Zomato, the leading online food delivery platform, has recently released its third-quarter results for fiscal year 2023-24 (Q3FY24), showcasing a remarkable performance amidst dynamic market conditions.
Let’s delve into the key highlights and implications of Zomato’s Q3 results with a comprehensive analysis of its financial standing and operational strategies.
You may also like: Analysing the impact of RBI’s monetary policy on the Indian stock market
Revenue surge and operational efficiency
The online food delivery giant reported a staggering 69% year-on-year increase in revenue from operations, reaching ₹3,288 crore in Q3FY24. This surge in revenue is attributed to the exponential growth in Zomato’s core food delivery business, coupled with the rapid expansion of its quick commerce division.
The company’s relentless focus on operational efficiency is evident in the expansion of its contribution margin to 7.1%, signifying improved profitability and sustainable growth prospects.
Profit surge and beats estimates
The most striking aspect of Zomato’s Q3 performance is the substantial surge in profitability. The net profit skyrocketed nearly four times quarter-on-quarter, reaching ₹138 crores, surpassing analyst estimates, which pegged the figure around ₹36 crores.
This remarkable turnaround from a loss of ₹347 crore in the previous year’s period underscores the company’s efficient management and robust business strategies.
Also Read: Financial dependence: What it is and how to overcome it?
Business segment performance
Food delivery and quick commerce
During the reporting quarter, Zomato’s core food delivery business witnessed a commendable 27% year-on-year growth in Gross Order Value (GOV). Moreover, revenue from food delivery surged by 29% year-on-year to ₹2,025 crore, indicating sustained momentum in this crucial segment.
The company also reported significant growth in its quick commerce division, with revenues jumping by a staggering 114% year-on-year to ₹644 crore. The increase in quick commerce was primarily attributed to a robust uptick in demand during the festive season and events like the Men’s Cricket World Cup.
Hyperpure business
Zomato’s B2B supplies under Hyperpure recorded a remarkable growth trajectory, with adjusted revenue soaring to ₹859 crore, reflecting an increase from ₹421 crore in the same quarter a year ago.
The core restaurant supplies business and the newer quick commerce opportunity propelled this growth. Notably, Zomato is expanding its offerings in this segment by setting up a plant to process value-added food supplies, catering to the evolving needs of its restaurant partners.
Future outlook and guidance
Encouraged by its strong performance and market positioning, Zomato has raised its revenue growth guidance from 40% to 50% year-on-year. The company anticipates continued growth in Gross Order Value, expecting it to maintain a trajectory of over 20% year-on-year.
Moreover, with a positive EBITDA of ₹51 crore and an EBITDA margin of 1.5% during the quarter, Zomato remains optimistic about achieving further margin expansion and profitability.
Also Read: Zomato stock dipped 7% – Will ONDC kill the discount war?
Conclusion
In conclusion, Zomato’s Q3 results reflect a remarkable turnaround, marked by robust revenue growth and a significant surge in profitability. The company’s strategic focus on its core food delivery business, coupled with the rapid expansion of its quick commerce and Hyperpure segments.
It has positioned itself favourably in the competitive online delivery landscape. Will Zomato sustain its growth trajectory? Only time will tell! But one thing is sure: as an investor, watch out for any big or small move.
Leave a Comment