Zomato posted its second straight quarterly profit today, an unexpected result that was driven by higher food delivery orders that the company expects will be even higher in the ongoing festive season.
Net profit came in at 360 million rupees in the second quarter ended September 30, beating analysts’ expectations of a loss of 201.7 million rupees, according to LSEG. It had reported a loss last year.
Gross order value (GOV) – the total value of all food delivery orders placed – for the foods business grew 20%, led by higher orders and as customers with the paid “Gold” subscription used the service more frequently.
Shares ended the session 8.3% higher, taking year-to-date gains to over 96%.
GOV in the segment could grow between 25% and 30% in the third quarter ending Dec. 31, Chief Financial Officer Akshant Goyal said in a letter to shareholders.
Indians typically splurge on everything from sweets and snacks to clothing during the festive quarter, which includes Christmas and the Hindu festival of Deepavali, helping consumer-facing corporations book outsized sales growth.
Food business CEO Rakesh Ranjan said the festive period is “usually a mixed bag for the food delivery business,” adding that people split their spending between ordering in and dining out.
The ongoing Cricket World Cup, which stretches between October 5 and November 19, should result in additional orders, he said, but cautioned that the demand uptick would not be significant and only limited to match days.
Demand for online food ordering has broadly grown in recent years, prompting delivery services providers such as Zomato and rival Swiggy to aggressively expand.
Zomato’s revenue from operations soared over 71% to 28.48 billion rupees in the second quarter.