Food delivery platform Zomato on Friday said it posted a net profit of Rs 36 crore for Q2FY24, compared to a loss of `251 crore in the year-ago period, sending its shares up 8%. An uptick in demand led to strong sales growth across businesses, particularly in its quick commerce arm Blinkit.
Consolidated revenue from operations jumped 71% year-on-year to Rs 2,848 crore. This helped the company post an adjusted Ebitda (earnings before interest, tax, depreciation and amortisation) of Rs 41 crore, compared with an adjusted loss before interest, tax, depreciation and amortisation of Rs 192 crore in Q2FY23.
Topline growth was boosted by a platform fee of `2-5, charged Q2 onwards to catch up with rival Swiggy, which began charging a similar fee in April. Revenue growth was also driven by an increase in signups on its loyalty programme – Zomato Gold, which now has 3.8 million users, compared to 2 million in Q1. However, the management said on the investor call it expects the pace of signups to slow down.
In Q2, Zomato’s adjusted revenue from its primary food delivery business rose 22% year-on-year to `1,925 crore, driven by higher order volumes. Adjusted revenue includes revenue from operations and delivery charges paid by the customer, net of discounts.
Gold members account for about 40% of the gross order value (GOV) in its food delivery segment. GOV, or the total monetary value of orders placed on the platform, showed strong y-o-y and sequential growth across the food delivery, quick commerce and going out businesses. “Food delivery GOV grew 9% QoQ and 20% y-o-y and is recovering well from the demand slowdown we witnessed in the last two quarters of FY23,” said founder and CEO Deepinder Goyal. “Quick commerce bounced back with a 29% q-o-q GOV growth following tepid growth in Q1 (due to temporary disruptions in the business),” he added in the letter to shareholders.
“GOV growth was almost entirely led by growth in order volumes, while the average order value remained largely flat,” said Rakesh Ranjan, CEO, food ordering and delivery business. He said order volume growth is typically negatively impacted in Q2 due to lower delivery partner availability during rains.
Growing Blinkit
Blinkit, the quick commerce business, posted an adjusted revenue of `505 crore in Q2FY24, compared to `142 crore in the year-ago period. Zomato closed the Blinkit acquisition in the middle of the year-ago quarter.
On a sequential basis, the segment’s adjusted revenue rose 32%, primarily driven by same store sales growth and addition of 28 new stores. This takes the overall store count to 411 stores at the end of Q2. The company had previously said it plans to end FY24 with 480 stores.
Gross order value on Blinkit’s platform rose to `2,760 crore from `2,140 crore in Q1. CFO Akshant Goyal expects the festival season to drive higher order volumes. In Q2, Blinkit reported a loss of `94 crore, smaller than the loss of `119 crore in Q2FY23 and the company aims to break-even in Q1FY25. Revenue from B2B segment Hyperpure rose to `745 crore in Q2, compared to `334 crore in the year-ago period.
Demand could be somewhat muted in the festive season, Ranjan said, as people travel and eat out. The Q3 numbers could be impacted, as many observe fasts during Navratri and Shradh period. At the same time, the Cricket World Cup should drive additional order volumes.
However,the company believes demand uptick might not be significant as it would be limited to a handful of match days.“On balance, we think that q-o-q GOV growth in food delivery in the next quarter should be moderate -in high single digits which should translate to about 25-30% y-o-y GOV growth,” CFO Goyal said.