Food delivery business was the company’s growth engine as it accounted for an adjusted revenue of INR 1,925 Cr, up 21.7% YoY from INR 1,581 Cr
Blinkit turned contribution positive for the first time in Q2 FY24 as contribution margin as a percentage of GOV in the consolidated entity improved to 1.3% during the quarter
Headlining the quarterly results was Zomato Gold. which has amassed 38 Lakh members since its launch in January this year
Foodtech major Zomato announced its financial results for the second quarter (Q2) of the financial year 2023-24 (FY24) on Friday (November 3).
Here are the major takeaways from the startup’s Q2 financial results:
Zomato Continues Profit Run: The foodtech major reported its second profitable quarter in Q2 FY24 with a profit after tax (PAT) of INR 36 Cr, ballooning 18X from INR 2 Cr reported in the previous quarter.
This is in contrast with INR 251 Cr net loss reported by the foodtech major in Q2 FY23.
The Gurugram-based company’s operating income soared more than 71% to INR 2,848 Cr in the quarter ended September 2023 from INR 1,661 Cr in the year-ago quarter. Sequentially, operating revenue jumped 18% from INR 2,416 Cr.
Food Delivery Leads The Way: Food delivery business was the company’s growth engine as it accounted for an adjusted revenue of INR 1,925 Cr, up 21.7% year-on-year (YoY) from INR 1,581 Cr and 10.5% quarter-on-quarter (QoQ) from INR 1,742 Cr.
The surge in revenue was largely led by growing adoption of its Gold programme, growth in gross order value (GOV), and an increase in order volume.
Even as average order value (AOV) remained ‘flat’, GOV for the food delivery vertical jumped 20% YoY to INR 7,980 Cr in Q2 FY24, recovering well from the demand slowdown witnessed in the last two quarters of FY23.
In Q2 FY24, average monthly transacting customers jumped to 18.4 Mn from 17.5 Mn in the preceding quarter.
Blinkit Turns Contribution Positive: The foodtech startup’s quick commerce vertical Blinkit turned contribution positive for the first time in Q2 FY24. Its contribution margin as a percentage of GOV in the consolidated entity improved to 1.3% during the quarter under review compared to -7.3% in Q2 FY23.
It clocked a record 45.5 Mn orders during the quarter, while GOV soared 29% QoQ and 86% YoY to INR 2,760 Cr in Q2 FY24. The AOV at Blinkit also zoomed to INR 607 in Q2 FY24 from INR 582 in Q1 FY24.
The company attributed the high QoQ growth to low base effect as strikes disrupted the quick commerce platform’s operation last quarter.
Zomato Bullish On Blinkit: Zomato CEO Deepinder Goyal reiterated that Blinkit is well poised to surpass the food delivery business and that the quick commerce vertical is witnessing profitable economics not only at stores but also in some cities.
Chief financial officer (CFO) Akshant Goyal believes that Blinkit will deliver another record-high quarter in Q3 on the back of festive season demand.
Blinkit Takes The Cautious Route: The quick commerce platform added 28 new stores during the quarter, taking the total store count to 411. Zomato reiterated that Blinkit is well on its way to open at least 100 net new stores in the current fiscal year and close FY24 with 480 dark stores.
In the post-earnings call, Blinkit CEO Albinder Dhindsa said the company is taking a selective approach to expand to new cities. He said the company first opens a dark store to test the depth of a new market and gauge demand, especially in smaller cities.
Dhindsa said the new markets won’t be ‘meaningful’ in the short term but will turn out to be growth channels in the longer run. In the shareholders’ letter, Dhindsa said that Blinkit’s adjusted EBITDA margin can only improve from here and the business is on track to achieve breakeven by Q1 FY25.
Zomato Gold Takes The Cake: Headlining the quarterly results was the foodtech major’s customer loyalty programme Zomato Gold. The company claimed that the programme has amassed 38 Lakh members since its launch in January this year.
Noting that Gold members are driving the food delivery business, Zomato said Gold orders contributed nearly 40% of the total GOV (around INR 3,192) of the vertical in Q2 FY24. However, the subscription service continues to be less profitable on a per order basis owing to longer average delivery and distance which pile up the costs.
Hyperpure, Dining-Out Verticals Continue To Scale Up: B2B supply arm Hyperpure reported a 123% YoY surge in adjusted revenue to INR 745 Cr in the quarter ended September 2023. Adjusted EBITDA loss improved to INR 34 Cr in Q2 FY24 from a loss of INR 53 Cr in Q2 FY23.
Meanwhile, the dining-out vertical saw a sharp 88% increase in revenue to INR 49 Cr in Q2 FY24 from INR 26 Cr in the year-ago period. Average GOV of the dining-out arm soared 2.28X YoY to INR 682 in the quarter ended September 2023 from INR 298 in Q2 FY23.
Zomato Unfazed By Platform Fee: The company said that the rollout of platform fees for food delivery orders has had no impact on demand elasticity. The foodtech major also confirmed that the fee is currently being levied on all orders.
Meanwhile, ESOP costs jumped 32% QoQ to INR 132 Cr in Q2 FY24 from INR 100 Cr. On a YoY basis, the expenditure fell marginally from INR 137 Cr. During the post-earnings call, CFO Akshant Goyal said the company’s share-based payment expenses would stand at around INR 450 Cr in FY24.
Amid all these, shares of Zomato closed the last trading session of the week 8.3% higher at INR 116.4 on the BSE, crossing the listing price of INR 115 for the first time since January 20, 2022.