New Delhi: Zomato Ltd reported a second consecutive quarter of profit, with the company’s food ordering and quick commerce businesses benefiting from strong festive season spending.
The food aggregator reported a net profit of ₹36 crore for the three months ended 30 September from a loss of ₹251 crore in the year-ago period. Zomato reported a ₹2 crore profit for the first time in the June quarter.
Revenue from operations grew 71% to touch ₹2,848 crore, driven by a order volume surge across its food ordering and quick commerce businesses.
“The growth momentum we witnessed in Q1FY24 continued in Q2FY24, driven by healthy growth across all our businesses. Gross order value across our B2C businesses (food delivery, quick commerce and going-out) grew 13% quarter-on-quarter and 47% year-on-year,” Deepinder Goyal, founder and CEO of Zomato, said in the company’s shareholder’s letter and results.
Gross order value (GOV) is the combined value of all food delivery orders placed on the platform. Food delivery GOV grew 9% from the June quarter and 20% from a year ago and is recovering well from the demand slowdown we witnessed in the past two quarters of FY23. Quick commerce bounced back with a 29% growth in order volume from the preceding June quarter.
On food delivery, growth was led by growth in order volumes, while the average order value remained largely flat.
“A visible uptick in demand coupled with some great execution by the team led to the robust growth in order volumes. Order volume growth is typically negatively impacted in this quarter due to lower delivery partner availability during rains. However, this year, we were able to improve on that through better all-round execution. Another key driver of GOV growth in the quarter was the growing adoption of our Gold programme, which is continuing to drive higher ordering frequency among members,” said Rakesh Ranjan, CEO of the food ordering and delivery business at Zomato.
The platform now has 3.8 million members that contribute nearly 40% of GOV in the food delivery business. However, a Gold order is less profitable than a non-gold order due to the impact of program benefits, Zomato said.
Shares of the firm closed at ₹117.90 apiece, up nearly 10% on the BSE on Friday, after the company announced its September quarter results.
Meanwhile, the company’s quick commerce business under Blinkit turned contribution-positive in the September quarter for the first time. The company aims to break even in the quick commerce business by the next June quarter. Demand for the service was strong chiefly on the back of a str-ong festive season.
“We have also seen festivals driving much stronger growth for quick commerce as compared to food delivery. With major festivals like Navratri, Dussehra, and Diwali, lined up in the December quarter, we expect another high growth quarter from Blinkit,” said Akshant Goyal, chief financial officer of Zomato.The company shared guidance of opening at least 100 new (net) stores within FY24 and exiting March 2024 with somewhere around 480 stores in total.
Blinkit GOV growth was largely driven by same-store sales growth. “We also saw a net addition of 28 new stores during the quarter, taking our overall store count to 411 stores as of the end of the quarter,” said Albinder Dhindsa, founder and CEO of Blinkit.
Over 60% of Blinkit stores are now contribution-positive. “We are now seeing profitable economics not just at a store level but also at a city level - where some of our cities are now operating at similar contribution per order as the food delivery business in those cities,” Goyal said.
However, the company warned of moderation in quarter-on-quarter GOV growth in food delivery in the next quarter to around the high single digit.
Zomato customers are also being charged a nominal platform fee (in the range of ₹2-5 per order) , including those of Zomato Gold members. It is a small fee to make our economics better and viable in the long run, Goyal said.
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