Zomato reports Rs 138 crore net profit in Q3 FY24, driven by growth in quick commerce and core business. Revenue from operations stood at Rs 3,288 crore.
Photograph: Francis Mascarenhas/Reuters
New Delhi, Feb 8 (PTI) Online food delivery firm Zomato Ltd on Thursday reported a consolidated net profit of Rs 138 crore in the third quarter ended December 31, 2023, on the back of accelerated growth of quick commerce and steady performance of its core business.
The company had posted a consolidated net loss of Rs 347 crore in the same quarter last fiscal, Zomato Ltd said in a regulatory filing.
Consolidated revenue from operations stood at Rs 3,288 crore. It was at Rs 1,948 crore in the year-ago period, it added.
Total expenses were higher at Rs 3,383 crore. The same was at Rs 2,485 crore in the corresponding period a year ago, the company said.
In a letter to shareholders, Zomato Managing Director & CEO Deepinder Goyal said in the third quarter, the food delivery Gross Order Value (GOV) growth reached back up to 25 per cent Year-on-Year (YoY).
"At this point, we expect GOV to continue growing at 20 per cent-plus YoY, and perhaps accelerate further if we see more than expected market share gains and revival in macro consumer demand," he added.
On the company's quick commerce vertical Blinkit, he said the GOV growth was at 103 per cent YoY and "continues unabated", while losses continue to decline.
In the third quarter of FY24, Zomato said its food delivery business had an adjusted revenue of Rs 2,025 crore. It was at Rs 1,565 crore in the year-ago period.
For the quick commerce, adjusted revenue was Rs 644 crore. It was Rs 301 crore in the year-ago period, the company said, adding that its B2B supplies under Hyperpure clocked adjusted revenue of Rs 859 crore, up from Rs 421 crore in the same quarter a year ago.
Goyal said Hyperpure witnessed growth in both the core restaurant supplies business and the relatively newer quick commerce opportunity.
"To address a growing need of our restaurant partners, we are now setting up a plant for processing value-added food supplies, including sauces, spreads, pre-cut and semi-finished perishable products, among others. Over time, this has the potential to expand margins and drive higher engagement with our restaurant partners," he added.
Rakesh Ranjan, Food and Delivery CEO at Zomato, said the demand environment was muted in the Q3FY24 and that was true even for the broader restaurant industry.
"One of the things driving the growth of our food delivery business is the fact that our platform is still underserved from a supply standpoint. The monthly active restaurant base on our platform has grown by 20 per cent-plus (YoY) in Q3FY24. This growth is driven both by new restaurants opening up and our coverage of existing restaurants increasing," Ranjan added.
On the possibility of a hike in platform fee, he said it is too early to predict how the platform fee will shape up and the company is "still testing the waters on what works and makes sense here from a long-term perspective".
"We will continue to tactically use levers like these to optimise both growth and margin expansion. Most importantly, as we do this, we will also continue to ensure the viability and well-being of each of our stakeholders, our customers, restaurant partners and delivery partners," Ranjan said.
Blinkit Founder & CEO Albinder Dhindsa said the growth in quick commerce was largely driven by the robust uptick in demand due to the multiple festivals and occasions in the quarter besides having the right assortment which addressed the most pertinent needs of customers.
"While most of the GOV growth was order volume-led, part of it was also driven by an increase in average order value, which continued to benefit from a higher mix of high ASP (average selling price) categories such as electronics, festive needs, among others," he added.
Dhindsa said 90 per cent of Blinkit's GOV comes from its top eight cities currently and in the third quarter, it launched stores in two new cities -- Goa and Agra.
Blinkit has been focusing on new store additions in existing neighbourhoods where it is exceeding current store capacity or covering more neighbourhoods in existing cities, he added.
While Zomato's cash balance is over Rs 12,000 crore as of the third quarter, company CFO Akshant Goyal ruled out plans to return cash to shareholders saying at this point the company wants to keep a strong balance sheet.
"I would say that it is safe to assume that we may not do any buyback or dividend distribution in FY24 or FY25," he said.
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