Foodtech giant Zomato has unveiled its second consecutive profitable quarter today, experiencing a remarkable surge in profit after tax, reaching INR 36 Crore during the September quarter of the financial year 2023-24 (FY24). This outstanding performance represents an 18-fold increase from the INR 2 Crore PAT in the preceding quarter.
It is important to highlight that Zomato achieved its first-ever profitable quarter in Q1 of FY24. In Q2 of FY23, the company incurred a net loss of INR 251 Crore.
Read More: Zomato turns profitable in Q1 FY24, reports INR 2 Cr consolidated PAT
Notably, Zomato recorded a profit before tax (PBT) of INR 21 Crore in Q2 of FY24, a significant turnaround from the INR 15 Crore loss in the preceding quarter.
Meanwhile, in Q2 FY24, Zomato announced a significant milestone with its quick commerce business Blinkit achieving positive contribution for the first time. This quarter, Blinkit marked a 1.3% contribution, a remarkable shift from the negative 7.3% recorded in Q2 FY23.
Zomato’s operating revenue surged to INR 2,848 Crore in the quarter under consideration, a significant increase from the INR 1,661 Crore reported in the corresponding quarter from the previous year.
Operating revenue also experienced an 18% increase, rising from INR 2,416 Crore in Q1 of FY24.
Zomato reported a significant year-on-year (YoY) increase of 47% in its gross order value (GOV), which reached INR 11,422 Crore in Q2 of FY24, reflecting positive growth across its various business verticals.
The company reported that the gross order value (GOV) for food delivery increased by 9% quarter-on-quarter (QoQ) and 20% year-on-year (YoY) to INR 7,980 Crore. Zomato mentioned that the food delivery sector is steadily recovering from the demand slowdown observed during the last two quarters of FY23.
Zomato explained that the growth in gross order value (GOV) within its core food delivery vertical was primarily driven by an increase in order volumes, with minimal fluctuations in the average order value.
“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,” Zomato said in its statement.
Another significant factor contributing to the growth of the gross order value (GOV) during the quarter was the expanding adoption of its Gold program.
The company reported a total of 3.8 million Gold members by the end of the September quarter, and these members accounted for nearly 40% of the gross order value (GOV) in its food delivery business. The platform had 2 million active Gold members as of June 2023.
Nevertheless, the contribution margin for its food delivery business increased from 6.4% in Q1 of FY24 to 6.6% in Q2 of FY24.
Zomato witnessed a positive shift in its consolidated adjusted EBITDA, which improved to INR 41 Crore in the current quarter, marking a significant turnaround from the INR 192 Crore loss in Q2 of FY23.
Zomato experienced a substantial year-on-year increase of over 45% and a sequential growth of 16.3% in its total expenses, reaching INR 3,039 Crore in Q2 of FY24.
In the current quarter, Zomato’s expenditure on purchasing stock-in-trade nearly doubled, reaching INR 685 Crore. Additionally, the company’s employee benefit expenses increased by 9.4% year-on-year, totaling INR 417 Crore.
During the preceding quarter, Q1 of FY24, Zomato allocated INR 338 Crore to employee benefit expenses.
At the same time, the company continued to allocate more funds to advertising and sales promotions, resulting in an 18.3% year-on-year increase, reaching INR 355 Crore.
Zomato witnessed a significant increase in its delivery and related expenses, more than doubling to INR 919 Crore in Q2 of FY24 compared to the previous year.
Zomato has observed that festivals have a more pronounced impact on driving growth in its quick commerce subsidiary, Blinkit, compared to its food delivery business. With significant festivals such as Navratri, Dussehra, and Diwali on the horizon in the December quarter, Zomato anticipates another robust growth period for Blinkit.
“The festive period in Q3 FY24 is usually a mixed bag for the food delivery business. While people order more around the festivals, at the same time, they also travel and eat-out more in this quarter,” it said.
Nevertheless, the company added that the ICC World Cup is likely to generate increased order volumes, although the surge in demand is anticipated to be concentrated on a few select match days.
Zomato’s shares closed today’s trading session at INR 116.4 on the BSE, marking an 8.3% increase.