India’s leading food delivery and technology platform, Zomato (ZOMT.NS), has achieved a significant milestone by posting its first-ever profit, marking an impressive turnaround for the company. The surprising profit was attributed to a tax gain and robust performance in its food and grocery delivery sectors.
Zomato’s shares witnessed a positive surge of up to 3.9% following the announcement of these results, underscoring investor confidence in the company’s strategic direction and financial prospects.
The achievement of profitability was reached earlier than anticipated, with Chief Financial Officer Akshant Goyal revealing that Zomato initially projected this accomplishment for the upcoming September quarter. Goyal highlighted the company’s conservative approach to such projections.
Furthermore, Zomato’s forward-looking stance remains optimistic, with plans to sustain profitability and drive a remarkable 40% year-on-year growth in its topline for the foreseeable future, extending over the next couple of years.
The Gross Order Value (GOV), a pivotal metric encompassing the total value of all orders, which contributes to Zomato’s revenue, showcased a noteworthy rise of 13.9% within its food delivery division.
In a notable development, Zomato’s quick delivery arm, Blinkit, demonstrated a remarkable surge in GOV by 82.6% compared to the previous year. This growth, 4.6% sequentially, encountered a temporary disruption in April due to adjustments in the payout structure for delivery partners, leading to a brief period of challenges.
Elaborating on this, Albinder Dhindsa, CEO of Blinkit, stated, “We faced a challenging period of around 45 days, when the number of overall gig workers available to work in our system was 15-20% lower than normal.”
Zomato’s strategic acquisition of Blinkit in June last year, a response to fierce competition in the quick-delivery sector, has proven fruitful. The synergies between Zomato and Blinkit’s performance have been evident, with Zomato CEO Deepinder Goyal noting that “Blinkit’s GOV is very close to Zomato’s GOV in some of the large cities where we have an overlapping presence.”
The financial report for the quarter ending on June 30 showcases a consolidated net profit of 20 million rupees ($241,861.37), a notable shift from the loss of 1.86 billion rupees reported in the corresponding period of the previous year. This positive momentum was further augmented by a deferred tax gain of 170 million rupees recorded in the same quarter.
The financial performance reflects a revenue from operations that increased by an impressive 70.9%, amounting to 24.16 billion rupees. This robust growth surpassed analysts’ estimates, highlighting the resilience and adaptability of Zomato within a dynamic and competitive market landscape.
As Zomato continues to evolve and strengthen its position in the food delivery and technology sector, this milestone marks a pivotal moment in its journey, demonstrating the potential for sustainable growth and innovation in the realm of digital dining experiences.