Zomato reports Q2 profit of INR 36 crore; Blinkit reaches contribution margin positivity
- ByStartupStory | November 4, 2023
Zomato, led by Deepinder Goyal, achieved another profitable quarter in Q2 of FY24, reporting a profit after tax of INR 36 crore for the July to September period. The company highlighted substantial growth in its key business-to-consumer segments, including food delivery, quick commerce, and going out.
These segments experienced robust growth, contributing to the company’s ongoing profitability. During Q2 FY24, Zomato’s revenue from operations increased by 71% to reach INR 2,848 crore, fueled by a 47% year-over-year growth in gross order values (GOV) across its various segments, including food delivery, going out (comprising dining out and live events), and quick commerce.
Food delivery saw a 20% increase in GOV during the quarter, signifying a strong recovery from the demand slowdown witnessed in the previous two quarters of FY23. However, Zomato’s total expenses rose by 45% to INR 3,039 crore compared to the same period in the previous year, with delivery and related charges increasing by 55%. Zomato attributed the success of its food delivery business to increased demand, higher order volumes, and the growing adoption of the Gold program. The Gold loyalty program, offering free delivery and discounts, now boasts 3.8 million members and contributes significantly to GOV in the food delivery sector.
Regarding future growth, Zomato expressed caution for the current quarter, as factors like the festive season and the ICC Cricket World Cup may not guarantee substantial sequential growth in the food delivery business. Zomato aims for moderate quarter-on-quarter GOV growth of a high single digit, translating to about 25-30%. The company also acknowledged that Gold orders are less profitable than non-Gold orders but emphasized the focus on the long-term benefits, such as increased ordering frequency.
Zomato introduced a platform fee on every order in Q2 FY24 to enhance the economics of its operations. Additionally, Zomato’s grocery delivery business reported a significant increase in revenue from operations, while quick commerce rebounded with a 29% quarter-on-quarter GOV growth. Blinkit, Zomato’s quick commerce business, turned contribution positive for the entire quarter, marking a notable achievement.
CEO Deepinder Goyal has expressed optimism about the growth potential of quick commerce by stating, “We are now seeing profitable economics not just at a store level but also at a city level—where some of our cities are now operating at similar contribution per order as the food delivery business in those cities. So even from a potential profit pool perspective, we think quick commerce is a larger opportunity than food delivery.”
Exciting news! We’re now on WhatsApp Channels too. Subscribe today by clicking the link and stay updated with the latest insights in the startup ecosystem! Click here!
On the stock market, Zomato’s shares ended 9.62% higher, closing at INR 117.90 per share.
Follow Startup Story
Related Posts
