Zomato expects 'moderate' sequential GOV growth in Q3

The Cricket World Cup should result in additional orders volumes, the company believes, but that demand uptick would be limited to a handful of match days and hence, not very significant.

Food delivery platform Zomato on November 3 said it expects a “moderate” sequential growth in gross order value (GOV) despite the uptick in demand from the ongoing ICC Men’s Cricket World Cup and the festive season. The Cricket World Cup should result in additional order volumes, the company believes, but that demand uptick would be limited to a handful of match days and, hence, not very significant.

“We think that quarter on quarter, GOV growth in food delivery in the next quarter should be moderate - around high single digit which should translate to about 25-30 percent year on year GOV growth,” said Akshant Goyal, Chief Financial Officer of Zomato.

The company reported its second ever quarterly profit in the September quarter at Rs 36 crore, while revenue rose 71 percent to Rs 2,848 crore. Festive period in Q3FY24 is usually a mixed bag for the food delivery business, Zomato said, adding that while people order more around the festivals, at the same time, they also travel and eat-out more in this quarter.

“A lot of Indians also observe fasts during the Navratri festival and Shradh period (both of which are in Q3FY24 this year due to a late Diwali), which tend to dampen order volumes during the quarter,” said the company.

During the September quarter, GOV growth was almost entirely led by growth in order volumes, while the average order value remained largely flat, the company said in a statement. Order volume growth is typically negatively impacted in this quarter due to lower delivery partner availability during rains. However, the company said they were able to improve on that.

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“Another key driver of GOV growth in the quarter was the growing adoption of our Gold program, which is continuing to drive higher ordering frequency amongst members. We now have 3.8 million members (as a

the end of Q2FY24) that contribute ~40 percent of GOV in the food delivery business,” said Zomato.