Zomato reports Q2 profit of Rs. 36cr, revenue up 18%
Food delivery giant Zomato announced a Q2 FY24 profit of Rs. 36 crore, beating estimates. The positive trend from Q1 FY24 continued into the following quarter, fueled by robust expansion in all sectors. In a letter to shareholders, CEO Deepinder Goyal revealed, "Gross order value (GOV) across our B2C businesses (food delivery + quick commerce + going-out) grew 13% QoQ." Revenue rose 17.9% to Rs. 2,848 crore sequentially as against an estimate of Rs. 2,559.3 crore.
Food delivery and Gold program drive growth
The food delivery segment's GOV climbed 9% quarter-over-quarter (QoQ), bouncing back from the previous two quarters' demand slump in fiscal 2023. Goyal credited the surge to increased demand and enhanced team performance. Moreover, Zomato's Gold program experienced greater adoption, resulting in a higher order frequency among its 38 lakh members, who account for 40% of the food delivery division's GOV. However, Gold orders currently cause margin reduction compared to non-Gold orders.
Platform fee introduced and future outlook
Beginning in Q2 FY24, Zomato will impose a compulsory platform fee ranging from Rs. 2 to Rs. 5 on all transactions. CFO Akshant Goyal clarified that this nominal fee is intended to bolster the firm's financials and guarantee long-term stability. He also noted that the margin dilution disparity between Gold and non-Gold orders should start to shrink due to pricing efficiencies and program cost improvements. Today, the company's stock closed 8.32% higher at Rs. 116.50 per share on NSE.
