Blinkit recorded 36.8 Mn orders during the quarter ended June 30, 2023, down 6% from the previous quarter’s 39.2 Mn orders
The AOV improved by 11.5% after two quarters of continuous decline, going from INR 522 per order in Q4 FY23 to INR 582 per order in Q1 FY23
Zomato said Blinkit turned contribution positive in June 2023 and it expects it to turn adjusted EBITDA positive in the next four quarters
While Zomato rejoiced with its maiden consolidated quarterly profit of INR 2 Cr, it was a mixed quarter for its quick-commerce vertical Blinkit during the first three months of the financial year 2023-24 (FY24).
The quick-commerce major recorded 36.8 Mn orders during the quarter ended June 30, 2023, down 6% compared to the previous quarter’s 39.2 Mn orders. Year-on-year (YoY), the number of orders rose nearly 66% from 22.2 Mn.
However, it must be noted that Zomato completed the acquisition of Blinkit on August 10, 2022.
Gross order value (GOV) rose marginally to INR 2,140 Cr in Q1 FY24 from INR 2,046 Cr in the previous quarter.
As a result, Blinkit’s revenue rose just 6% to INR 384 Cr in the quarter ended June 30, 2023, from INR 363 Cr in Q4 FY23. In contrast, revenue jumped 44% quarter-on-quarter (QoQ) in Q2 FY23, nearly 28% QoQ in Q3 FY23 and 20% QoQ in the quarter ended March 2023.
Blinkit cofounder and CEO Albinder Dhindsa put the onus of muted topline growth on the strikes carried out by delivery executives.
“The slower sequential GOV growth in Q1FY24 was mainly due to the temporary business disruption we had in the month of April resulting from the change in the delivery partner payout structure,” said Dhindsa in a letter to the shareholders.
The Blinkit CEO added that the quick-commerce startup had 15-20% fewer delivery partners available on its app for 45 days during the quarter (comprising 91 days) due to the strike and heat and incessant rains. This, Dhindsa said, impacted Blinkit’s order volume and GOV.
The impact on GOV and the number of orders is also in line with predictions made by brokerage firms after the strikes commenced. However, Dhindsa expects the numbers to bounce back strongly in the ongoing quarter.
“And based on our current volumes, we are expecting a QoQ GOV growth of 20%+ in Q2FY24,” the Blinkit CEO said.
Meanwhile, the average order value (AOV) improved by 11.5%, after two quarters of continuous decline, rising from INR 522 per order in Q4 FY23 to INR 582 per order in Q1 FY23.
“AOVs, as we mentioned last time, will continue to swing up and down in the near to medium term due to multiple (mainly seasonal) factors,” added Dhindsa on the AOV growth.
The grocery delivery vertical, which competes with Zepto, Dunzo, Swiggy’s Instamart and BigBasket’s BBNow, continued to improve its adjusted earnings before interest, taxes, depreciation and amortisation (EBITDA) loss during the quarter. Adjusted EBITDA stood at INR 133 Cr during the period under review compared to INR 203 Cr in the previous quarter.
Blinkit Turns Contribution Positive In June
For the first time since Zomato acquired the quick-commerce company a year ago, Blinkit reported a positive contribution month in June 2023.
However, contribution loss stood at INR 14 Cr during the entire quarter, an improvement from INR 56 Cr in Q4 FY23. In the shareholder letter, Zomato said Blinkit could turn adjusted EBITDA positive in the next four quarters.
“Getting to sustainable positive contribution at a business level was the first step, but there’s a lot that needs to come together in order to get to adjusted EBITDA break-even. Doing that in conjunction with the store expansion plan (about 100 net new stores during FY24) is going to be challenging, but the team is very determined to deliver growth and profitability over the next few months,” Dhindsa said.
In an post-earnings call, Dhindsa said that Blinkit is ‘cautiously expanding’ into new geographies, while adding ‘flavour and variety’ to its existing network of dark stores. Elaborating on the plan for opening 100 new dark stores, he said a majority of additions would take place in cities where Blinkit has ‘significant volumes’.
Blinkit only managed to add six new dark stores during the first quarter of FY24. This will leave the company with the task of adding 94 new stores over the next nine months.
Overall, Zomato posted a consolidated profit after tax (PAT) of INR 2 Cr against a consolidated net loss of INR 186 Cr in the corresponding quarter of the previous fiscal. Operating revenue stood at INR 2,416 Cr in the quarter against INR 1,413.9 Cr in Q1 FY23.
While Blinkit appears far from profitability right now, Zomato CEO Deepinder Goyal is very bullish on the business. In the letter to shareholders, Goyal said he believes Blinkit will drive more value for shareholders than Zomato a decade from now.
