Zomato reported a net profit of Rs 175 crore for the January-March (Q4) period, marking the fourth straight quarter of the food aggregator’s earnings coming in the green.
Revenue rose 73 percent year-on-year to Rs 3,562 crore at a time when the broader e-commerce sector is reeling under the pressure of high inflation and muted demand.
During the same quarter last year, Zomato had posted a net loss of Rs 188 crore and a revenue of Rs 2,056 crore.
The food delivery company's stock price has been surging on the back of rising profitability in its core business and the fast growth of its quick commerce arm, Blinkit.
The company's stock is trading at more than 100 times forward earnings, well above multiples for global peers including Uber, Deliveroo, and Meituan.
Goldman Sachs Group Inc. expects profit forecasts to increase for Zomato’s “quick commerce” business Blinkit, analyst Manish Adukia wrote in a recent note. While “earlier investor conversations suggested skepticism around profitability of this business model,” concerns should ease as more results are reported, he said.
Meanwhile, Zomato has sought shareholder approval for a fresh employee stock option (ESOP) pool of over 18 crore shares, which is worth more than Rs 3,500 crore at the current market value.
The company said this will help it reward employees and leadership over the next 5 years for their performance.
First profitable financial year
For the fiscal ended on March 31, 2024, Zomato's consolidated net profit was Rs 351 crore. It had posted a consolidated net loss of Rs 971 crore in the previous fiscal ended on March 31, 2023, the filing said. In FY24, consolidated revenue from operations stood at Rs 12,114 crore. It was at Rs 7,079 crore. In FY24, consolidated revenue from operations stood at Rs 12,114 crore. It was at Rs 7,079 crore.
The results for the year ended March 31, 2024, are not comparable with the year ended March 31, 2023, due to the acquisition of Blink Commerce Pvt Ltd (formerly known as Grofers India Pvt Ltd) in June 2022, the filing said.
Zomato said its margin expansion continues in both food delivery and quick commerce. The quick commerce business, Blinkit, reached an adjusted EBITDA break-even mark for the month of March 2024.
The company said a rapid store expansion is underway in the quick commerce business and it is aiming for 1,000 stores by March 2025.
In a letter to shareholders, Zomato Managing Director & CEO Deepinder Goyal said the food delivery GOV (gross order value) growth continues to be strong at 28 per cent year-on-year despite the softness in the overall restaurant industry due to the "convenience and predictability layer" that Zomato has built on top of the services offered by restaurants.
"We believe that we can continue to grow faster than the overall restaurant industry (and therefore power a significant part of the growth of the restaurant industry) if we continue to innovate using our customer-first principles, while creating value for all our other stakeholders our restaurant partners, and our delivery partners," he added.
On Blinkit, which has become a larger shareholder value driver than the food delivery business in less than two years after the acquisition, Goyal said, "...the bet that we took on Blinkit worked out just fine..." He said the company's focus is on the four business verticals of food delivery (Zomato), Blinkit, Hyperpure (B2B) and Going-out, and it is not looking at other new areas at the moment.
Blinkit Founder & CEO Albinder Dhindsa said, "One of the key vectors for growth for us right now is store expansion. In Q4FY24, we added 75 net new stores taking our total store count to 526." In the Q1FY25, Blinkit expects to add another 100 stores, Dhindsa said, adding, "at this point, we are aiming to get to 1,000 stores by the end of FY25".
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