and different partners spend different amount of time on the platform. The number of active partners may go up or down depending on how many hours they're spending with us, right? The nature of fleet might change from quarter to quarter depending on seasonality and various other factors and in some quarters, we might have a much larger part-time fleet as compared to others and therefore the number might go up. If you were to look at the number of login hours, and we don't disclose that data, but-.
Right.
For that, you know, that trend is sort of linear and we are seeing the number of login hours grow every quarter.
Got it. Last question, Akshat, and just a bookkeeping one. The treasury income for the quarter, this quarter has been quite high. What's leading to that?
Yeah, sorry, you're talking about the cash received in terms of the cash flow?
That's right. That's right. That's right. I'm looking at page 11, the change in cash number.
Like we explained, there are differences in this number because the nature of investments, you know, impacts the cash flows that we get on a quarterly basis. To take the example of GSEC, right? You have like six monthly coupons. You may have a quarter where you hope to receive more cash on account of, you know, the coupon for that GSEC, but the next quarter you may not have that coupon, and then the quarter thereafter, you may have it. It's things like these that impact. We may also premature some of our fixed deposits, so that may also cause these fluctuations in the cash amount. You know, of course, the income, accrued income that we book in the P&L will be stable.
Fair enough. Thank you very much. That's fairly clear. All the best.
Thank you.
Thank you. Next question is from the line of Ms. Garima Mishra from Kotak. Please go ahead.
Yeah. Hi, can you hear me?
Yes. Yes.
Okay.
Garima.
Hi. Thank you so much for the opportunity. If I see your 4 QFY22 results release, you very clearly told us that 60% of your GMV for that quarter for the food delivery business was contributed by top eight cities. Could you give us an update of how much is that contribution, I mean now or for 4 QFY23?
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 eight cities and the cities beyond them as well. It's no meaningful change there.
Okay. With the advent of Gold, this proportion has not changed at all, Kunal. I mean, I would have expected that the uptake of Gold... you know, you also selectively give out these invites. I would have thought that the sort of run rate of orders from the top few cities just increases a little bit higher. Is there any impact of that at all visible in the, let's say, first quarter?
Garima, Gold is already live in almost 50 cities now. Right? That contributes to almost around 75%, 80% of our business. That alone will not be a factor in the bigger cities gaining share in our overall business.
Okay. The bigger cities have not gained share. I mean, that's what you are trying to say on an overall basis?
They are not very meaningful.
Okay. The second question is on AOV, and of course, we've seen that increase pretty recently through FY23. It's safe to assume that your 4Q AOV was decently ahead of what you had in the first quarter, that there was an increase through the year?
Yes, that's right.
Okay. Understood. That trend again has not changed for you meaningfully in the first quarter?
Right.
Okay. Understood. Those were my questions. The last part is really for Albinder. We've seen, you know, AOVs of the Blinkit business go up and down a little bit. Anecdotally at least, I can tell you that the more the user uses a platform, the lower the AOV actually goes. How do you really solve this problem in the medium term when most of your stores actually start maturing?
Hi, Garima. Actually, when we look at our data, the conjecture that you made, that as users use the platform more, their AOV goes down is not entirely true. In fact, our new user AOV is low, and that is what contributes to a lower AOV for the platform. As our users mature, their AOV and the number of categories that they buy from us, it keeps increasing, contributing to the increasing AOV of the platform. It's actually an inverted curve, where a new user will have a much lower AOV, and as they become used to the platform, their purchases on the platform also keep going up. The AOV fluctuations that we have seen over the last couple of quarters on the platform, a lot of these are seasonal factors.
Even towards the end of the fourth quarter, we started seeing the AOVs improve because the seasonality factors, especially in fruits and vegetables, were going away. Then you will see some seasonal factors. We are also a fairly large platform for festivities. All at home festivals that people celebrate with their families, that's something that Blinkit is a part of a lot now. Those also add a lot of meaningful variance in our quarterly AOVs. A Valentine's Day might only have a college kid ordering a couple of chocolates, but you know, something like Mother's Day or Rakhi or bigger festivals, you might see a lot of gifting and more higher AOVs ending in the kitty.
It's right now the business is still fairly early, I would say, where we can confidently point out how each of these factors is going to play into our AOV. I think over the next couple of years, as the business gets larger and we have a lot more data, we'll be able to predict it better.
Got it. Thank you so much.
Thank you. Ladies and gentlemen, in the interest of time, we will now be taking the last question. The last question is from the line of Mr. Ashwin Mehta from Ambit. Please go ahead.
Yeah. Hi. Can you hear me?
Ashwin, hi.
Hi, Akshant. One question for Albinder. If I look at your cost of dark store and replenishment, that over the last three, four quarters has been stable on a per dark store basis at somewhere closer to INR 50 lakhs. Is it more like a fixed expense? How do we kind of get that down?
Sorry. I think 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's a base level of cost that you run for it. I think we are still at the stage where we have not reached a meaningful enough utilization of some of these assets, where, you know, we will start seeing this number has been going 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. Right? I think we still haven't meaningfully hit it. This number overall will not change significantly, but our throughput will increase.
On a per order basis, this number will keep going down.
Okay. Fair enough. My second question was in terms of Hyperpure integration with Blinkit and possibly Hyperpure supplying you fresh. On that, where are we?
Primarily, what we are developing with Hyperpure, is a farm-to-table supply chain for fruits and vegetables. Hyperpure has pretty significant business when it comes to restaurant supplies and supplying fresh fruits and vegetables there, and obviously Blinkit also has some of that business. A lot of our integration is primarily on the capabilities. If we are putting in joint infrastructure at the farm gate, that is something that we're investing in with Hyperpure.
I think that is something that is still ongoing, and these are long-term projects because we have to do the hard work of actually reaching out to rural areas, setting up collection centers, connecting forward linkages, and that is a shared load that both teams differently do depending on where we have strength and where Hyperpure needs where Hyperpure has a strength.
Okay. Okay. The last one was in terms of, did I get that correct? We talked about a 30% to 40% increase in dark store count, in the next fiscal. Do we still stand by that?
I think the earlier question was also about the net store additions. I think we added maybe about 15 stores in the fourth quarter. I think we are pretty much on track to. We are still planning on the similar numbers that we will keep doing store additions. We're not really providing a different guidance for that. The number might go up or down based on whether we find the right places and whether.
Locations.
Locations.
Rentals.
A lot of these factors, but that is what the team is still aiming for.
Okay. If I can squeeze just one for Akshant. Akshant, we were talking about reworking our advertising business, where are we in terms of that?
Yeah. Ashwin, are you referring to the dining out business?
Yeah, the dining out business. Yes.
That's why I mentioned that in response to a previous question, Ashwin. I think, that business is shaping up nicely, but it is still very small from our overall size and impact from the P&L perspective. While we are very excited about how that business is turning out to be and how it can grow, but at this point, I think it's still very small.
Okay. Fair enough, and all the best.
Thank you.
Thank you.
Thank you. Ladies and gentlemen, we will now conclude this conference call. Thank you for joining us. You may now disconnect your lines.