In a remarkable turn of events, food delivery firm Zomato achieved a significant milestone by recording a first-time profit of Rs 2 crore in the first quarter of FY24. This comes as a notable shift from the loss of Rs 186 crore reported during the same quarter last year. The company, led by Deepinder Goyal, surpassed its previous guidance by reaching profitability much earlier than expected. Operating revenue witnessed an impressive 71% growth, soaring to Rs 2,416 crore from Rs 1,414 crore in Q1 last year, primarily driven by substantial growth in Hyperpure.
Hyperpure, Zomato’s business-to-business supplies vertical, demonstrated exceptional growth, rising by 126% to Rs 617 crore from Rs 273 crore last year. This remarkable surge was largely attributed to an increase in the minimum order value, resulting in a rise in average order value. Akshant Goyal, Chief Financial Officer of Zomato, expressed his satisfaction with the team’s performance, which exceeded expectations and played a crucial role in achieving profitability ahead of schedule.
In terms of expenses, the company’s total expenses rose by 48% to Rs 2,612 crore from Rs 1,768 crore last year, with delivery and related charges increasing by 42%. The firm is now focused on achieving Adjusted EBITDA breakeven for Blinkit within the next four quarters, aiming for a positive financial outlook.
Zomato’s food delivery Gross Order Value (GOV) in Q1 experienced a 14% growth, reaching Rs 7,318 crore from Rs 6,425 crore in the previous year. The company also noted an average monthly transacting customer base of 17.5 million. The growth in food delivery GOV can be attributed to the increasing number of orders and a modest rise in average order value. Rakesh Ranjan, CEO of the food delivery business, highlighted the significance of the growing adoption of Zomato Gold membership program, demand recovery, and exceptional execution by the team, which significantly contributed to the boost in GOV.
Blinkit, Zomato’s quick-commerce segment, generated a revenue of Rs 384 crore. The company had acquired the grocery delivery company for Rs 4,447 crore in June last year. While Blinkit saw a marginal rise in Q1 compared to the previous year, there was a 6% decline in order volume from the last quarter due to a temporary business disruption in April. Albinder Dhindsa, CEO of Blinkit, explained that the disruption was caused by a strike among delivery executives following changes in their payout structure. However, operations returned to normal within a few days, and since early June, the company has seen healthy growth.
Looking ahead, Zomato’s quick-commerce segment anticipates a YoY GOV growth of over 60% with improvements in unit economics. The segment witnessed its highest-ever GOV and transacting customers in June and July. According to CEO Deepinder Goyal, Blinkit’s GOV is very close to Zomato’s GOV in some large cities, and Blinkit is expected to drive even more value than Zomato in the next decade.
In conclusion, Zomato’s impressive performance in Q1 FY24 reflects its resilience and adaptability in a competitive market. The company’s success in achieving profitability ahead of schedule bodes well for its future growth and potential. Zomato’s shares closed 1.65% higher at Rs 86.45 apiece, highlighting the positive response from investors.
