Zomato posts first-ever net profit of Rs 2 crore in Q1

New Delhi: Online food delivery firm Zomato Ltd on Thursday reported its first-ever consolidated profit after tax of Rs 2 crore in the April-June quarter of 2023-24, driven by strong revenue growth.

The company had posted a net loss of Rs 186 crore in the same quarter last fiscal, Zomato said in a regulatory filing.

Consolidated revenue from operations in the first quarter of the current fiscal was at Rs 2,416 crore as against Rs 1,414 crore in the year-ago period, it added.

Total expenses were higher at Rs 2,612 crore as compared to Rs 1,768 crore in the same quarter a year ago.

In a letter to shareholders, Zomato Managing Director & Chief Executive Officer (CEO) Deepinder Goyal said the company has been working hard to make its business less complex, and putting the right people at the right spots within its businesses.

He had said in May that the company was confident of achieving profitability for the entire business in the next four quarters.

"...I can in hindsight say that most of our seemingly 'risky' bets have changed the trajectory of the business significantly, much faster than we expected," he added.

Zomato Chief Financial Officer Akshant Goyal said, "Realistically speaking, we were expecting to hit this milestone in the September quarter, 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."

"We expect our business to remain profitable going forward and knowing what we know today, we believe we will continue to deliver 40 per cent-plus YoY topline (adjusted revenue) growth for at least the next couple of years," Akshant said.

Zomato said its food delivery business posted adjusted revenue of Rs 1,742 crore in the first quarter as compared to Rs 1,470 crore in the year-ago period.

Revenue from Hyperpure, the B2B business, was at Rs 617 crore as compared to Rs 273 crore in the first quarter of the last fiscal.

Deepinder said revenue increase of Hyperpure was driven by growth across its core restaurant supplies business as well as the newer quick commerce opportunity that the company started tapping a couple of quarters ago.

"In our restaurant supplies business, we increased the minimum order value threshold below which restaurants are not allowed to place orders on Hyperpure. This led to two things -- the smaller, unprofitable restaurants churned out and the average order value on our platform went up, driving both growth in revenue and improvement in profitability," he said.

Revenue for quick commerce (Blinkit) was at Rs 384 crore, up from Rs 164 crore in the year-ago quarter.

Blinkit Founder & CEO Albinder Dhindsa said there was a slower sequential gross order value (GOV) growth in the June quarter mainly due to the "temporary business disruption" in April, as a result of the change in the delivery partner payout structure.

"Due to this, some of our 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. While the operations were back on within a few days, we faced a challenging period of around 45 days where the overall gig workers available to work in our system was 15-20 per cent lower than normal," he added.

On the potential of the Blinkit business, Deepinder said, "I can proudly say that Blinkit's GOV is very close to Zomato's in some large cities where we have 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."

On whether Zomato will now get into new businesses with the company turning profitable, he said, "As we continue to grow, I am sure we will spot new opportunities where we have a right to win. I do not want us to operate with a rigid mindset of what kind of businesses we should (or should not) get into. And we will of course be thoughtful about capital allocation." 

"As we are scaling the dining-out business, we are seeing another opportunity to build an events and ticketing business (Zomato Live), alongside the dining-out business," he added.

Shares of the company closed 1.55 per cent up at Rs 86.22 apiece on the BSE on Thursday.