India's Swiggy-owned Instamart key profitability metric improves, plans more stores
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FILE PHOTO: A gig worker waits to pick an order outside a Swiggy's grocery warehouse at a market area in New Delhi, India, May 6, 2024. REUTERS/Priyanshu Singh/File Photo
July 30 (Reuters) - India's Swiggy said on Thursday its quarterly loss narrowed and a key profitability metric at its quick-delivery platform Instamart improved, while it plans to add more distribution hubs to drive growth.
The food delivery service provider said its consolidated net loss narrowed to 7.91 billion rupees ($82.67 million) for the first quarter ended June 30, while revenue rose to 68.12 billion rupees.
Analysts had expected a loss of 7.2 billion rupees and revenue of 65.21 billion rupees, according to data from LSEG.
Instamart, which delivers everything from eggs to smartphones within minutes, posted a contribution margin - revenue remaining after variable costs - of negative 0.2% of gross order value, improving from negative 1.8% in the previous quarter.
Gross order value is the total value of goods sold through the platform before discounts.
The improvement comes as India's quick delivery apps race to expand their networks and cut delivery times, with Swiggy competing against Eternal's Blinkit, Zepto and Tata-backed BigBasket.
Swiggy said higher advertisement income, customers returning more often and a wider range of goods at its dark stores, or distribution hubs dedicated to online orders, led the improvement.
"In the last 4 quarters, we have taken a ... choice in terms of choosing contribution over growth (for Instamart)," Sriharsha Majety, group CEO and co-founder at Swiggy, said on an earnings call.
The company also expects contribution margin to remain in the 0% to negative 1% range over the next couple of quarters. It plans to opens 75 new Instamart stores across the country in the September quarter.
Instamart currently has 1,171 stores across 131 cities.
The Indian food delivery sector, meanwhile, has been resilient despite some consumers cutting back spending, according to analysts.
($1 = 95.6800 Indian rupees)
(Reporting by Saikeerthi and Urvi Dugar in Bengaluru and Praveen Paramasivam in Chennai; Editing by Eileen Soreng)
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