Ladies and gentlemen, good day and welcome to the Swiggy Limited Q2 FY 2026 earnings conference call. As a reminder, all participant lines will be in the listen only mode and there will be an opportunity for you to ask questions after the presentation concludes. Should you need assistance during this conference, please signal an operator by pressing star and then zero on your touchtone phone. Please note that this conference is being recorded. I now hand the conference over to Mr. Abhishek Agarwal, Head of Investor Relations. Thank you. And over to you sir. Thanks. Hello everyone and welcome to the second quarter FY 2026 earnings call of Swiggy. Our financial results and shareholders letter have been published on the exchanges and the information pack has been placed in the investor relations section of our website www.swiggy.com. We would like to inform you that the management may make certain comments on this call that one could deem forward looking statements. Specifically, the financial guidance and pro forma information that we will provide on this call are management estimates, are based on certain assumptions and have not been subjected to any audit, review or examination procedures. Swiggy does not guarantee these statements and is not obliged to update them at any time. Joining me today on the call are Sriharsha Majety, Group CEO, Rahul Bothra, our CFO, Rohit Kapoor, CEO of Food Marketplace, and Amitesh Jha, CEO of Instamart. With this brief preamble, let us start. Operator, you can go ahead please. Thank you very much. We will now begin the question-and-answer session. Anyone who wishes to ask a question may press star and one on the touchtone telephone. If you wish to remove yourself from the question queue, you may press star and two. Participants are requested to please use handsets while asking a question. Ladies and gentlemen, we will now wait a moment while the question queue assembles. Our first question comes from the line of Sachin Salgaonkar from Bank of America. Please go ahead. Hi, thank you for the opportunity. I have three questions. First question is on the QIP. I know it's early stages and you're still waiting for an approval from management but broadly want to understand the thought process in terms of, you know, how the incremental capital will be used. For example, will there be any change in strategy towards your dark store editions which, you know, we see after Q4 it has been a slow addition out there, or, you know, is there an intention to, you know, further expand into different areas? We would love to understand and get an update in that direction. Sure. Hi Sachin, Rahul here. If you've seen over the last three quarters and, say, post our IPO, the quick commerce business is where most of our investments have gone. The food delivery business, of course, has continued its path of profitable growth and currently is at one run rate of INR 1,000 crore on an annual basis. In quick commerce, you have seen now this is the third continuous quarter of us delivering 100%+ GOV growth, and this is way over some of the expectations that we had back in the days when we were expecting a 50%-60% kind of growth trajectory. We've also guided and reiterated our guidance of being able to demonstrate contribution margin profitability by June 2026 quarter, and we also demonstrated even in the current quarter how we've been able to move the contribution margin profile. We feel very good about our ability to finance the growth opportunity, the investments that we've made, and continue to get operating leverage from those investments. Having said that, we have seen continued investments. This sector has continued to attract a lot of investment. Both new and legacy players, we have seen, are growing and getting investment. This is a conversation that we want to have with the board to be able to raise this additional capital, which would be more towards growth as well as strategic reserve that we want to use on a going forward basis. Of course, more on this once we get the approval, but this is the intent of calling this particular board meeting. Got it, Rahul. Just to follow up on this, clearly we do have a visibility and now a comfort that you guys should be able to come to a positive contribution margin by June 2026. Again, from that perspective, any thoughts of introducing a guidance towards an EBITDA breakeven? Because to your point, the sector continues to attract a lot of investments, and again, any comfort what investors could get that there will be no further fundraisers in that direction and, you know, the path towards a profitability will be clearer. You know, despite being slightly higher competition in terms of what you are seeing out here. As you've seen, we have very strong cash reserves, right? As I said, the food delivery business continues to improve cash reserves positively, and with the Rapido stake sale which we are expecting in this quarter, the cash proceeds to come in, we anyway sit on a very strong balance sheet. This additional fundraise, as I said, is going to be used more towards growth capital. We are also a very innovative company. We have been pioneers of launching the services, whether it's food delivery or quick commerce, and continue to experiment on the side, so we need some of this innovation capital going forward for some of the new experiments that we do. This will definitely bolster our overall cash reserve and put us in a very, very healthy position. We don't expect the need to raise any further capital if and when we were to raise additional QIP. Thank you for the clarity. Second question is on competition. We see one of your competitors raising some capital and a large traditional player adding 600 + kind of dark stores. Since the last quarter to now, have you seen an increase in competition in quick commerce? Hi Sachin, this is Amitesh here. The competition has been there, and we have not seen a let up or let down of any of the competition that we had seen earlier. In general, what I will say is that the steady state of the competitiveness still remains. We'll keep on seeing up and down based on the season and based on the objective in that particular month. Overall, we see heightened competition at the same level as what we had seen in the last quarter to essentially continue, and all our plans in the future are based on that. Last question, generally wanted an update on QIM. Would be great to understand, you know, it's the first time you did this. How has been the traction out there? Was there any incremental cost in terms of selling and marketing associated with that? Is there an intention to do some programs on similar lines in future also? Yeah, absolutely. The Quick India Movement had a very specific objective, and that specific objective was to make sure that people are aware that quick commerce has a lot more to offer than only grocery. It was very important for us because in terms of future readiness of being an everything store rather than only a grocery store, this is the first step towards that factor. We wanted to move into a move or make that move in a time period where generally there is a heightened intensity in the overall online commerce space. We thought it is the right time because people at that point of time do switch and do look for all opportunities that exist. The objective was to make sure our customers and a lot more customers are aware that we sell a lot of things. The result of all of that is that we have seen a lot more adoption for these categories that were not there earlier. There is a heightened traffic that has gone into these new categories even after the sale has essentially ended. The objective that was to make sure that people are aware is there and all of that will lead to higher AOV also in the future. In terms of the money spending, I think one of the quick commerce is a fast growing business and in general brands also want to participate in that. What we have seen is that we have been able to build a story around why quick commerce and why does it make sense for the non-grocery brands to participate and make sure that there is a lot of work adoption for consumers that already exist in this business. The way brands think about it is that as soon as there is a new channel that essentially comes in, there is a chance of market share movement for them. They want to use these opportunities to drive their market share, which has been the way it has happened. Apart from that, I think one of the things that we saw was also that though the Quick India Movement was focused towards newer categories, even the grocery business view, it was on the back of obviously the existing customer feeling having heightened curiosity about the items as well. We see the continuous adoption in terms of IA traffic in the month of October as well. The way to think about it is that the excitement that customers had was also shared by brands, which is the reason why we were able to do it at a much better profitability. A quick follow up out here. We are seeing that as the contribution of non-grocery increases, your take rate also goes down. In a way, does that imply that non-grocery has a lower take rate and given the fact that you have mentioned in the shareholder letter that non-grocery component will continue to increase, do we see a continued pressure on take rate going ahead? Two things there, right? One is in terms of the introduction of some of these non-grocery SKUs which as you have seen it's only been a recent phenomena for us. There is this margin accrual that we expect over time as we continue to go deeper into the supply chain. The other is the mix factor. We do expect a lot more higher margin mix to attach to this non-grocery segment from what we have seen. In the near term, there has been some amount of customer inducement that we had to do while trying to sell this newer assortment to these customers. That will also come down. As a combination of these three factors, we do expect the margins overall to go up because typically non-groceries have higher margins as well as the ability for these brands to also hunt for advertising. We do expect the margins to continue to improve from here on the selection. Sachin, just to add here, this is Abhishek, we've improved our adjusted revenue per order as you would have seen by INR 10 each of Q1 and Q2 consecutively, which basically means that at the overall level, you're talking about improving the economics of the equation. Perfect. Thank you all and all the best. Thank you. Our next question comes from the line of Kunal Vora from BNP Paribas, please go ahead. Yeah, thanks for the opportunity. You mentioned that non-grocery like electronics have doubled in terms of contribution in the last couple of quarters. What else are you looking at adding? How promising is pharmacy? Which I think there's a strong push now. How's the early response into pharmacy and what's the coverage now? That's my first question. Yeah, I just answered this question. [Samiteshir], the strategic rationale that we have chosen is that apart from the long tail, you know, category where the assortment or the wide assortment really helps, we'll be in all the categories that require decent assortment. That is the reason our stated objective of being the everything store is there. Effectively, think about it. Everything that you can find on the floor, except for really long tail, maybe some fashion, some home decor and all that kind of stuff, the pharmacy is obviously essentially a part of. It is one of those things that leads easily to the requirement of quick commerce. We have seen robust growth in it. In one year, we have reached an adoption that a lot of other new businesses take a very extremely long time. Our focus will always be there. We believe it's a very integral part of our overall approach of making things extremely convenient for the end consumer. We will continue to do that for all the other categories as well. Understood. Just a follow up on this. Non-grocery has moved from 9% to 26% in the last one year. Do you see it crossing even 50% in the coming couple of years? I think it's very hard to crystal gaze on where exactly we land, but I'll give you an overall way to think about it. Grocery is still the highest contribution on the wallet of an end consumer, so the majority of the revenue will always come from there. No going away from there. That said, the consumers that we are looking at do have a significant share of general merchandise as well and all the other products. We believe this number will essentially go up. There is a headroom that exists. How much will be extremely hard to say. We'll have to play quarter to quarter. Yes, I believe the headroom is still there. 50% is way too much a stretch. Just by pure logic on grocery being higher, we don't think it will happen. That's right. Second and last question. In food delivery, you mentioned that during the quarter you saw heightened competitive intensity with lower subscription fees and reduced minimum order value. Is the impact of these competitive moves already in the numbers or could there be some margin impact in the next quarter or so? How's the early feedback been on the new entrant which has entered? Hi, this is Rohit here. I think the competition is always there in food delivery, but it spiked on the subscription platform side over the last quarter. That's what we saw. I believe it's already factored into the numbers, and I don't see a differential coming in the future from the baseline. If you look at the numbers, we have still grown our EBITDA 44 basis points over last quarter, and the EBITDA last quarter has more than doubled. To your second question on the new entrant, we do not have any inside information, but from the best of market knowledge that we have on public sources, whatever we have gained, the pilot space is in a few areas in Bangalore. That's all that we know as of now. Okay. Have you had to respond to that new entrant or, like you stated, We have not had to respond to the new entrant as of now. Understood. That's it from me. Thank you. Thank you. We have our next question from the line of Aditya Soman from CLSA. Please go ahead. Aditya Soman, your line has been unmuted. You may proceed with your question. As we're not receiving a response from the current participant, we will move to the next question. We have our next question from the line of Vivek M from Jefferies. Please go ahead. Hi, good evening team. Two questions. First, to the extent you can comment because you have mentioned about the capital raise. Today's media article also talks about some raise at the subsidiary level which is a quick commerce entity. Can you just clarify your position? As I said to the extent you can. This is being done at the holding company level. There is no near term plan or any plan to raise at the subsidiary level. Thank you Rahul for that. The second question is, let's say your GOV in this quarter has gone up by 110% give or take, and the overheads are up about 125%. From here on as we go forward, how will the profitability at EBITDA level improve given that about INR 650 crore, INR 660 crores are the overheads? As you grow forward, will there be an operating leverage basically at the overheads level? Your AOVs are already at about INR 700 levels and I would have thought that would have given you that leverage but for whatever reason it's not showing up. Are there expenses which will grow way slower than your GOV growth? Yeah. Vivek, if you see on a sequential basis our overhead base in the quick commerce business has only grown 5% versus close to 25% growth on a sequential basis. That operating leverage is already starting to play out and you should absolutely expect this to continue in the future. Is it possible in contribution? Sorry, that's visible in the contribution margin improving by 200 basis points and the EBITDA margin improving by 375. My point is basically the overheads are still about 10% of GOV and if you take the last six quarter average also it has trended at around that level. Let's say between 8% and 12% as we go forward. Within overheads, what are the key heads which will drive that leverage? In large part, marketing is one place that will go up or down depending on how we see the customer adoption and new customer acquisition happening in the sector. It's slightly also competitive in terms of the price that we end up paying for our tax depending on the competitive intensity. Right. Outside of that, all the other costs are fixed in nature apart from the annual wage inflation, etc. Most of those are fixed in nature. Okay, just to conclude Rahul, this year-over-year increase, the bulk you are saying is due to marketing, the other heads would have still seen leverage benefits in a way That's correct. Got it. Thank you and wish you all the best. Thank you. The next question comes from the line of Abhishek Bhandari from Nomura. Please go ahead. Yeah, thank you for the chance and you know, congrats on a sharp improvement on CM at the QC. Rahul, as in the past, when you gave some breakdown about how the CM actually fell in those quarters, if you could give a similar breakdown on how the CM improved from -4.6% to -2.6% across these three vectors, what you mentioned, which is ADS and lower customer incentives and increased utilization. The reason for asking this question is, I'm just trying to gauge. The reason for asking this question Rahul is, I'm just trying to gauge what are the incremental levers for you over the next few quarters when you want to hit, you know, a kind of break even by Q1 of 2027? Absolutely. If you see, we have given this answer in our shareholder letter in terms of the breakdown of the 200 basis points. This has come across the monetization levers as well as the operating leverage and better utilization of the stores. Going forward, basically as I said, you should expect margin improvements to continue happening. We have also guided that our store addition is not going to be in line with some of the past additions that we've done over the last four quarters. That is going to drive operating leverage or throughput and efficiency for us. You should expect that there is a lot of juice left in almost all the monetization lines as well as the cost lines, largely through better operating efficiencies. Do you think lower customer incentive is really a lever from here on given that competition has raised money and as you said, the competition has not really gone down from the other players? I think that bit is a little bit dynamic because depending on how much competitive intensity we are seeing, we also choose not to respond during various times because there could be some amount of insanity around both minimum order pricing as well as deep discounting which we may not want to partake. At the same time, we see what are the cohorts of consumers that we want to attract and retain on our platform and we'll continue to make the right choices of investments there. While it can have some impact due to the outside pressures, largely we believe that we are in control of our destiny here. Got it. My second and last question is on the food side. Do you think the contribution margin kind of stagnating at 7.3% odd is because of your initiatives around the value segment to ensure that your GOV growth rate remains closer to 20%? Also, in the letter on page 10, you have mentioned that the entire EBITDA margin currently comes only from advertisement. How much more juice is left on the advertisement piece on the food you think from here on? Yeah, I think two questions. One on the contribution margin, I think it remaining constant over the last quarter is a function of two things. One is our focus on indexing on growth and continuing to invest toward that and that's something we'll keep balancing quarter on quarter. The second thing was, as I said, higher intensity on the subscription program that we saw from a competitive lens and we matched that and in some cases even went aggressive because there was an opportunity to do so, those two things. It is something that over time we see still more potential to trend up in the subsequent quarters. Having said that, I also want you to note that while that happened, we still increased EBITDA by about 44 basis points over the previous quarter as we interchanged investment into what goes into contribution margin versus what comes below the contribution margin. Second question on advertising revenue, I think that's just one lens of looking at it because obviously if you take all line items, some will be from a percentage standpoint. That's probably not the only way to look at it, seeing that the comfort there is that there's one significant line item that is more than the EBITDA today and we have guided to a medium-term EBITDA margin of 5% which we think we have line of sight to in the medium term. I think that's the answer to questions. Got it. Thank you and all the best. Thank you. Our next question comes from the line of Vijit Jain from Citi. Please go ahead. Thank you for the opportunity. Sorry, my line dropped a bit, so it's a repeat question. I apologize. This quarter, contribution margin in quick commerce improved 200 basis points and you called out all those different levers and you're only - 2.46% now. I looked at the cohorts data. Your comments on the impact of non-grocery still to play out further as you said earlier in this call. How would you characterize the potential for contribution margin to break even well before the June 2026 deadline? At this pace, you could do it in December or in the March quarter itself. That's my first question. I think we have given in the past a certain guidance around and we do want to regain flexibility. As some of the participants have mentioned, competition intensity goes up and down depending on how much investments are happening in the sector. Currently, we do want to retain our guidance. Whether that happens one quarter ahead or not is something that we are not able to comment on today. Sure, fair enough. Rahul, thanks for that. My second question is your non-groceries have gone up quite meaningfully this quarter as well. Congratulations on that. I'm guessing some part of it would have been definitely aided by the Quick India Movement. My question is, does it consolidate here since QIM is over or can this continue to go up even in the near term? Secondly, from an AOV point of view, how should one think about the pace from here? You're now at INR 700 from a quarter-on-quarter basis. Does it still continue to grow at this kind of a pace? I know December is usually the strongest quarter from an AOV point of view. We see continued interest from both customers and brands on the non-grocery part. We believe that what we did in QIM is not a QIM-specific impact and the reason also why we essentially did was that we should have a more permanent impact. We are already seeing it with more number of customers, more number of brands partnering in that and for sure there is a headroom for higher AOV. It's very hard to visibly look at and say how much will it essentially. We see there is a substantial upswing, especially because the consumer penetration of some of these categories are extremely low. As and when more users become matured on quick commerce, their buying will happen more on the non-grocery categories and the UV will go up. It is still early stages there. Thank you. The next question comes from the line of Sudheer from Kotak Asset Management Company. Please go ahead. Hi. Thanks team and congrats on good set of numbers. I am just looking at the contribution margin and I just want to double down on what Vijit was also asking earlier. Despite the Quick India Movement sale, you have shown almost 200 basis point sequential improvement in contribution margin and incrementally not having. I mean of course a lot of those discounts might be funded by the brands and I get that, but incrementally you have just a 250 basis points kind of incremental effort to be done to reach your guidance. I mean just asking a bit of converse of what the participant asked, in case you reach that contribution breakeven earlier, would you sort of decide to let that flow into the P&L or would you sort of decide to recoup that back as investments in user incentivization or so on and so forth. No, I think Sudheer, that's exactly what we intend to do, which is retain the flexibility to be able to invest it back for even higher growth from what we see. At the same time, I think there is a journey that we have to traverse. We've done well over the past couple of quarters to get it to negative 2.5 from the negative 5.5 peak that we had. I think from here on, while there is going to be all the positives, if there are negative headwinds coming from, these are some competition activity. We do want to retain the flexibility and therefore the guidance stays for the outer end of the June 2026 quarter. Got it Rahul. Second thing, our store addition is this around 40 this quarter and despite that, sequentially our GOV growth is not very different from that of our larger competitor who has added almost, you know, 7x our stores. What is happening here? In case if we were to understand in very simple terms, how far do you think this bridging the utilization or improving the utilization will give you that growth kicker or is it a difference in terms of the spread of the stores, geographic spread of the stores that is driving this kind of a paradox? Yeah. Sudheer, I think we had talked about this in the past that we have a network design and a choice which has the normal dark store of say roughly 4,500 sq ft and a Megastore which could be 8,000 sq ft- 10,000 sq ft. Our ability to therefore service a lot more orders from these stores exists. We also mentioned that we have created sufficient capacity on the dark store network to easily double our business from here without having the need to add more stores. Having said that, we will continue to densify, especially to manage capacities where we run out of max capacity. There is enough headroom that we have from the current network and I think we do want to use the current. Even if you look at our assortment addition or the speed at which we are delivering today, we believe that we are amongst the best in the industry. These customer backward choices that we have made around the network design and the capacity addition that we have done ahead of time put us in a good place to be able to appropriate the growth that we are. Rahul, let me ask it in a different way. Even if we were to add much fewer number of stores compared to our company competitor, do you think going ahead sequentially growth rates should be in the same ballpark that we had seen in the current quarter? Is that a fair assessment to make? Yes, I think we want to meet and beat the industry growth rates. I think there are some choices around some of the newer cities, etc., that we may or may not decide to go considering they are long tail. In the larger metros and the cities that matter to us, we will continue to densify and as I said, we have leading metrics on the consumer side so see no reason for us to fall back on growth from. Okay, understand Rahul, thanks and all the best for your fundraise. Thank you. The next question is from the line of Gaurav Rateria from Morgan Stanley. Please go ahead. Hi, thanks for taking my question. I just want to know what's the breakeven period for any new store at the same level for the quick commerce business? It varies between 800 - 1,000 orders a day. No, I was asking time period. In terms of timelines, it could be depending on again the hyperlocal area, it could anywhere be between say six months to 12 months. You shared a pretty interesting data point on percentage of total active stores which are greater than 3% and 0%- 3% which is put together 25%. Correct me if I'm wrong. Only 25% of the stores are positive CM and the remaining 75% are still in red at the CM level. I was not sure if this interpretation is correct or not. That's correct. As we have written in question number eight, the negative stores are currently at 5.2% negative CM. At the portfolio level, we are at - 2.6%. I was just trying to reconcile if it takes six months to 12 months to get to a break even. My understanding is that you have gone from 600 stores - 1,100 stores in the last 12 months. How come your stores that are above breakeven is only 25% of the total stores? Shouldn't it have been a much larger percentage of total stores which have been in existence for a long period of time from a breakeven perspective? Maybe there is some math to it which I'm not able to reconcile. As you rightly said, a lot of our store additions happened between, say, December to March period. We have to therefore wait for these couple of quarters for the 12-month cycle to elapse. This is in conjunction with the guidance that you have given, right, which is that by June we expect the entire network to become CM positive. It's moving in that trajectory. If you see even the last couple of quarters, our overall network from 9% has gone up to 25% and it will continue to accrete in the same fashion. My second question is that you have a lot of scope to go from current throughput of 1,000 + to 2,000 + in terms of orders per day per store. What exactly does it require from our side, like in terms of aggressively adding MTUs or trying to drive frequency? Just trying to understand, we already have the network, so what are the incremental steps required to get to that from 1,000 to 2,000? What you have said is absolutely right. The way to think about our business is, there are new users that we acquire. Those users become mature users, and the frequency of mature users is higher, both in terms of what they spend on the platform as well as their orders. The way to think about it is that we're in the journey of moving from a lot of new users to matured as a user that will drive up both the orders per day in that particular store as well as the GOV per store in that particular store. That is the reason why we believe this development, which is what you would have seen, the GOV per user is also increasing. GOV per store is also increasing. We see that being a circular trend for a longer period of time because we are extremely happy with the fund and the new users that we are acquiring are spending more in the first month itself. The users that we acquire in the subsequent quarters and months are also spending more as a structural thing. We believe this is a positive cycle that has already been started. As and when the lot of new users that we acquired in the first two quarters of this current year start maturing and they move towards the higher frequency, we believe all these stores will also start becoming profits. Last question is, you know, on this QIP that you're talking about, just trying to understand would this lead to any change in the strategy that we are pursuing in the quick commerce business and with the incremental growth capital that you get, is it fair to say that the market has enough depth for you to continue to grow at sort of 100%, not just for this year, even going forward in the coming years. Thank you. Yeah, I think the overall boosting of the balance sheet is more forward looking, more around the opportunity that will present to us. We don't know how long will these growth rates continue in this segment. Also, as I said, this is also adding to the innovation capital and the strategic reserve of the company. Overall you should see from that lens, I think overall on the quick commerce business, we have made sufficient network investments that are required for us to be able to grow at these triple digit growth rates. We don't necessarily see a reason to change that strategy. However, if it positively surprises us, we will have the flexibility to continue making those investments. Thank you and all the best. Thank you. Our next question comes from the line of Garima Mishra from Kotak Securities. Please go ahead. Yeah, thank you so much for the opportunity. First question from me, you mentioned in the letter that your current store network can support double the orders. Based on trends that you are witnessing, do you have any sort of timeline in mind as to when this happens? We are seeing a healthy rate of our GOV around 20%+ for the last two quarters. We see a movement in our OPD in the subsequent quarters as well. We can assume a similar kind of growth rate. If you assume a similar growth rate, we should see these numbers being hit within a year's time. Of course, what also happens is that it is lopsided. Not every store will be at the same rate. There are stores that will hit the maximum capacity sooner, which means we'll have to open new stores. We believe that in the next two quarters there will be a few stores that will reach those quarters and we'll have to open new stores on that. The one thing that we are at least for now very, very sure on is that we want to focus on the cities that we are in where we would want to densify that network. Make sure that we are doing a good job there because the headroom in those cities itself is extremely high, which is where the focus for our store expansion will be. Got it. If I look, let us say, let's just pick eight quarters ahead. Should we also assume that at some point of time this store addition, which today seems to be a little low because you built a buffer or you've built some spare capacity in the past, this exhausts and then you again start seeing a recovery or a much higher, you know, let's say quarterly kind of store addition, where to expect. Yeah, absolutely. I think it will. There are two ways in which it will happen. One is whenever there is a capacity reach that we see for existing stores, we will open new stores. Whenever we see there is opportunity with higher speed that we can present in spite of capacity not reaching, we'll also do that. We believe that will start happening from maybe a couple or three quarters from now. We don't see this being essentially a permanent feature. Got it, got it. Another follow up here. Now, contribution margin break even for the Instamart business. I think it's been talked about a lot and 1Q FY 2027 is where things are landing up as of now. However, in this business, what is your long term ambition for this number and what can be hence a resultant sort of EBITDA margin? Because I think a positive contribution margin and a positive EBITDA margin will sort of be the target for any business, right? I think you know, this is obviously taking a little bit of crystal ball to say, but we do have conviction that this business can get to like a 4% EBITDA record with a 7% kind of contribution margin. Positive. Okay. Maybe last question here again. In the letter you've mentioned that for food delivery business, advertisements are roughly 4%+ of GMV. What is this number for Instamart today and can this number potentially be much higher than what it is? Yeah. For specific reasons we won't be able to share the specific number. In a very short period of time we have made substantial progress on this particular line in terms of our guidance. We believe that in steady state this number can get to 6%- 7%. Got it. Thanks Rahul. Wish you the best. Thank you. Our next question is from the line of Gaurav Malhotra from Axis. Please go ahead. Yeah, hi. Thank you for the opportunity. Just a few questions on my side. Just on this, on the ads, on the ad revenues in the restaurants. I was under the impression that the ad revenues from restaurants typically would be lower than what it would be for a quick commerce business. It's because not every restaurant typically would spend and generally most if not all brands tend to spend. The greater than 4% number looks a little bit high in that context. If you could just give us some sense as to, if the long term quick commerce is 6%- 7% and the restaurant are like 4%+, how should we sort of think of these two numbers in that context? This is Rohit here. Is the question more around expansion possibilities in food or is it the comparison with quick commerce? It's not a sharp. It's actually. Yeah, yeah. Basically, it is other than the question that the ad revenue contribution in the food delivery would be lower than quick commerce. If restaurant, the food delivery itself is 4% + then shouldn't the long term quick commerce be then more than 6%- 7%? Right. The understanding is that most of the brands typically tend to spend on quick commerce but not all restaurants spend on food delivery from an activation perspective. Yeah. I think we're looking at both businesses at different points in time of maturity. Structurally you're right that quick commerce by definition should be higher over time. We are looking at a decade old food delivery business and a three year old quick commerce business. The expansion in terms of percentage of GOV will happen at differential pace between both the businesses. Your assumption is actually correct that over time quick commerce should have a higher percentage of GOV in terms of advertising revenues or food. That will be AI. What do you think, which is what Rahul was speaking about, that structurally we believe that the total amount spent by brands, there is enough available for QuickCommerce, which is in fact the highest impacting on consumer behavior to extract most of the brands. We believe that QuickCommerce will end up being the industry leader in ad spend just because this model is very, very high impact on the way consumer preference essentially changes. Right now, since it is the start, we are only a few years old. We see generally brands spending a lot more money, and they are very excited about the opportunities that exist in this. Got it. Next question is on Instamart. Obviously, the contribution margins have sort of improved quite meaningfully, but obviously the absolute losses at the EBITDA level have come down, but maybe not to the same level in context of the fact that you're not expanding as aggressively. I just wanted to get a sense as to this. The fixed cost, right, is there much higher salience on marketing spend versus, say, the cost related to the actual operations, which is why the fixed cost itself is remaining more sticky than what one would have expected. Yeah. As we answered this in the past, on a sequential basis, the cost below CM have only increased by 5% versus the 24.5% growth on the gross order value. There is significant operating leverage that sits there. A large part of the cost below a CM is around marketing, and marketing, as I mentioned, also depends on the number of users that you're adding as well as the competition intensity that exists in the market around your acquisition costs. We do expect significant operating leverage here, and on a going forward basis, you should see that starting to play out, which has already started to play out. Just last question on Max Saver. Obviously, you know that seems to be helping from an AOV perspective, but is there a thought process as to increasing the minimum threshold, or you are sort of happy with how Max Saver is currently seeing the traction it is seeing? Yeah, we are happy with the threshold and the touch rate that we are seeing. If you remember last time when we were speaking about Max Saver, we did speak about the extra steroid injection that we had to give to make sure that option is higher, and we spoke about it last time, especially talking about how we are weaning away people from that without changing the habit. We see that habit not change in spite of investment from our side being lower, you know, right away. That's a secular trend and we don't believe that we should be changing that. It is one of the more important missions that consumers have in a month. We want to be top of mind for that and we will try to drive adoption of Maxwell rather than increase the AOV or the minimum AOV req uired for that. This last question, you know, I think this question has already been asked, but maybe if I can just ask it once again. In terms of your throughput, you mentioned that you sort of, you have capacity to double it as well. In what time frame, you know, are we sort of thinking about it? Because now throughput also is a function of, you know, the AOV and if there is max saver and, you know, higher value items, then maybe throughput will take longer to sort of reach that. Double the number versus where it is right now. Just some thoughts around that, please. Yeah, see I think as we said, right, our growth is something that we're allowed to be doubling our GOV number in a year's time. You see, I think one of those things is it's very hard to exactly where the throughput will reach the level that we essentially want. What we have seen generally wherever the growth of max saver is there, the growth of open also is there and there are more mature customers essentially coming in. We believe that there is a balance play on maybe breaking up a cord or expanding our network faster than what is required from a pure financial perspective. Those are the calls that we keep on taking and which we will be keep on taking. Sometimes these addition of stores or pods happen faster than what we would have said from a pure financial lens, that's the only change which is there. That's the reason I said last time also we'll keep on seeing movement in that, but I don't think it will be an abrupt movement. It will be a gradual movement. From capacity wise we are solved for a year. Got it. Thank you. Thank you. Ladies and gentlemen, in order that the management is able to address questions from all participants in the queue, we request you to please restrict yourselves to two questions only. Our next question comes from the line of Ankur Rudra from J.P. Morgan. Please go ahead. Hi. Thank you. Good to see casual and shrink rapidly this quarter. Firstly, on quick commerce, I noticed that while GOV growth is quite strong, the November growth is very similar to last quarter, about 17% - 18%, and the MTU growth was probably a bit lighter at about 8.9% versus 11% last time. I'm just curious how the sale event may have helped you in terms of user acquisition and growth in general, and also if there's any sort of impact on GST on the business and how that might impact Q3. Yeah, see, I'll take one of, I think there are multiple questions, so I'll take it one by one. QIM obviously happened at the end, the impact of that will also be felt in the subsequent quarter. One of the things which is happening is that there is a lot of adoption from our consumers to the category where the GEO growth is higher, and which is the reason why you see that also playing out. The other thing is that our MTU growth is built primarily on the quality of the consumer base, that wanted ratio. If you remember last time when we were looking at our, when we looked at the retro of the last quarter, one of the things that we specifically said is that we are trying to get our funnel right into the kind of customers that lead to a more healthy output in the future. That healthy output in the future is what we are essentially focusing on right now. That does have an impact in the current quarter in terms of pure MTU and OPD. We believe that the retention of these consumers being higher will have a subsequent quarter impact of higher growth rate as well. We believe that, as you said, right, I think one of the questions also was about our GOV growing faster. We are seeing a particular trend of that GOV being fast with more mature customers essentially coming in. We see an opportunity of higher end of growth, MTU growth as well as OPD growth in the future. We'll keep a balance on getting the right consumers rather than just run after an OPD number which may not be sustainable for the longer term. Thank you. I think a related question was, was there any impact of the GST cuts in the cadence of the business? Yeah, we are largely dealing in non-discretionary kind of spending, so we haven't really seen any significant movement. At the same time, we didn't see any dip which the other platforms saw as a lead up to the changes. I think the business has been pretty consistent and continues to perform. Some categories, there is some tailwind, but again, not impactful enough to make a large impact on the platform. Understood. You first mentioned and as you discussed on the call, also the capital raiser considering once you do, do you think you have a blueprint to potentially accelerate your GOV or MTU growth further. What do you think you need to do to further accelerate from here? No, as I mentioned, even our current cash balance is sufficient, including the cash accrual that we see from the profitable food delivery business to finance the ambition that we have in the quick commerce business. At the same time, we don't know enough about some of the future opportunities, including in this, in the quick commerce business, that how long can we continue to sustain this triple digit growth. We are bolstering our cash reserves towards that gross capital as well as the strategic reserve, considering some of the innovations that can start firing from our table. Okay, understood. This last question if I can. Working capital improvement was very sharp this time. How should we think about the working capital movement going forward? Is what we saw this quarter sustainable or should we see negative working capital or a return to the kind of working capital investment that are happening the last two quarters? As I mentioned in the last call, the cycles are now kind of established. We do see some bit of efficiencies that can land depending on how the month end and the payment cycles play out. You should expect that the number of days of working capital should not go up. At the same time, in one quarter, if it's higher or lower, it can vary. Appreciate it. Thank you. Thank you. Our next question is from the line of Aditya Soman from CLSA. Please go ahead. Hi, good evening. Two questions. Firstly, on the loyalty programs Swiggy One and Swiggy One Black, can you give us a sense of what proportion of Instamart customers are coming from the loyalty program? In the related lines, you've also split your app for Instamart, I mean between the common app and a separate app. Can we get a sense of what proportion of customers is coming on the separate app? Has that accelerated as that separate app has been extended? Unfortunately, we won't be able to share specific numbers as these are sensitive. At the same time, we can tell you that the separate app strategy has worked out really well for us, especially in some of these newer cities. As new to Swiggy customers, acquisition has been pretty strong on the separate app. All right, and maybe then if you can't give me specific numbers and also in terms of the split between sort of food delivery customers and new to Swiggy customers, would that now be incrementally much larger in terms of the proportion of new to Swiggy customers coming on or would it still be a large chunk of food delivery customers that are all our common customers that are using the platform for Instamart? We are seeing both the adoption of the multi-services users using multiple services continues to inch up as well as new to Swiggy users, especially at the back of the Instamart proposition continues to increase. Would it be fair then to say for me that let's say the proportion of new to Swiggy customers is r ising? Yes. That's also the trend line that you should assume going forward considering the overall channel that exists. One of your competitors obviously has moved to an inventory model. Any plans or any, obviously at this point I'm assuming you cannot do it. Any plans on doing that or any advantage? Do you see of doing that? I think we have menti oned in the past that this is an eventuality that we do expect that to happen. If you look at our domestic shareholder base, it has now gone above 43% in a very quick time. Since our listing this has more than doubled and we do expect this to cross the threshold at which time we can convert ourselves to an inventory-led model. There are certain benefits both on the numerator side as well as certain investments that happen on the denominator, which is the cash flow side. That approval will happen if and when we change to this model. All right, Rahul, thank you very much and really appreciate the great disclosures. I think hopefully this becomes a benchmark. Thank you. Thank you. Thank you. Ladies and gentlemen, we will now take one last question from the line of Abhishek Banerjee from ICICI Securities. Please go ahead. Thank you for the opportunity and congratulations on the great set of numbers. One question is that today there was an article which came out where one of your competitors claimed that their order numbers are almost 40% higher than you during the Diwali season. They basically claim that in which case there is no way that you can be higher on an NOV basis. If you could give some clarity on that, plus if you would have any data which would give parity on what is the bond rate for the overall segment, these two data points will be very helpful. Firstly, even in the past when we've been asked on this line, it's easy to compare with publicly listed peer but it's very hard to get the numbers of privately listed peers and even understand their definitions of how they're calculating everything that they're suggesting. That just makes it really, really hard. At the same time, volume growth and getting volume growth and buying it in orders by choosing a path of, let's say, very poor average order values and average order and contribution is a choice, but it's not really a choice we want to make because in the end we're playing to win in the long term and for that, staying power happens at the stage of the category only if you are consistently making progress on the contribution. We believe that we do not know at least how to operate like that at maybe very poor AOV contributions because we definitely believe that will staying tied in the medium term. As for the overall spend in the category, as Amitesh Jha mentioned, intensity has been high. There are a bunch of players in the category so it would be hard to make such an overall estimate. We remain sanguine about our own path and guidance and we want to build a business with good staying power and an ability to win in the long term. Got it. Now on the net order value is to GOV. That proportion has dripped to 70% in this quarter. Right. I guess that would be also due to the sale that you did in this quarter and in the letter you have mentioned that was funded by the brand. What would be the outlook going forward on this NOV to GOV ratio? The NOV to GOV reduction is because obviously the non-grocery mix increasing and it is not only because of the sale event. I just want to clarify that's a very secular trend. Consumers have come back, they're expanding their bus this and also the proportion of CG1 and 3 delivery orders also increased in this particular period, which is the reason why we on the dip the secular trend of more customers being on that will increase. It's very hard to because we have seen our FMCG growth also being at a decent click. There could be some pressure on the NOV to GOV ratio but not a lot. Hence, going essentially forward, this particular any festive season generally has a higher delta. Since the next two months are not going to be successful, we believe that this quarter will still be okay, and we don't see a lot of addition there. Understood. While I have you, just one last question, which is if I see this spend per proper cohort, right, it is almost doubling, you know, in this quarter for some of the cohorts, right. What is happening which is driving this kind of increased user adoption? If you could give some clarity on that. See, of course, one of the things is that when you give better service, better speed, more assortment, and when it becomes a habit, the spend per customer essentially goes, frequency is higher, there are more number of items in the cart. What is happening is that a lot of these items are of higher AOV because they have more percentage of asset. The way to think about it is the spend is increasing because people are adopting our quick commerce platform as a platform of default on buying a lot of other categories as well as things that they would. The way to think about it is that all missions that they have in shopping are slowly moving towards essentially quick commerce. It is a reflection of that. We believe these numbers will keep on going up. Quality of customer is an important benchmark as well, something that Harsha spoke about. We want to go in a sustained way. We need to get the right habit for the customer. We have seen that a lot of customers who do get acquired in quick commerce because of unsustainable incentives generally go and stick to platforms that are much better on the fundamentals of business, and which is what we are seeing for us also right now. Understood, understood. That is very helpful. Thank you so much and best of luck for the next quarter. Thank you. With that, ladies and gentlemen, we will end our question-and-answer session on behalf of Swiggy Limited. That concludes this conference. Thank you all for joining us. You may now disconnect your lines.