Zomato Q1 Results: Food aggregator posts first ever profit at Rs 2 cr as delivery margin jumps

Online food delivery platform Zomato turned profitable for the first time during the June quarter of this fiscal. The profitability has been aided largely by operational improvement in the company's food business. Zomato's food delivery margins sored to 13.6 percent.

The food delivery platform reported a consolidated net profit of Rs 2 crore for the June quarter against a net loss of Rs 186 crore in the year-ago quarter. The consolidated revenue from operations surged 71 percent year-on-year to Rs 2,416 crore, compared to Rs 1,414 crore in the corresponding quarter of last fiscal.

The bottomline is also aided by an tax credit of Rs 17 crore and other income, which was higher by Rs 10 crore, compared to the previous March quarter.

However, both these components were present in the base quarter as well.

The company's Chief Financial Officer (CFO) Akshant Goyal expects its business to remain profitable going forward. "We believe we will continue to deliver 40 percent+ YoY topline (Adjusted Revenue) growth for at least the next couple of years."

"We were expecting to hit this milestone in the September quarter (Q2FY24), and we were being conservative in our earlier guidance. However, some critical parts of the team across our businesses out-executed our expectations/plans, and some of our initiatives delivered better outcomes than we had expected," Goyal said.

Consolidated adjusted EBITDA was at Rs 12 crore as against a loss of Rs 152 crore in the same quarter a year ago. The adjusted EBITDA margin stood at 0.4 percent, a rise of 9 percentage points YoY. The adjusted revenue excluding the quick commerce business stood at Rs 2,402 crore, a growth of 33 percent YoY.

The online food delivery giant said its quick commerce (Blinkit) business turned contributive positive for the first time ever in the month of June 2023. The food delivery platform said it can deliver adjusted EBITDA breakout in the quick commerce business in the next four quarters.

The food delivery giant also posted a jump in its gross order value (GOV) for Q1FY24 at Rs 7,318 crore, compared to Rs 6,425 crore in the year-ago quarter of the previous fiscal. The average monthly transacting customers were at 1.75 crore in Q1FY24 as against 1.67 crore in the same period a year ago.

The GOV growth was driven by robust growth in the number of orders as well as a modest uptick in average order value. Zomato has been witnessing a recovery in demand since February 2023 which continued into Q1 of FY24. Moreover, Q1 usually tends to be a seasonally stronger quarter for the company.

The growing adoption of Zomato's Gold program drove a higher frequency of ordering and now contributes to 30 percent+ of GOV in the food delivery business.

Zomato attributed a slower sequential GOV growth in Blinkit in the first quarter to the temporary business disruption in April, resulting from the change in the delivery partner payout structure. Due to this, some of the company's 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.

Zomato CEO Deepinder Goyal said that Blinkit's GOV is very close to Zomato's GOV in some of the large cities where the company has an overlapping presence. "This is just the start, and I believe that 10 years from now, Blinkit will drive more value for our shareholders than Zomato."

The company's Hyperpure business vertical reported a revenue growth of 29 percent sequentially and 126 percent YoY to Rs 617 crore in Q1FY24. This was driven by growth across our core restaurant supplies business as well as the newer quick commerce opportunity that we started tapping a couple of quarters ago.

Zomato released its financial results for the first quarter during the market hours and the stock jumped over 2 percent on the NSE. Zomato shares settled 1.65 percent higher at Rs 86.45 apiece in trade today. The stock recovered 8 percent from day's low of Rs 81.60.