Zomato Reports INR 36 Crore Profit as Order Volume Surges
Written by Sanjay Kumar
Zomato Ltd, a leading food aggregator and quick commerce platform, has announced its second consecutive quarter of profitability. The company attributed this success to robust spending during the festive season. In the quarter ending on September 30, Zomato reported a net profit of ₹36 crore, marking a significant turnaround from a loss of ₹251 crore during the same period the previous year. Notably, the company had reported its first-ever profit of ₹2 crore in the June quarter.
The strong financial performance is supported by a remarkable 71% increase in revenue from operations, reaching ₹2,848 crore. This surge in revenue is primarily driven by a substantial increase in order volume across Zomato’s food delivery and quick commerce divisions.
Deepinder Goyal, the founder and CEO of Zomato, expressed, “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.”
Gross order value (GOV), the combined value of all food delivery orders on the platform, exhibited remarkable growth. Food delivery GOV increased by 9% compared to the June quarter and 20% compared to the previous year. This recovery signifies a positive trend, bouncing back from the demand slowdown observed in the past two quarters of FY23. Quick commerce also made a strong comeback with a 29% growth in order volume compared to the preceding June quarter.
The growth in food delivery is primarily attributed to increased order volumes, while the average order value remained relatively stable. Rakesh Ranjan, CEO of the food ordering and delivery business at Zomato, stated, “A visible uptick in demand coupled with some great execution by the team led to robust growth in order volumes.”
Zomato’s Gold program, designed to increase ordering frequency among members, also contributed significantly to GOV growth. Currently, the platform boasts 3.8 million members who contribute nearly 40% of GOV in the food delivery business. However, it’s worth noting that Gold orders are less profitable than non-Gold orders due to program benefits, according to Zomato.
Following the announcement of its September quarter results, Zomato’s shares closed at ₹117.90 apiece, marking a nearly 10% increase on the Bombay Stock Exchange (BSE) on Friday (November 3).
Meanwhile, Zomato’s quick commerce business, operating under the name Blinkit, achieved contribution-positive status for the first time in the September quarter. The company aims to break even in the quick commerce business by the next June quarter, driven by strong demand during the festive season.
With major festivals such as Navratri, Dussehra, and Diwali lined up in the December quarter, Zomato expects another high-growth quarter from Blinkit, as stated by Akshant Goyal, the chief financial officer of Zomato.
Zomato has also outlined its plans to open at least 100 new net stores within FY24, aiming to reach a total of approximately 480 stores by March 2024. Blinkit’s GOV growth is largely attributed to same-store sales growth, with a net addition of 28 new stores during the quarter, bringing the total store count to 411.
Over 60% of Blinkit stores have now become contribution-positive, and the company is witnessing profitable economics not only at a store level but also at a city level, similar to the food delivery business in some cities.
However, Zomato has cautioned about a moderation in quarter-on-quarter GOV growth in food delivery for the next quarter, which is expected to be around the high single digits.
Zomato customers will now be charged a nominal platform fee (ranging from ₹2-5 per order), including Zomato Gold members. This fee is introduced to improve the company’s long-term economic viability, according to Deepinder Goyal, CEO of Zomato.
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