During the quarter, the 10-minute delivery platform recorded gross order value of ₹7,938 crore.Food and grocery delivery company Swiggy reported a 54 per cent increase in operating revenue to ₹6,148 crore for the third quarter of this financial year, while its net loss widened 33 per cent to ₹1,065 crore.
The company’s quick commerce business, Instamart, continued to be a drag on profitability as operating losses for the unit widened after one quarter of dip – coming in at ₹908 crore, up 57 per cent year-on-year.
On the other hand, Swiggy’s food delivery business—the largest segment that generates cash for the company—recorded a 20.5 percent growth in gross order value, exceeding its 18-20 percent guidance.
Echoing views stated by Blinkit founder and CEO Albinder Dhindsa during rival Eternal’s earnings on January 21, Swiggy flagged “irrational” competition in the quick commerce industry that impacted Instamart’s order volume, particularly in the low average order value (AOV) segments.
“Our eventual right to win will come from the fruition of our differentiated assortment proposition, and we want to only focus disproportionately on bringing the proposition to life in a bigger way while navigating the path towards profitability,” Swiggy founder and group CEO Sriharsha Majety said in a letter to the company’s shareholders.
“Even if this creates any short-term bumps in order-growth in an irrational market, we believe that focussing on these two while continuously improving the consumer experience is the right strategy towards winning in the long-term,” he added.
During the quarter, the 10-minute delivery platform recorded gross order value of ₹7,938 crore, up 103 per cent year-on-year, while total orders increased 45 per cent to 106.4 million.
“Order-growth in the past couple of quarters had been impacted as a result of Maxxsaver-led cannibalisation (as larger carts were built by customers) and weaning away of low-AOV orders. This was amplified in Q3 by competitive action, which we chose to not participate in,” Swiggy said in a letter to shareholders.
Speaking during the company’s earnings call, Instamart CEO Amitesh Jha said that the competitive intensity was likely to hold up and would be a headwind to its growth trajectory.
After rival Zepto cut several customer fees in November, Swiggy introduced similar measures for larger cart sizes. However, the company said these initiatives had “limited success due to continued irrationality in competitive activity across pricing and monetisation levers”.
“We have chosen to not participate in fuelling such behaviour, thereby choosing to forego such inducement-led volume gains. This may therefore have a near-term impact on underlying volume growth,” Swiggy said.
Food delivery growth
Swiggy’s primary cash generating engine, its food delivery business, grew at a faster rate than guided, and the company attributed it to its efforts in growing monthly transacting users (MTUs) paying off.
The company’s food marketplace CEO Rohit Kapoor told ET that the company had been making deliberate efforts in MTU growth over the past year through initiatives such as 10-minute food delivery offering Bolt and low-price programme 99 Store.
“If you look at the MTU trajectory, there’s a clear pattern of steady improvement. As new users come in, their order frequency builds over time, and we’re now seeing the benefits of that. We’ve consistently guided for 18-20 per cent growth and stayed within that band,” he said.
Swiggy’s food delivery business saw 18.1 million MTUs in the December quarter, compared to 14.9 million a year ago.
“This is the first time in eight quarters that we’ve crossed 20 per cent. While we’re encouraged, it will take a few more quarters to see if this is sustained. What is comforting is that the 18-20 per cent range remains firmly in sight,” Kapoor added.
The GOV for food delivery increased to ₹8,959 crore during the third quarter of this fiscal from ₹7,436 crore a year ago.
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