Zepto, the quick commerce platform that has become synonymous with rapid delivery services, on Tuesday released its financial results for the fiscal year ending March 2024. The company reported a massive growth in revenue, clocking Rs 4,454 crore, a 2.2 times increase from Rs 2,026 crore in FY23. However, the growth came at a steep price as Zepto’s total expenditure rose to Rs 5,747 crore, reflecting a 71.6% increase from the previous year.
PC: The Financial Express
The main revenue driver for Zepto is its network of over 550 dark stores, through which it delivers more than 25,000 products within a 10-minute time frame. The company handles more than 700,000 orders per day, proving the scale and efficiency of operations in this competitive quick commerce sector. The total operating revenue of the company was primarily generated through income from the sales of products at 89.2%, which rose by 120% to Rs 3,973 crore in FY24. The remaining revenue came from delivery, warehousing, and advertising services.
Despite the surge in revenue, Zepto faced challenges in managing its costs effectively. The cost of procurement alone accounted for 60.5% of its overall expenditure, growing 87% to Rs 3,481 crore. Employee benefits also saw a significant rise, increasing by 62% to Rs 426 crore. This figure includes Rs 74 crore attributed to Employee Stock Ownership Plans (ESOPs), which are non-cash expenses.
Operational costs also increased for Zepto in areas critical to its logistics and service delivery. The company spent Rs 493 crore on warehousing and Rs 580 crore on delivery costs, which added to the overall financial burden. Information technology and advertising expenses also saw a significant increase, with IT costs increasing by 65.7% to Rs 116 crore and advertising costs by 40.3% to Rs 303 crore.
Due to these expenses, the losses of Zepto only declined marginally by 2% to Rs 1,248.6 crore from Rs 1,272 crore in FY23. The ROCE improved slightly to -119.3%, and the EBITDA margin was also showing improvement at -23.81%. The company’s expense-to-earning ratio stood at Rs 1.29, meaning that for every rupee earned, the company spent Rs 1.29.
In terms of financial health, Zepto reported current assets of Rs 1,398 crore that included cash and bank balances of Rs 692 crore. The company has just received $350 million in a funding round led by Motilal Oswal Private Wealth, which has raised $1.85 billion for the company since its inception. Currently, with a valuation of $5 billion, Zepto retains a 29% market share in quick commerce and is the second-largest player, after Blinkit.
Zepto is set to launch a standalone app for its 10-minute food delivery service, Zepto Cafe, as a direct competitor to the established players such as Swiggy and Blinkit. The CEO, Aadit Palicha, has stated that the company will be profitable by FY26 and could go public in the second half of next year.
In summary, although the financial results of Zepto show strong revenue growth, they also indicate some of the major challenges in scaling operations in the competitive quick commerce landscape. Its strategic focus on expanding its service offerings and optimizing costs will be key as it navigates its path toward profitability.
