Zomato: fast delivery, faster investor reward
Zomato Ltd is known for its quick delivery, but investors in its shares seem equally fast or even faster in rewarding the online food delivery company’s financial performance. At least, that’s the impression one gets going by the 12% surge in the stock on Friday reacting to the positive surprises in the June quarter results (Q1FY25). This time around, the strong customer addition of the food delivery segment, which is already profitable at the adjusted Ebitda (excluding Esop) level, is commendable.
Esop is employee stock ownership plan and Ebitda is earnings before interest, taxes, depreciation, and amortization. Before Q1, the segment’s sequential growth in average monthly transacting customers had been tapering consistently for the past four quarters with growth at 1% in Q4FY24. In Q1, sequential growth has bounced back to 7% to 20.3 million, contributing to the 10% jump in the gross order value (GOV).
This suggests that performance could be better if the take rate from restaurants tops out. Adjusted revenue (including net delivery charges and platform fees) as a percentage of GOV has been flattish year-on-year as commission from restaurants plateaued and growth was largely owing to the hike in platform fee and ad revenue. The rebound in customer base growth rate should help Zomato’s management to achieve its guidance of at least 20% GOV growth in future and Ebitda margin target of 4-5%.
In Q1, GOV growth and Ebitda margin was 27% and 3.4%, respectively. Coming to the quick commerce arm Blinkit, which had seen early signs of adjusted Ebitda breakeven in Q4FY24, the GOV growth of the business was almost in tandem with the number of orders in Q1. The sequential GOV growth was 22% at ₹4,923 crore and customer base was up
. Read more on livemint.com
