ZOMATO Q2 RESULTS 2024: REPORTS PROFIT OF RS 36 CRORE

Zomato reported its Q2FY24 numbers on Friday. The share price closed 8.32% higher at Rs 116.50 per share. Let us look at everything in detail about Zomato's Q2FY24 results. 

About Zomato

Zomato is an online food delivery and restaurant discovery platform, headquartered in India. It allows users to explore nearby eateries, view menus, and place orders for delivery or takeout. Zomato operates in various countries, connecting millions of diners with diverse culinary experiences.

Crucial parameters

• PE: 174.20
• 52-week high: Rs 120
• Market Cap: Rs 1,00,155.75 crore
• ROE: 2.55

Share price movement

In the last one month, Zomato's shares have beaten NIFTY50 gains and jumped 17%. In 2023, the stock had an exceptional rally of 95% and nearly doubled investor's wealth. Since its listing in July 2021, the Zomato stock price is still down 6% from its highs.

How has Zomato performed in Q2FY24?

Let us look at Zomato's September numbers in detail:

Revenue: The company reported a consolidated adjusted revenue of Rs 3,227 crore, up 53% YoY. The company had projected earlier that its adjusted revenue would compound at a 40% growth rate over the next couple of years, and it is on track to achieve it. The adjusted revenue growth has been comfortably above 40% for the last eight quarters, whereas the food business (excluding quick commerce) growth has been 30%+.

EBITDA: The company reported adjusted EBITDA of Rs 41 crore. In the year-ago period, Zomato reported an adjusted EBITDA was negative. In the previous quarter, the adjusted EBITDA was Rs 12 crore. The Adjusted EBITDA margin should only improve, which is why the company has guided for break-even by Q1FY25 at the EBITDA level.

Profits: Zomato posted a profit for the second consecutive quarter. The profits for Q2FY24 stood at Rs 36 crore. In the September quarter of last year, the company reported a loss of Rs 251 crore. 

GOV: Gross Order Value (GOV) refers to the total monetary value of all orders placed on a food delivery platform during a specific period before any deductions or adjustments are made. It includes the sum of the prices of all the items ordered, any applicable taxes, delivery fees, and other charges.

GOV increased by 47% YoY. For Q2FY24, it was Rs 11,422 crore compared to Rs 7,771 crore reported in the June quarter. GOV growth is almost entirely led by growth in order volumes. Order volume growth is typically negatively impacted due to lower delivery partner availability. Another key driver of GOV growth was the adoption of the Gold program, which is continuing to drive higher ordering frequency amongst members.

Gold Member Update: The Gold program has scaled to 3.8 million members in just three quarters since its launch, and these members now account for ~40% of the total food delivery GOV. The company has said that the gold order is less profitable than a non-gold order due to the impact of the program benefits as the delivery charges are negligible. It has also led to margin dilution. However, the program is leading to higher contribution profit. With higher ordering frequency, the company expects to make the program a success.

Cash balance: The cash balance on a consolidated basis as of the end of the September quarter was Rs 11,761 crore as compared to Rs 11,573 crore in Q1FY24.

Segment updates

• Blinkit Updates: Blinkit is seeing good product-market fit and is growing well in each city that it is present in currently. The company has seen, since its acquisition, a steady rise in Blinkit's GOV as a percentage of Zomato's GOV in the cities where they have an overlapping presence. On the profitability front, over 60% of their stores are now contribution-positive, and many of them at already at 5% contribution margins.
• Hyperpure Updates: Hyperpure revenue increased by 20% sequentially and 123% YoY to Rs 745 crore in Q2FY24/

What is the Q3FY24 outlook with the cricket World Cup and festivals?

The festive period in Q2FY24 is a mixed bag for the food delivery business. The company has said that people order more around the festive, but at the same time, they also travel out and eat more. Also, many Indians observe fast, and then there is the Sharadh period, which tends to dampen order volumes during the quarter. The company has said that Cricket World Cup brings in additional orders, but the demand would be limited to a handful of match days, not very significant. Overall, things are expected to balance out in the quarter.