“…we expect our business to remain profitable going forward and knowing what we know today, we believe we will continue to deliver 40%+ YoY topline (adjusted revenue) growth for at least the next couple of years,” chief financial officer Akshant Goyal said in a letter to shareholders.
Also read | Zomato Q1 Results: Food delivery platform turns profitable with Rs 2 crore-PAT; revenue soars 71% YoY
The Gurgaon-based company reported a net profit of Rs 2 crore for the three-month period ended June 30 as against a net loss of Rs 186 crore in the same period last year. Zomato also reported a 70% year-on-year surge in operating revenue to Rs 2,416 crore.
Notably, during its March-quarter earnings, the company had said it would turn profitable on a consolidated level over the succeeding four quarters.
After a sluggish performance in its mainstay food delivery business over the past few quarters, the adjusted revenue in that segment grew almost 14% sequentially in the June quarter to Rs 1,742 crore. In January-March, adjusted revenue had fallen to Rs 1,530 crore, from Rs 1,565 crore in October-December.
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Zomato’s newly elevated CEO of food delivery, Rakesh Ranjan, attributed the growth in the segment to four factors – recovery in consumer demand that started in February and continued into April-June; seasonally strong Q1; growing adoption of the company’s loyalty programme Zomato Gold, which “drove higher frequency of ordering”; and “great execution by the team, especially on ensuring delivery partner availability in a quarter impacted by adverse weather (both extreme heat and untimely rains)”.
Ranjan also pointed out that Zomato Gold now contributes to over 30% of the gross order value (GOV) in the food delivery business.
Zomato defines adjusted revenues as revenues from operations plus actual customer delivery charges paid in the food delivery business – net of any discounts including free delivery discounts on account of Zomato Gold.
Quick commerce
Zomato’s quick commerce platform Blinkit reported a 134% on-year increase in revenue for the quarter to Rs 384 crore. The business also turned contribution positive for the first time ever in June 2023.
However, the growth in the segment’s GOV was sluggish on a sequential basis. Blinkit chief executive Albinder Dhindsa attributed this to a temporary business disruption on account of delivery partner protests that resulted in some of its dark stores shutting down for a few days.
“The slower sequential GOV growth in Q1FY24 was mainly due to the temporary business disruption we had in the month of April resulting from the change in the delivery partner payout structure. Due to this, some of our dark stores were shut for a few days in certain parts of the country, which caused a decline in overall order volumes during the quarter,” he said.
“While the operations were back on within a few days, we faced a challenging period of around 45 days where the overall gig workers available to work in our system were 15-20% lower than normal. This was due to the above disruption as well as the heat and incessant rains,” Dhindsa added.
Blinkit’s performance started to normalise in early June, he said, pointing out that the platform has seen healthy growth since then.
“Getting to sustainable positive contribution at a business level was the first step, but there’s a lot that needs to come together in order to get to Adjusted EBITDA break-even. Doing that in conjunction with the store expansion plan (about 100 net new stores during FY24) is going to be challenging, but the team is very determined to deliver on growth and profitability over the next few months,” the Blinkit CEO said.