Zomato's Q2 PAT Hits Rs 36 Crore amid Soaring Revenues

Zomato, the online food delivery platform announced a consolidated profit of Rs 36 crore for the second quarter ending in September 2023, propelled by robust growth in its revenue.

In the same quarter of the previous financial year, the company had posted a loss of Rs 251 crore.

During the current quarter, the revenue from operations amounted to Rs 2,848 crore, marking a significant increase from the Rs 1,661 crore recorded in the corresponding period last year.

As per a regulatory filing, the total expenses for the quarter being reviewed amounted to Rs 3,039 crore, while in the same quarter of the previous year, it was Rs 2,092 crore. Additionally, the company's board has granted approval for the sale of its complete 30% voting rights in ZMT Europe LDA, an associate firm situated in Portugal, for a total sale value of approximately 1.80 lakh euros (equivalent to approximately Rs 1,59,45,300).

In a letter addressed to shareholders, the company also shared that its quick commerce business, Blinkit, has achieved a positive contribution for the first time throughout the entire quarter.

The contribution margin, expressed as a percentage of the gross order value (GOV) in the business, has shown a positive shift from -7.3 percent in Q2FY23 (when the business was acquired) to a current 1.3 percent in Q2FY24.

Deepinder Goyal, Founder and CEO said that the strong growth trend observed in Q1FY24 has persisted into Q2FY24, propelled by robust expansion across all of the company's operations. He also highlighted the company's profitability, mentioning that they achieved their second consecutive profitable quarter, with an Adjusted EBITDA of Rs 41 crore. This represents a substantial improvement compared to the Rs 12 crore profit in the previous quarter (Q1FY24) and a significant turnaround from the loss of Rs 192 crore during the same quarter last year (Q2FY23).

EBITDA, which stands for Earnings Before Interest, Taxes, Depreciation, and Amortization, is a metric employed to evaluate a company's operational efficiency.

Zomato's CFO, Akshant Goyal, expressed that they anticipate a moderate quarter-on-quarter (QoQ) growth in Gross Order Value (GOV) for food delivery in the upcoming quarter, roughly in the high single digits. This growth is expected to result in approximately 25-30 percent year-on-year (YoY) expansion in GOV.

In reference to the recently introduced platform fee, Akshant mentioned that, beginning in Q2FY24, all customers, including Zomato Gold members, are now incurring a modest platform fee, typically ranging from Rs 2 to Rs 5 per order. This fee is implemented to improve the company's long-term economic sustainability while ensuring that their services remain affordable for customers.

Albinder Dhindsa, the founder of Blinkit, mentioned that when comparing year-on-year (YoY) figures, the Gross Order Value (GOV) growth for Blinkit reached 86 percent, aligning with their expectations and past performance. This growth was primarily attributed to increased sales from existing stores, emphasizing their commitment to meeting a wider range of customer needs while maintaining consistent service quality. Additionally, they expanded by 28 new stores during the quarter, resulting in a total of 411 stores by the quarter's end.

Akshant also commented on Blinkit, highlighting that quick commerce experienced more robust growth during festivals compared to food delivery. With major festivals like Navratri, Dussehra, Diwali, and others scheduled for the December quarter, they anticipate another quarter of substantial growth for Blinkit.