Ladies and gentlemen, a very good evening, and welcome to Zomato Limited's Q2 FY 2023 earnings conference call. From Zomato's management team, we have with us today, Mr. Deepinder Goyal, Founder and Chief Executive Officer, 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 and disclaimers. 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, unmute your line, and after 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. Vivek Maheshwari from Jefferies. Please go ahead. Hi, good evening, team. A couple of questions. First on, you know, on the food delivery side. Commendable progress on the margins front. You know, how do you think about the balance between growth and profitability? Because this quarter has seen losses coming down quite a bit, but the GOV growth also has been more modest at about 3% quarter-on-quarter. How do you think about this from coming quarters and medium-term standpoint? Yeah. Hi, Vivek. Thank you for your question. Akshant this side. I think the way we're thinking about this, Vivek, is essentially a focus both on good quality growth as well as profitability, right? Yes, you're right. The September quarter growth, GOV growth, was low and that is largely because we traded some lower quality growth in our business in favor of economics. As far as good quality growth is concerned, right, and we define good quality as something, you know, where we acquire users which are going to be profitable if in future, if not now, and the retention is going to be high and their cost of acquisition is justified, that makes total sense, right? I think that was, you know, one of the reasons we saw a slightly lower growth in GOV in the last quarter. Second reason has also been the general macros, right? While we don't want to make that an excuse, but we've seen lower app opens in the last quarter compared to in the past, which clearly demonstrates some lower intent to spend on a category like ours. This is also a quarter where seasonally there is the highest impact of rains, you know, which leads to typically more muted growth if you look at the past trends. These have been few reasons, I would say, we've seen a relatively lower GOV growth in the last quarter. I would say that this does not impact our long-term view on the opportunity in this segment. We continue to remain bullish on the potential of this business if we take a medium to long-term perspective. Sure, Akshant, but, you know, just a follow-up on that. Whatever investor conversations that I have had today, some of the investors are worried. Can you hear me? Yes, we can. Go ahead. Yeah. Some of the investors have this worry that, you know, if you prioritize on profitability and get to a breakeven, which is obviously everybody is expecting, but in two to four quarters, that will continue to weigh on GOV. You think that till the time the focus on breakeven continues, the GOV numbers will be lackluster, so to speak? I mean, we are not really focusing on breakeven as a very important milestone, I think. I don't think we are driving the business with that in mind as the first goal. I think our goal continues to remain to expand the market, and set it up well, so that in years down the line, we can generate huge pools of profit, right? While I understand that the street is treating that as a big milestone, but in our minds, I think this is one of the milestones which we have along the way, and we are not going to compromise good quality growth just for getting to that milestone faster. Also, just to add, like we mentioned in the letter, we continue to invest on our long-term growth vectors, whether it is initiatives like Zomato Instant, Intercity Legends and all of those. I think these are all opportunities that will take time to sort of build and grow. We are not leaving any stone unturned in terms of investing in these. Got it. Second and last question on Blinkit. Now that, you know, this was the first quarter of consolidating the numbers and in fact, the consolidation, what is your impression on the Blinkit side? How, you know, have there been any, let's say, negative surprises or what are the key focus areas for you from a next few quarters standpoint on Blinkit? I think integration has gone well, Vivek. We haven't had any surprises in the business so far. I think that also reaffirms our faith in the M&A approach that we had in this case and also in the other deals that we've done in the past, where we want to get to know the founders well and the business well before we proceed with the M&A. To answer your first part of your question, yeah, there'll be no surprises. As we mentioned in the letter, I mean, we are excited about this business. As you have seen in the numbers, the business has made good progress in the quarter compared to the previous quarter, both on top line and bottom line. We expect that trend to continue. Perfect. Yeah, sorry. Go ahead, please. No, nothing, Vivek, from our side. Okay, great. Thank you, and wish you all the best then. Thank you. Thank you. Next question is from the line of Mr. Gaurav Rateria from Morgan Stanley. Please go ahead. Hi, am I audible? Yes, Gaurav, hi. Yeah, hi. Hi. First question is, if you look at your MTU growth is around 4.5%. You made also a commentary that AOV have also grown. The GOV growth is only 3%. It appears that there has been some impact on the frequency. Is it the case that we have lost out on some high-frequency users, and there has been some market share loss to competition in the recent quarter? Which might be a deliberate strategy, but just trying to confirm that. Has that been the case? We don't think we lost market share in the last quarter. The frequency has indeed gone down slightly, but I think those reasons are attributable to what I mentioned in response to the previous question. Yeah. I hope I answered your question. The share of power users would have remained constant, Akshant, in terms of the number of users or percentage of total annual transacting users that you guys had shared. Absolutely. Okay, got it. The second question is on the medium-term aspirations on profitability that you guys have shared. It looks like a lot of the revenue-led levers have already played out. Just trying to understand from a driver perspective, how should one think about the contribution margin going to 8% eventually? What will be the bigger drivers? Will it be more on the revenue side or more room for the take rates to improve, commission rates to improve? Or, actually the bulk of the initiative on cost side is yet to play out and that will be the key driver for margin improvement from here on. Thank you. Yeah, Gaurav. I would say I think it'll be pretty much all of that. Right? You're right, I think last couple of quarters, revenue side levers have played out perhaps more than the cost side. Going forward, we still think there is enough growth left to improve our revenue per order as well as drive our cost down, right? The cost there are again two elements. One is driven by scale, and the other is essentially making the business leaner as we go along, right? I think all those levers are going to play out and that's what we're expecting in the next few quarters as we go along. Got it. If I may squeeze a last question, what exactly is the restructuring that we are doing in the ad sales and the Pro platform there, which is going to lead to increased losses in the coming quarters? Thank you. Right. You know, as we have mentioned in question 16 and 17 in our letter, essentially we have launched a new product for customers on dining out. Along with that, it's a new monetization model where we are essentially driving transactions at restaurants through the Zomato app, right? Customers will be paying through the Zomato app in restaurants, and then those transactions will get monetized. As we switch and transition to this new construct, the erstwhile monetization streams have sort of been discontinued, which includes sale of Zomato Pro membership, as well as restaurants who are, you know, buying ads on our platform. That has for a time, for the time being, discontinued, and hence, we see losses expanding in that segment for the short term, because we have all the costs, but we've lost the revenue. I think that's the transition we are going through, and we expect that to continue at least in the next quarter and maybe one more quarter after that before we start to see that business generating profits again. All right. Very helpful. Thank you so much. Thank you. Next question is from the line of Mr. Vijit Jain from Citigroup. Please go ahead. Hi. Thank you for the opportunity. I have two questions, one on the food delivery business. So how do you think about your overall promotional budget spending on a QoQ basis, you know, between new user acquisition and, you know, driving that better usage with existing users? Related to that, could you give me a, you know, an approximate base of annual transacting customers for you at the end of Q2? Yeah, Vijit. Hi. Hi. Hi. Hi, Akshant. Could you just repeat that question, Vijit? Sorry, we lost you for a second. Sure. My first question was, how do you think about the promotional budget, the incentive budget spending on a QoQ basis in the food delivery business between, you know, things which drive new user acquisition and things that drive better usage with existing older customers? Second part of that question was, your total base of annual transacting customers as of Q2. Vijit, on the first one, a majority of our spends are on acquiring new users or our promotional spends. Mm-hmm. That's what we spend our capital on. Having said that, you know, if you are an existing user of Zomato, you will experience that you still get some offers and discounts on our platform. Those are largely funded by restaurants who are essentially trying to target you as a new customer to that particular restaurant, right? Right. That's why you will feel as a regular user that there are subsidies or discounts all the time, but they are not always funded by us. I mean, in response to the second question, like, we're not disclosing that data point every quarter, Vijit. Okay. You'll have to wait until when we get to that. Right. I guess the point I was trying to get at from that question was, I think you and Deepinder have earlier mentioned that you typically see about maybe 1 million new users come onto the platform with little or no marketing spends also. If I get that number right, 1 million or maybe 7 million-10 million a year, something like that. I just was wondering if that is still holding true at the end of this quarter. Yes, that is holding true. I mean, the pace of new user addition hasn't slowed down. Got it. Second question is just on the Blinkit side. Two questions. One, on the delivery fleet integration side, are there any practical on-the-ground challenges to integrating the two delivery fleets right away from, you know, rider preference perspective or any other consideration? Second question on Blinkit is, in terms of unit economics, you've said that, you know, your own store is not materially different versus franchise stores. Could you explain how is that just a function of store maturity? Hi, Vijit, this is Albinder. I'll take both the questions. On the rider side, like we had mentioned in the letter as well, the integration that we are doing is primarily right now on leveraging a common tech stack for both the companies. Mm-hmm. That is probably a medium-term thing that we will pick up on actually cross-utilizing fleet. The prime reason for that is that the scale of the two businesses is not similar when it comes to the last mile size of the fleet, as well as the number of orders that are done in a particular locality by both the businesses. So, until the time that we actually get there, we are not really even experimenting with merging the fleet utilization right now. The numbers that you see for fleet or the improvements are essentially Blinkit riders working for Blinkit only and Zomato riders working for Zomato only. In some places we've started integrating the tech stack, the underlying platforms that we build, those are getting integrated, so that the tech dev effort on both sides can be leveraged. Got it. On the unit economic side, the store economics are primarily dependent on, you know, more of the throughput. With the same infra and the same people, you can actually, you know, you push through a certain volume of GOV, and irrespective of the size of the store, at every level the economics are actually similar, whether it is our store or it is a partner store. Of course, the nature of costs in each of the cases can end up differently, right? In one which in the partner stores, we basically have to make sure that in places where the number of orders are not scaling up materially early enough, we support the partners through the first few months of the process. If that was our store, we would also be taking that cost in terms of idling manpower at that store as well, right? The costs are not materially different. One of the things which is changing though is that as our brand recognition and brand value in each of the localities and the cities that we're present in, it goes up, the time that we are able to see the stores get to a certain number of orders, it's actually getting faster. The costs that we used to have to pay on the partner side to support them, we are just getting to them a lot faster, and the partners start making money a lot faster. Got it. Thanks, Albinder. Albinder, just a quick question on that one. On the dark store side, are you now at a place where you would start to net add dark stores going forward or, there's still some, a little bit more rationalization to go? Secondly, when I look at the unit economics, is the right way to look at your unit economics that, you know, expense related to the dark store on a per store basis? Because I see that number is roughly INR 5 million, I believe a quarter, has been kind of around that number last two quarters that you reported. Is that understanding correct? Vijit, so throughout the, I would say the last two quarters, we have been adding stores to the network. The net store deletion number has not. It was higher earlier. Mm-hmm. Primarily for multiple reasons. We opened stores which were infrastructure, they could not have been in the right places because obviously the model was early. Right. Our experience is that, you know, the net store addition pace for us stays roughly the same, across each of the months. We are starting to see more and more our stores being successful, so the net deletion pace is something which is going to go down, right? Got it. The overall number of store openings will go up. It's still a question internally for us, as our store network is fairly large now, it's at around, you know, number is around 400. At this pace, should we be opening more stores, or because we have more opportunities, more localities in which we have existing successful stores? More validation. Should we be opening more stores or should we be reducing the figure of store openings as the number of stores go up? That's something that's still at a stage that we're debating whether we should be investing behind it, but I think, we will wait to do that till the overall existing store like for like network is breaking even. On your second question, which was, I think around the unit economics for the stores. Like I mentioned earlier, the unit economics for the stores, primarily moved. You have the same infrastructure, you have the same people, and then you just increase net revenue that you get from a store with the increasing GOV. Right? That's why you're seeing that, numbers stay the same, and while the overall throughput of the business has gone up dramatically. Roughly speaking about maybe 2x-2.5x the number of orders you do per store and you break even at a company level across the board. Right? That seems to be the case from these unit economics. I think there is a difference in how you are doing the arithmetic versus how we will do it, but that is not a guidance. Okay. that we provide at this point in time. Sure. Thanks, I appreciate it. Thank you. Thank you. Next question is from the line of Garima Mishra from Kotak. Please go ahead. Yeah, hi. Am I audible? Yes, Garima. Please go ahead. All right. Hi. Thanks for the opportunity. First question, your AOVs have held up very well actually over the last few quarters. Now, could you help us understand the difference in AOVs that you see from new and old customers, and also customers who might be in, you know, let's say top 10 cities and other cities? Yeah, sure, Garima. The new customers AOV is lower than repeat customers. I think the trajectory here is that, you know, as customers mature their AOV starts going up, and therefore it sort of settles down at a steady levels. Between one and the smaller cities as well, there is a difference in AOVs, right? Metro AOV is larger than the smaller cities. Having said that, I mean, just wanna clarify that that doesn't mean that the small cities economics are not viable, as we've also this time shared a chart on the number of cities which are profitable. While even with lower AOV, given lower cost structures, a number of our smaller cities are also profitable. Understood. Second question is really in terms of the growth of the food delivery platform and, you know, there is a competitor in the market, so I think your focus would also be on driving some kind of differentiation. Would you highlight the new aspects, the new product innovation, et cetera, that you're carrying out in the food delivery business for you to have a more differentiated platform going forward? Thanks. Sure, Garima. I think like differentiation here could be in many aspects. I think one of the things we focus a lot on is quality of service, right? Which is not really visible on the app, but as a customer you know once you experience the platform the error rates in the business you know and the customer support and so on, all of that adds up. I think there's a consistent focus on making our platform experience better for our customers every day, and I think that has a compounding effect on the growth and the relative market share in the business. Outside of that, I think we, as we mentioned in the letter also, we are very keenly looking for large growth ideas which can drive multiplier outcomes for this category in future. Couple of them that we're experimenting with right now are, you know, Zomato Instant, which is a 10-15 minute food delivery service, which is already live in Gurgaon and Bangalore in few locations. Recently we've launched Intercity Legends as a product and service where we are delivering food from legendary restaurants across cities, right? I think both of these ideas so far have seen good traction and we're seeing a lot of customer love and appreciation for both these product and services. These are businesses which take a lot of, I would say, the multiple building blocks in these businesses and we've spent time, effort, and resources in scaling them up. We're cautiously investing as they scale and we'll continue doing that as long as we continue to see returns from these two products and services. Just on that point, it's safe to assume that all these new initiatives are going to be done organically within the company, correct? Yeah, that's the current plan. I don't even think there's an opportunity for an inorganic route in these things. I think the knowledge that we have and the resources that we have, I think we need that to be able to scale these platforms. Perfect. Thank you so much for your answers. You're welcome. Thank you. Next question is from the line of Mr. Alok Srivastava from Credit Suisse. Please go ahead. Good evening, guys. Yeah, yeah. Akshant, on the number of cities point that you made and the one that you have mentioned in the investor letter that now 248 cities are at contribution breakeven. Just trying to understand that, you know, this number was fairly low, let's say four quarters ago, and all the revenue measures that you have taken, for instance, higher take rate on restaurants and customer delivery charges going up. Is it right to assume that all those initiatives across all these cities have been more or less uniformly applied? That is one. Two, in terms of the smallest city where you'll be contribution positive, what kind of household, you know, total population size or household size are we looking at? I mean, just trying to get a sense as to, in what kind of population, the model has become viable already. Sure. Alok, to your first question, yes, I think we have seen the improvement in contribution pretty much uniformly across multiple cities. I think where we are still contribution negative are some of the more recently launched cities or cities where this flywheel of you know restaurant food ordering has not really kicked off yet, right? We see enough traction on underlying consumer metrics because of which we continue to invest. Outside of that, I think everywhere else we've seen the contribution improve and hence a larger number of cities are now contributions breakeven or positive. In terms of smaller cities and by the way, just to clarify, you know, this 248 doesn't necessarily mean that these are the top 248 cities for us in terms of size, right? Right. Some of the cities profitable are actually not in the top 248, but they're still profitable because that ecosystem is maturing faster than some of the larger cities as well. Right. So to your second question, I mean, the smallest city that we have where we are contributing, where contribution breakeven is about like 100,000 people today, right? As a potential size of the market. There are some, I mean, while we are loosely calling these cities, some of these are also locations and neighborhoods, dense population neighborhoods like university towns and so on, where the population is not large. They're close to 50,000, but we are breaking even because it's densely located and the target audience there is, you know, it values the service and the product. Okay. Yeah, thanks for that. The second one that I have is for Albinder. Albinder, in the investor letter you had mentioned that, during the festive season where there were certain days where, the Blinkit as a whole was near contribution positive. I'm just trying to understand that, what was driving this? Means overall it's a 7% negative contribution, and from 7% to 0% was it operating leverage driven by higher orders? Was it product assortment which had perhaps higher take rate? Or was it, you know, higher delivery fees that customers were willing to pay during that time? I'm just trying to get a sense as to this will give an idea how the model can become profitable going forward. Thanks. Hi, Alok. I think like we also showed in the contribution movement graph in the letter, I wish there was an easier answer to give than that. You will see that the same pattern that took us from -17%, -7% in contribution over a three-month period was also driving getting closer to contribution during the festive period as well. It was not just a singular factor, but improvement across our average ticket size, improvement across average revenue per order, reduction in costs. And to also clarify that, during the festive period, we didn't want to be the ones ruining the festive period for our customers too much, so we were not actually charging higher delivery fees for them. We try to always make sure that we are, as a business, working towards charging lower and lower delivery fees for our customers. Okay, got it. Thanks and all the best. Thank you. Thank you. Next question is from the line of Mr. Abhishek Bhandari from Nomura. Please go ahead. Yeah, thank you for the opportunity. Akshant, I have just two quick questions. First one is, you know, on your page seven of your PDF. You know, I see that the food delivery restaurant partners, you know, kind of stagnated at around, you know, 200,000 number for last three quarters. Now, part of this might have to do with the pruning out of, you know, lower quality growth what you mentioned. But if you could give us some indication about what kind of addition you're looking at, because I would like to believe that, you know, this is a lead indicator in terms of getting more customers on platform. Yeah, Abhishek. Hi. See again, in case of dark stores, which Albinder mentioned, this is the net number, right? What has happened is, I mean, we continue to add thousands of restaurants, new restaurants on our platform every month. The net number actually has remained flat, as you can see and as you're pointing out, and that's a function of the essentially restaurants shutting down in the country, right? You know, that pace, actually we don't dictate and a decent number of restaurants on our platform, which have very low order volumes, and low share of business from us. And as they churn out, the overall number of restaurants can stay flat or come down slightly as it has happened, right? I think from a I mean, we're not concerned about supply being constrained, at least at this point. If you look at the number of orders per restaurant per day, they're still very low. While we expect the number of restaurants to continue increasing in the medium and long term, but even at this pace of restaurants, the business can grow meaningfully, if it has to. Yeah. Sure. Thanks, Akshant. My second question is, you know, on the, you know, long-term target was, you know, you guys have mentioned, that you would like to go up to 4%-5%, you know, Adjusted EBITDA margin as a percentage of GOV, which translates roughly to 8% contribution margin. Now, just trying to, you know, get a sense of, you know, what's behind that, you know, precise numbers. If I remember correctly, you have been mentioning that you think a double-digit contribution margin is likely in your maturities from a longer-term period. Are you scaling back on that 10% target? No, sir. I mean, 8% is. First of all, I think this is not a guidance, neither are we saying that we are going to stop at 4%-5%. This is just a point of view which we have shared at this point in time, given all we know. That perhaps a better use of capital, beyond a point, is going to be in making sure that we reinvest back in the ecosystem, which leads to faster growth, right? Because I think eventually the goal here is to get more dollar profits from the business. The goal is not to get the maximum percentage margin, right? If we are going after that goal, you know, the cash that the business generate, we have to look at the best ROI for that. Is the best ROI in giving more discounts to customers or is the best ROI in actually giving back to ecosystem in terms of lower take rates and higher payouts, which leads to growth of the ecosystem. I think that is where we will always have a choice. What we have shared this time around is that we feel that beyond a point, it will perhaps be a higher ROI if we leave money on the table for restaurants to grow faster and if we pay our riders more so their retention is higher and so on, right? On the second part of your question on 8% and 10%, we are not pulling back on guidance. I think like we said, some cities could get to 10%. 8% is an average, right? It can still go beyond 8%. But I think I would urge you to focus on the core message here and the numbers are, I would say, indicative of what we feel at this point in time, and they can change as we go along. Thank you, Akshant, and all the best. Thank you. Thank you, Abhishek. Thank you. Next question is from the line of Mr. Amit Bhargava, joining in as a retail investor. Please go ahead. Can you hear me? Yes. Yes, we can. Yeah. Hi. You know, my question is, if I look at this earnings report, I mean, I'm sure there are lots of financial experts who would ask you questions on the earnings, but in your Q2 too, the question two, when you say execute better, what do you mean? In that I find one paragraph which, I guess is very relevant for all investors as well. A culture of high standards is an endless list of things, but the starting point is that culture is being present, not just physically but intellectually. Now, you know, in the Q1, earnings call, no retail investor was allowed to speak. In the AGM, no speaking number was given. No, I was not allowed to speak. I had pertinent questions on the, on corporate governance. When you say this in your earnings, in the letter, then, you know, this doesn't fit in. You know, there were pertinent questions why conflict of interest between Albinder and Aakriti was not disclosed. The day after this deal, when the markets opened, many people didn't know about it. When the TV news channels started speaking about it, you know what happened with the Zomato stock. Because the entire perception of people, I mean, this looked more like a scam. Even if it was not a scam or is not a scam, I don't know, but the perception was something else. You know what happened to Zomato's stock. People who may have taken leveraged positions may have lost their shirt, who may not have money to fund it. I guess, you know, there are some serious corporate governance issues which Zomato needs to think about. Blinkit, obviously, most of us feel was purchased at a very high price. Then there's a question of ESOPs. I mean, the company is still in loss, and more and more ESOPs are being doled out. I would like the CEO of Zomato to address this, these three and these things. Above that, in the last Q1 earnings call, someone said, you know, "Why there isn't a loyalty program?" You know, and many people today are asking, you know, the gross order value has, or, you know, the number of orders or expansion, rather expansion, new customers have come down. The competitor already has a loyalty program, a membership. Zomato doesn't. I guess the person who asked in the last Q1 earnings call did have a point that if you have a loyalty program, if you have some kind of a membership, there could be regular customers who order maybe two times a day, maybe more. On every day, they may want to see something like, you know, where they have a fixed fee for, you know, a monthly fee for delivery and so on and so forth. Yeah, that is all that I have to say. Thank you. Thank you, Amit. To your sort of first question, I think, you know, if I zoom out, I think, you know, in general, we tend to endeavor and operate without any biases. The idea is not to sort of give any preference to any particular sector, class of shareholders. The idea is actually to give equal opportunity to all shareholders. There may be situations where we've not had adequate time to address all questions, but, you know, people can write to us. We are always available to address any queries. I think your point is noted, and we will just ensure that, you know, that there are no situations under which you will have a reason to complain going forward. Yeah, the broader sort of philosophy is not to operate with any bias. On your second sort of point around, you know, the, you know, conflict of interest, et cetera, I think over there, you know, as a philosophy, again, we operate with the highest standards of diligence, you know, and our processes are as per global standards. In case of the potential conflict that you're talking about, I think we had responded as well that, you know, Akriti was not a director or a KMP, and, as such, as per applicable law, there was no reason to call this a related party transaction, and she was not even involved in the discussions of this on this deal. As far as... I think you know, from a legal perspective, we have letter and spirit, we've not tried to do anything which is outside of you know, the high standards that we hold in terms of diligence and process. In terms of valuation as well, I think we've had the best of global firms, advisors, and valuation. Those valuations reports were made publicly available for public inspection. Again, we've responded to you with that feedback. I think yeah. On both these things, I think, again, we hold ourselves to the highest standards, and we will continue to do so. On your point regarding ESOPs, I think, you know, we've also, in this letter, if you look at it, one of the questions we've tried to address is why human capital is so important and critical in tech businesses. You know, the speed of innovation and experimentation that we need to do to stay alive and stay ahead is purely people dependent. For us to be able to attract the best talent, we also have to offer the right incentives and packages that, you know, that we need to do to attract the right talent. When you go out into the talent marketplace, you know, to attract the best talent from the best tech companies globally, we need to offer that. Now, you know, it is a cost. Now, whether it is paid in cash or through ESOPs is a different matter. Yes, we do think of this as an important long-term investment for our business, which will eventually lead to profitability for us. Yeah. I have, you know, on our response in terms of Akriti and Albinder's, maybe it's not required under law, but, you know, markets don't work purely. They work on perception and, you know, various other things. I guess disclosure, you know, take it as a positive thing. I mean, not that, you know, that's why someone is questioning this. You know, if had that disclosure been made beforehand, people who, when the markets opened on Monday after the deal, they would have had this information and could have taken an informed decision. All of a sudden they came in for a surprise. 10 minutes into the markets, every news channel is, you know, at the top of their voices talking about this. You know, sometimes, you know, maybe it's not required under law, but, you know, it's required otherwise, for various other reasons, as I just explained. The one other thing that I said is that, you know, this loyalty program with someone, in the Q1 earnings call, some institutional investor did raise it. I think that would help the company. I mean, I ordered a lot from, you know, outside- Amit, on loyalty program, I think we are aware of what the competition is doing, right? We also had one of our own, which we have discontinued, right? It's a business call. There are pros and cons of the form of loyalty program that is out in the market today. We are, as we speak, working on creating something which is more differentiated, we believe at least, and perhaps make sure that we get the benefit of customers' loyalty, you know, without really losing a lot of money. I would request you to please wait and watch for that and we'll come back with some loyalty program constructs soon in the market. All right. I mean, that thing has been there on the app for several months now. Yeah, I mean, okay, let's see. Thank you. Yeah. Thanks, Amit. Thanks, Amit. Thank you. Next question is from the line of Mr. Mukul Garg from Motilal Oswal Financial Services. Please go ahead. Yeah, thanks. I hope I'm audible. So just a quick clarification on this. Was there any impact of the gradual phase out of Pro Plus on volume or GOV growth during the quarter, you know, was there something which kind of resulted in either lower volume or number of orders or order frequency? You know, the second part was, given that your market share in Q2 was stable, what portion of the impact on GOV was, you know, came from seasonality versus, you know, the move towards lower customer spends in terms of focus on good quality customers? Hi, Mukul. I think look at the combination of the various things you mentioned. I mean, the first part of your question was on Pro Plus membership. So yeah, I mean, by the way, like, meanwhile we have stopped selling new memberships, but there are still members who are continuing to use that service till their membership expires, right? For customers for whom the membership expired, at least the more frequent customers, we haven't really seen much fall in their frequency post the membership expiring, right? While that may have contributed in some form in terms of lower growth, you know, but these are sort of multiple variables which are all impacting the overall order volume in a quarter, so it's very hard to isolate the impact of each one of these. Hence sort of I would be unable to give you more color on how this, you know, the overall impact of each one of these is on the overall performance in the quarter. Right. Basically what I was trying to understand, we are, you know, we are going into Q3 which, you know, again, is a seasonally high quarter for you guys. You know, is that something which we should expect, you know, Q3 growth to be meaningfully strong, you know, given, A, seasonality and, B, normalization in the, you know, the ad spending cuts, you know, kind of that getting into the base? Or, you know, are there any impacts which are kind of still going through the system? Mukul, we would not want to give any guidance for the next quarter, at this point in time. Fair enough. The second question was on, you know, the letter you mentioned that, you know, you have pocketed a large portion of low-hanging, you know, gains as of now. Are you referring to that take rate in that commentary, you know, you have obviously seen a meaningful improvement in take rate over last three quarters. How much more scope is left? Last quarter we did discuss that, you know, that is an area where there is still meaningful scope. You know, have you captured most of it by now or, you know, are you referring to something else? No. We are referring to essentially the overall pace of improvement in contribution. If you see over the last two quarters, contribution as a percentage of GOV has grown from 1.7% in Q4 FY 2022 to 2.8% Q1 FY 2023, and then 4.5% in the last quarter, right? I think that, I mean, the pace of change has been sharp and that's because there were opportunities on both the revenue and cost side. Our comment was simply essentially telling everyone that we don't expect that pace of improvement to continue. That pace of improvement will slow down, but that doesn't mean that you know, it's either revenue improvement slowing down or it's cost, right? I think we'll continue to working on all the levers, where we see opportunity to improve margins. The overall margin expansion pace, we want the shareholders to know will slow down going forward, at least from now. No, no, I get that. You know, again, just following up from last quarter, do you expect the take rate normalization of, you know, restaurants where it was initially low to continue abreast you know what you have done in last two to three quarters? Or is that also something which should, you know, start feeling some impact on the base effect? I mean, it's work in progress, Mukul. I think, I mean, nothing in our business is, you know, just essentially done and where we can't make any more progress. There are opportunities across the board, and take rate also is an area where we might see some improvement going forward. I would not wanna specifically discuss on that specific lever of growth, but I just wanna leave it at saying that the overall margin improvement, there is enough scope in the long term. That journey from where we are today to the 8% that we mentioned, I think will involve improvement both in the revenue and the cost side. Understood. Just sorry, one final clarification. When I look at the Blinkit revenue and adjusted revenue, there's a difference of just, you know, about INR 5 million. You know, ideally the difference between adjusted revenue and reported revenue is the delivery cost. You know, given obviously the breakup, it cannot be that low. Is there some something wrong which we are reading there? Was there something which did not come into the numbers? No. For Blinkit, the business model is different. The customer delivery charge that we get from customers there is our revenue there, so it's already recorded in the revenue. Pretty much revenue and adjusted revenue for the Blinkit business is same, unlike food delivery, where the customer delivery charge is passed on to the delivery partners directly. Oh, okay. Understood. I think that's all from my side. Thank you. Thank you, Mukul. Thank you. Ladies and gentlemen, we will be extending this call by 10 minutes and moving to the last few questions. Next question is from the line of Mr. Swapnil Potdukhe from JM Financial. Please go ahead. Hey. Hi, thanks for the opportunity. Just continuing on the last participant's question on contribution margin improvement. Wanted to add one of the levers that I think is would be your delivery cost that you pay to the riders. And what I see that some of the competition has been outsourcing this delivery you know delivery cost delivery deliveries to third parties. In the past from what I understand is like we have been managing our own fleet majorly. Has there been any change in the strategy there or are we thinking on those lines? Any thoughts over there? No, Swapnil. I don't think there's any plan to outsource. I mean, we're not planning to outsource a meaningful portion of our delivery fleet to third parties. There is a very small component, a portion of our delivery fleet which is outsourced. As far as we know, we are the cheapest delivery service in the country today. At least at this point, we don't see much merit in outsourcing more than what we already have here. Just to clarify, the earlier number that you had shared was 94% of the deliveries taken through your own fleet. Is that the same number that you're continuing with, or like there has been material change in that? It's more than that now. Yeah, but it's anyways not material because I would say majority of it is now done directly by us. Okay, good. Next question is on Zomato Pay business model. I know this is a nascent investment that you're doing right now. Any thoughts on like how do you plan to monetize this new venture that you're trying? Yeah. I think, yeah, you're right, Swapnil. Still early days. I think, essentially I mean, the main monetization here will continue to be ad sales, right? But what has changed now is that the ROI of those ads that restaurants will do on our platform will be more tangible, right? Because it'll be visible in terms of more transactions that customers will do at their restaurants, right? That essentially increases confidence of restaurants when they spend on ads on our platform, which we think is going to lead to better monetization down the line. Yeah, that's the broad strategy and we'll share the results with you on how this is going, perhaps next quarter once we have more data with us. So far it's been a very recent launch and we're just a few weeks into it, so it's too early to share any data on this at this point. Okay. Just the last one on quick commerce. One of the comments in the shareholder letter says that quick commerce is turning out to be another opportunity for Hyperpure. I would like to understand, like, what are the synergies that you're looking here from the cost side, from the revenue side, what should we think about it? Hi, Swapnil. This is Albinder. The primary integration that we are doing with Hyperpure at this time is joining forces to figure out whether we can do direct from farm sourcing for a large part of the fresh produce that our sellers need and obviously, Hyperpure needs to be able to supply to restaurant. If you look at sort of the both Zomato and Hyperpure's sort of vision statement is to figure out a system of getting better food for more people. I think you know, adding Blinkit to that mix allows us to be able to do two things at once, improve our scale of sourcing from the farms directly and to be able to give more opportunities to farmers in those areas to have access to a wider market. That's an option that we are presenting to our sellers as well, that if they partner with Hyperpure, they will be able to get better quality produce faster from farms. That is something that also helps out our overall sourcing ecosystem. That's what we're working on. There are obviously services that Hyperpure is able to offer to our sellers that it uses for the restaurant partners as well. That is something that we are still in the process of developing. Most of the synergy right now that we are exploring and working on is direct from farm source. Okay. Any timeline by when we can see these synergies reflecting in the numbers? Would you like to comment on that? See, primarily like, if you look at the customers' love around Blinkit's quality of fresh produce, some of these metrics would already be reflecting over there. I don't think you're gonna see a separate breakout for it. The economic impact of this is something which will also probably baked in somewhere, in the commissions we are able to charge our sellers. You're not gonna be able to see a specific breakout for just this integration outside. If you are a customer and you're ordering on Blinkit, the quality of produce will consistently keep going up. Okay. Well, thanks a lot for taking my questions. Thank you. Next question is from the line of Mr. Aditya Suresh from Macquarie Capital. Please go ahead. Yeah. Thank you for the candid remarks and the commentary. Right. Two questions. First question on concentration. In the past, you've spoken about your top eight and top 10 kind of cities. Are you able to share what proportion of this kind of cohort is your GOV, AOV and margin for contribution profit? Hi, Aditya. This is Kunal here. Look, we haven't put that data out, but it is, it hasn't changed meaningfully from what it was in the past. The larger point here is that, you know, both the top ten and the markets beyond the top ten continue to grow and see growth both from a new user addition perspective as well as order volumes perspective. At this point, we don't see any reason why that mix will change substantially. In terms of growth and gross order value for this cohort of top eight, top 10, that's consistent with the broader theme. Is that a fair comment to make? That's correct. Cool. The second piece on kind of cost optimization, right? And this is more a point about scale and some of the global models we've seen that scale necessarily does not drive down costs and therefore improve profitability, right? More that optimization dynamic. As you are looking to kind of optimize some of these delivery costs, et cetera, can you speak about some of the practical challenges that you're facing here today? I think, Aditya, it's a continuous process. I mean, our fleet has grown to almost 200,000 delivery partners now across multiple cities. In that journey in last two, three years, I think we have learned incrementally on how do we make this a better experience for our delivery partner, a better earning opportunity for our delivery partners, while ensuring that the customer service also continues to be better, right? I think it's a constant challenge, and a learning process for us. I mean, there isn't any specific practical challenge which has emerged, which I would like to highlight at this point. Thanks. This is maybe a final piece, right? In terms of the contribution profit itself at 4.5%, this is a specific question. Do you think this is a solid baseline to work from on an incremental basis, i.e., 4.5% next quarter can only be up or is there kind of, risk on both sides? We hope so, Aditya, that we can grow from here. All right. Okay. Thank you. Thank you. Thank you. Ladies and gentlemen, we will now conclude this conference call. Thank you for joining us and you may now disconnect your lines. Thank you everyone. Thank you.