Zomato Q2 Results Preview: EBITDA loss likely to narrow; Blinkit revenue may rise

Food delivery company Zomato will report its September-quarter (Q2FY24) earnings later today. Experts expect a further narrowing of its EBITDA loss in Q2FY24. However, while they expect to see sequential improvement in Zomato’s profitability in Q2, the pace of improvement could be slower.

In the June quarter, the food aggregator reported its first-ever consolidated net profit of ₹2 crore as against a net loss of ₹186 crore in the year-ago period. The revenue from operations during the quarter came in at ₹2,416 crore versus ₹1,414 crore in the year-ago period. Its EBITDA (earnings before interest, taxes, depreciation, and amortization) loss also narrowed to ₹48 crore versus ₹307 crore in the same period last year.

Here's what brokerages expect from Zomato's earnings:

JM Financial

At a consolidated level, the brokerage expects Zomato’s reported EBITDA loss to narrow down to ₹6 crore in Q2FY24 versus a loss of ₹48 crore in Q1FY24.

The brokerage forecasts a 15 percent YoY (+4 percent QoQ) growth in Zomato’s food delivery in Q2, broadly in line with 14 percent YoY in Q1. 

For Blinkit, it expects a sequential gross order value (GOV) growth of 17 percent (+68 percent YoY) due to a robust increase in order volume. In terms of profitability, the brokerage expects sequential adjusted EBITDA margin (as % of GOV) improvement in food delivery as well as Blinkit to be relatively modest at 30 bps/150 bps, respectively, compared to 130 bps/370 bps sequential improvement in the June quarter. 

Overall, while it continues to expect sequential improvement in Zomato’s profitability, the pace of improvement could be slower than in the past 2 quarters.

"Our channel checks suggest macro pressures continued to weigh on demand for online food delivery in the Sept quarter. Competitive intensity also appears to have picked up following Swiggy’s (Unlisted) announcement of a shift in focus back to growth over profitability. During the quarter, we noted a sharp reduction in loyalty membership fees by both Zomato as well as Swiggy. Our checks also suggest daily order volume for the ONDC network has not increased materially despite continued incentives," it said.

Nuvama

As per the brokerage, Zomato may deliver a consolidated revenue growth of 10.5 percent QoQ and 60.7 percent YoY. The food delivery business is likely to grow 5.9 percent QoQ and 27.9 percent YoY in a seasonally weak quarter, it said. Blinkit revenue growth is likely to be 20.6 percent QoQ, in line with the management guidance. The improvement in profitability will be limited this quarter due to wage hike seasonality and investment in dark store additions, it added.