Indian food and grocery delivery platform Swiggy on Thursday reported a narrower second-quarter loss and improved margins on a sequential basis, as strong growth in its quick commerce arm partly offset the still-high investments in the business.
The company’s consolidated loss came in at 10.92 billion rupees ($124.24 million) in the three months ended September 30, compared with 11.97 billion rupees in the first quarter.
Adjusted earnings before interest, taxes, depreciation and amortization (EBITDA) margin improved quarter-on-quarter to a negative 3.6% from a negative 4.7% in the previous quarter.
India’s quick commerce industry, which promises to deliver everything from milk to mobile phones in 10 minutes, has ignited an investment frenzy as it grows at a blistering pace.
Swiggy‘s Instamart, Eternal’s Blinkit and IPO-bound Zepto have been jostling for market share by providing discounts, subsidising deliveries and rapidly expanding their warehouses.
The race has weighed on profitability for Eternal, with the pace of margin improvement disappointing analysts, and has led to ballooning losses for Swiggy, which indicated in May that absolute losses were set to decline gradually.
In a post-earnings call with analysts, Swiggy warned of grappling with strong competition and elevated marketing costs.
However, it added that analysts “should expect margin improvement to continue,” as the pace of addition of new dark Instamart stores slows, compared with the past few quarters.
INSTAGROWTH
“We have improved speed … selection and value,” Swiggy said in a letter to shareholders, referring to Instamart.
Instamart’s revenue rose 21.6% to 9.8 billion rupees quarter-over-quarter, as gross order value – the total value of all orders – grew 24.2%.
Additionally, its EBITDA loss narrowed to 8.49 billion rupees from 8.96 billion rupees. EBITDA margins improved by 375 basis points to negative 12.1%, even as store count addition remained largely stable from the preceding quarter.
Separately, Swiggy said it would consider and approve raising funds not exceeding 100 billion rupees via public or private offerings in a board meeting on November 7, as it looks to bolster overall cash reserves for growth.
Reuters
