Zomato's Rs 2 Crore Profit Paves the Way for Future Growth
Zomato Rises to the Top, Stock Price Soars Amidst Profit Milestone
3 August 2023
Zomato reported its first-ever quarterly profit of Rs 2 crore in Q1 FY24.
Revenue surged by 70.9% to reach Rs 2,597 crore compared to the previous year.
The quick commerce business (Blinkit) contributed positively for the first time in June 2023, boosting confidence in achieving Adjusted EBITDA breakeven in the next four quarters.
In a major milestone for the Indian food delivery giant, Zomato, the company announced its first-ever quarterly profit of Rs 2 crore during the first quarter of FY24. This success came on the back of impressive revenue growth, with the company's total income reaching Rs 2,597 crore, a substantial 70.9% increase from the previous year.
The significant contributor to this positive performance was the quick commerce (Blinkit) business, which turned contribution positive for the first time in June 2023. Zomato expressed its confidence in achieving Adjusted EBITDA breakeven for the quick commerce division within the next four quarters, indicating its commitment to sustainable profitability.
The company's CEO, Deepinder Goyal, attributed the success to efforts in streamlining the business, strategically placing the right people in key positions, and making seemingly risky but transformative bets. This approach has borne fruit much faster than anticipated and has changed the trajectory of the business significantly.
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Despite past challenges and concerns over profitability, Zomato has been on an upward trajectory. Its cash balance reached an impressive Rs 11,573 crore as of June 30, providing a solid foundation for future growth and expansion. Furthermore, Zomato's stock price witnessed a resurgence, rebounding to reach the upper band of the initial public offering at Rs 76, a positive sign for the company's investors.
The quarter's financial results showcased impressive improvements across various key metrics. The consolidated adjusted EBITDA stood at Rs 12 crore, a substantial leap from the loss of Rs 152 crore in the same quarter of the previous year. The adjusted EBITDA margin also rose by 9 percentage points year-on-year, reaching 0.4%. The revenue growth was robust, with the company reporting Rs 2,416 crore in the reporting quarter, up nearly 71% compared to the year-ago period. This growth was primarily driven by an increase in the gross order value (GOV), which reached Rs 7,318 crore in the quarter, showcasing a strong recovery in customer demand since February.
The company's commitment to innovation and customer-centric programs like the Gold program has led to higher customer engagement and a higher frequency of orders, contributing to over 30% of GOV in the food delivery business. Zomato remains optimistic about its future, with Managing Director and CEO Deepinder Goyal stating that the company expects to maintain its profitability and deliver over 40% year-on-year growth in adjusted revenue for the foreseeable future.