Note: This is a preliminary transcript and may contain inaccuracies. It will be updated with a final, fully-reviewed version soon.
Swiggy Ltd (NSE: SWIGGY) Q4 2026 Earnings Call dated May. 08, 2026
Corporate Participants:
Suman Sharma — Investor Relations
Rahul Bothra — Chief Financial Officer
Amitesh Jha — Chief Executive Officer, Instamart
Analysts:
Sachin Salgaonkar — Analyst
Vijit Jain — Analyst
Jignanshu Gor — Analyst
Aditya Soman — Analyst
Presentation:
Operator
Ladies and gentlemen, good evening and welcome to the Swiggy Limited Q4 and FY26 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 call, please signal A by pressing Star then zero on your touchstone phone. Please note that this conference is being recorded. I now hand the conference over to Mr. Suman Sharma from the Investor Relations team.
Thank you. And over to you, sir.
Suman Sharma — Investor Relations
Thank you. Operator. Hello everyone and welcome to the Q4 and FY 2026 earnings conference call for Swiggy Limited. Our financial results and shareholders letters have been published on the exchanges and the information pack has been placed in the investor Relations section of our website, www.swigi.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 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 us on the call today are Sri Harsha Majedi, MD Group CEO, Mr. Rahul Bhotra, our CFO Rohit Kapoor, CEO of Food Marketplace and Amitesh Jha, CEO of Instamart. With this brief preamble, let us start the Q and A. Operator, you can please go ahead.
Operator
Thank you very much. We now begin with the question and answer session. Anyone wishes to ask a question may start in one on the national telephone. If you wish to remove yourself from the question queue, you may press R. And two participants are requested to use handsets while asking the question. The first question is from the line of Sachin from Bank of America. Please go ahead.
Questions and Answers:
Suman Sharma
Hi. Thank you for the opportunity. I have three questions. First question is about some of the comments you guys mentioned in the shareholder Lender doubling down on differentiation. Can you help us understand three to four areas of
Rahul Bothra
Differentiation for you guys versus competition?
Suman Sharma
Hi. Sorry. Okay. Hi. Asha Here talk about 34 examples of how differentiation can look like in the category. So thanks for the question. So even in the shareholder letter we talked about one example which is noise versus a clean label that noise operates in like bread, eggs, etc. I can just take the 3, 4 examples with what we’ve done with noise only if you go in the case of eggs, you will find high protein eggs that is coming with much better quality feed for the animals that that just makes a better that is an upgraded version.
You think about bread lot more freshly baked bread with much lesser preservatives that just significantly the clean quotient of the product and the taste of the product as well. So these are maybe some examples in the food category but even outside that I think there are some explorations that we’ve done the cookware category with triplife where we worked on expanding the category very differentially with some interventions we made both in assortment and price to grow the category. You will actually in the next couple of months see a host of such examples pop up across the Instamar app.
But the broad thing is Indians are largely always looking for upgrades. That is a theme of the economy and we believe that there is an opportunity in being the platform that can democratize their aspiration and offer more and more access to consumers across a host of categories. Noise is one route to maybe give access to great quality bread or great quality eggs to our consumers. Working with a brand to open up something in the trip like categories and attempt to upgrade in the home cooking category by creating co creating a better version.
So that is the broad theme for us.
Operator
So just from what I understand the area of differentiation is product categories of SKUs which have been put on the platform versus anything on speed and others and out
Suman Sharma
There possible to throw some numbers. How much of a total gov or Nov right Now are these SKUs and you know where do we expect that proportion to be as a percentage of Nvidia
Sachin Salgaonkar
In terms of differentiated offerings?
Suman Sharma
Unfortunately at this point we will really unable to share a lot of details. As they mentioned it’s still early but we will come back over the next couple of quarters as we have more assurances. Also one specific detail that I want to add it wasn’t clear is this is not a strategy that is exclusionary even as we mentioned in our shareholder report will continue to serve all core latent needs of our today’s users. But actually amplify the upgrades part as opposed to
Sachin Salgaonkar
Saying we’ll only do the updates. Thank you.
Suman Sharma
Got it. And direction. I understand you can’t give exact numbers but when we directionally think about it, is it going to be 1020 percentage of Nov or is it going to be much much higher?
Rahul Bothra
So Satya Rahul here I think it would be extremely hard for us considering that we are trying to create a differentiation here. I think ultimately the consumer proposition is very strong. At least early signs that we have Seen in some of the labels that we have launched as well as working with some brand partners, we are seeing pretty good uptick I think over time. What really helps propositions like this is consumer retention and frequency increase over time and that’s where the largest benefit of these propositions will come through.
So as Harsha mentioned in a couple of quarters, you know, we will give you some more color in terms of how this is progressing for us. But early signs are very, very encouraging.
Operator
Thank you. Sachin. I request to come back for a follow up question.
Rahul Bothra
Yes,
Operator
Thank you. The next question is from the line of Vineet Chen from Citi. Please go ahead.
Vijit Jain
Yeah, hi, thanks for the opportunity. A couple of questions from my side. So first with this private label and with noise that you spoke about, is that contribution margin positive for you in Quick Commerce, private label as a whole or specific brands within that? That’s first question and I’ll just follow up with one more
Suman Sharma
On the first question. Asha here for us, as we’ve talked about, noise is for us an attempt to actually build on the differentiated assortment and a tool for us to improve stickiness and repeats and engagement on the platform. It’s not a margin maximizing equation. Having said that, it is contribution margin.
Rahul Bothra
As you see, it’s not in the value play. Right. So what we are not going to do is think of this as another commoditized play where you make additional couple of percentage points margins. This is a differentiated offering. This could be of even higher value and therefore more contribution margin and across categories as we build this out, we will definitely want to accrete our overall margin structure versus doing just a commoditized play.
Vijit Jain
Understood. My next question is can you elaborate a little bit more on this commentary where you say that you’ve repurposed customer incentives away from direct wallet subsidies. If you can elaborate on that. And then also I see that marketing spend below contribution line have started to tickle down this quarter. Now I know OneQ is seasonally strong. Typically you see higher NPU additions in OneQ. So how should one think about both how you’re tracking so far in one Q on MTU additions in Quick Commerce and the marketing spend below cm.
And then if you can explain that commentary on repurposed customer incentives. Thank you.
Sachin Salgaonkar
As we had said, hi, it’s Amitesh here. As we had said in our last earning call as well, you know there are multiple ways in which we will be reaching our cm. Number one is the repurpose of the incentives that we give to the the end consumer on the ballot. We rationalize it, we don’t reduce it. And in the way that it happens is that it allows for better retention for the end consumer as well. And that’s the process that we have taken. It also means that a lot of time what will happen is a high frequency customer will retain better and which is the process that we have initially taken.
The second question was on, on the marketing spends. Marketing
Vijit Jain
Spends below CM and the MTU additions how you’re tracking in one Q.
Sachin Salgaonkar
Yeah, see there are two ways, okay. The marketing spends, what we are doing is commensurate to the growth that we are essentially looking for. The way we looked at our MTU is that there is a lot of consumer base that we have that we need to focus more on retention and repeat on the platform and which is what we have been trying to do over the last couple of quarters and which we will continue to do over the next couple of quarters as well. That said, there is definite marketing spend that we will keep on going on the new consumer base.
That new consumer base will eventually keep on increasing. But yes, at the same time our MDU will still face slight headwind on the base that are low aov, low frequency and which will eventually continue.
Vijit Jain
I see. And sorry just you. So, so one Q. Will you. Does that mean, you know, MTU additions might slow? Is that what you said? So I didn’t quite follow that part if you can clarify.
Sachin Salgaonkar
No, we can’t, you know necessarily give an idea on what will be the forward looking, you know, assumption on this, on this number. But as a strategy it has not changed in the way that we are looking.
Vijit Jain
Understood. And one last question from my side. You have a medium term guide here now of 1 trillion in quick commerce and I think you said something to the effect of that you will get to rupees 500 billion odd, you know, double the current pace without adding too many stores. So in general, you know, is, you know, the 500 to 1 trillion journey, how will that come about? Is that geographic expansion on the cards beyond F27? Is that how one should read those comments in conjunction?
Rahul Bothra
I mean it’s Rahul here. I think what we are really drawing out, the medium term guidance here is in terms of the size of the business that we have built and where we see this going. So even if we take conservative estimate of cater estimates of 35 to 50% in this business, we can potentially get to the 1 lakh crore in between three and a half to five years depending on how the overall market growth really plays out. So for us, this is really establishing the size of the price that we are going after and also establishing the overall contribution margin pool and the EBITDA margin pool that we can clearly see from the business that we have built, along with the reiteration of our guidance of having achieved contribution margin or our guidance of achieving breakeven in the current quarter.
And we would have moved it massively by close to five and a half percentage points over the last year itself. And perhaps we are the only one in the industry who have moved it in such a short time. So for us, these are the choices which are ahead of us. Of course growth is important and we don’t see the necessity to add stores necessarily over at least the next few quarters, considering the current utilization that we have. But outside of this, geographical expansion as well as store expansion will absolutely be critical for us to get to those run rates.
Suman Sharma
Just to build on this answer a little bit more, we’ve also given this ambition for what we want in the medium term to also help explain any decisions that we will be making. Because this is the framework that we’ve used in the past. It was important for us to get to this CM0 milestone in a in a quick enough time frame for us to be able to feel the chances of the ambition becoming stronger. And every decision that we take financially investment wise is all going to be judged by does it get us closer to this ambition or further from this ambition?
Vijit Jain
Understood. Thank you so much and best of luck, you guys. Thank you.
Operator
Thank you. Next question is from Bernstein. Please go ahead.
Suman Sharma
Hello. Hi. Sorry. My question is on food delivery. My first question. So we’ve had a phenomenal growth in food delivery. So one just clarification. All our new experiments on food delivery, whether it is toying or 19 and etc, they are all included in, in the financials for food delivery and both growth as well as margins. Is that fair? This is always here. Everything that you read about which is bold 99, store, eat right. Those are all included in our core food delivery platform financials. Pine is a completely different business.
Right. And it is at a very different stage of testing and evolution that is not in the food delivery that that comes under the H3 Innovations bucket, as you see.
Jignanshu Gor
Okay, fair. All right. Going ahead, how do we think of of the
Suman Sharma
Interplay between toying and food delivery? Right. We’ve discussed why we needed different apps. I think that’s fair. But even on food Delivery we have 99 and store and other parts which are creating a different brand identity or different Addressing a different customer profile. So how do we think of that and are we seeing shift of consumers from
Sachin Salgaonkar
Swiggy
Suman Sharma
To
Sachin Salgaonkar
Toy?
Suman Sharma
Please bear with me, this is going to be a slightly long answer. The food Delivery is a 10 year old phenomenon. We know the business, we know the category it caters to. X percent of India’s population is roughly like 10% of India’s total population on ever targeted basis. And the contours of that are more predictable. And we have continued to try two things there. One is a medium to growth of 18 to 20% and a margin of steady state 5%. Now the question is there is a large part of India which has never tasted food delivery or does it very frequently the question is what is the right model for us.
Toying is a separate app, a separate business at this point in time catering to opening up that segment. Now, early days, 3PMF yearly we are seeing clean thumb green shoots of optimism there. But it’s too early to say that this is a definitive model. And any such model also evolves as you go along. And I know portability is seen as a unidimensional characteristic, but if you think of other industries, even E commerce and E commerce exists, there’s some overlap of customers but they’re legit. Two separate businesses in their own rights.
So we don’t know how it shapes up honestly. But we may be in a much better position to give that answer in a couple of quarters down the line.
Rahul Bothra
Okay, sure, that’s helpful. Last one Small question
Suman Sharma
On WooCommerce
Rahul Bothra
I
Suman Sharma
Think we added half a million MTUs despite not adding stores. So what would your sort of view be on what drove this per store NTU edition?
Sachin Salgaonkar
We don’t look at M2 as a first growth number. M2 is an overall number that significance, you know how many new customers we are essentially getting and how many customers of those are essentially retaining with us. So it will be wrong to look at it as a MTU per store number. You should look at an absolute and a percentage on the overall base.
Rahul Bothra
Maybe if I were to double click on this and I think this is an important topic that what is your aspiration of store growth, etc. If you look at the current coverage that we have across the 130 cities that we are operating and you know in terms of the last mile, you know that we operate at the speed that we operate we find us is well distributed in these geographies. Right. And we are catering to greater than 90% of the demand. So store addition from here is for More densification or a choice that we make when we have to do any geographical expansion.
So for now we want to get the operating leverage from additional utilization that will come through with the growth that we have experienced.
Suman Sharma
Sure, that’s very helpful. Thank you. I’ll come back in the queue for more questions.
Operator
Thank you. Next question is from the line of Aditya Soman from CLSA India. Please go ahead.
Aditya Soman
Hi, good evening and thanks for the opportunity. So, just two questions. Firstly again on drawing now from some of the third party data, we are seeing that monthly active users are almost as much as a third of the main Swiggy app. One, would that data be accurate in terms of the adoption of toy and second, if that’s the case, then would a significant chunk of the losses in platform innovation be from toying? At this point
Rahul Bothra
I think we don’t measure really around MAU. I think for us monthly transacting user is really the North Star that we see and honestly number of downloads or number of app opens is just a data point and as Rohit mentioned, it’s a very early days in toy journey to be able to establish any clear metrics there in terms of the platform innovation. This was the quarter that we also shut down Mac operation. The large part of the cost that in that P and L is related to the snack operations getting closed.
Aditya Soman
No, very clear. Thanks Rahul. And then a second question on the quick commerce side. So right now we are seeing a slowdown in sort of overall growth and I see that you’ve made the choice between sort of growth and profitability. But in terms of going forward, in a view, let’s say you achieved sort of contribution breakeven then how do you see the path to accelerating growth? Would that mean that you’d have to be more aggressive on pricing again? Or do you think the pricing right now in the market is just at an irrational level?
Sachin Salgaonkar
Hi Samidesh, See one thing that we have reiterated again and again is that we are not going to take the route of buying growth. It is something that we had recommended to on that essentially a couple of quarterback and we’ll essentially continue to do that as well. The reason why we go to CM Breakeven is that obviously it makes the PNL healthy, it increases our staying power and allows us to invest in the places where it is where it is much more universally structural. So at any point of time the focus that we have is on to create more such kind of differentiation and bring opportunities associated with it as well.
The growth that we will see the One thing that will happen after we reach a CM breakeven is that any kind of headwind that we had created because we had to reach this CM positive growth will essentially go away and that will allow some more aspects of growth which we continue to foresee happening from the next quarter onwards.
Aditya Soman
Understand? And maybe just to follow up on that, I mean, if so, would that then again mean that the losses could go up or, or that would be like the base level of CM that you’d operate with.
Suman Sharma
I mean the question,
Aditya Soman
In other words, being that is it you, are you making a proof of concept that you can reach CM breakeven? Or, or is this a sustainable level of cm and, and, and then growth becomes, and growth will come in with improving CM from that.
Sachin Salgaonkar
See, the one thing that we have committed is that, and which we said also is that CM is also a reflection of our staying power in this particular business. So the investment that will go, and if it is required to go on any area that in fact enhances that staying power. So the commitment that we had initially given is that if there are revenues of growth that require investment, we will keep on doing that. Any avenue of growth that dilutes CM without having any advantage on the business that we are building, we will not do it.
So buying growth we will essentially not do, which will basically mean that yet we don’t see a CM CM dilution happening going forward.
Aditya Soman
Thanks Mitesh. That’s very clear. Thanks so much.
Operator
Thank you. Next question is from the line of Ankur Rudra from JP Morgan. Please go ahead.
Suman Sharma
Thank you. You know, nice to see the accusation on food. I want to start there. Thanks for the comments on point. I wanted to understand, in the medium term, are you not potentially cannibalizing the main opportunity for the parent food app as so far it doesn’t seem like you’re adding
Amitesh Jha
New menus and new restaurants. You’re just potentially reducing
Suman Sharma
Your
Amitesh Jha
Fees and meetings or platform fees that.
Suman Sharma
Hi Ankur, Asha here. As Go ahead and Rao already mentioned, it’s still too early to figure out what is going to happen, when will it happen, etc. I do think that it’s also important because we’re not the only players. There are folks who are also attempting what this business model can unlock as challenges outside the category. I think just by being able to do it early, we also probably have an opportunity of understanding what goes on. But I think it’s too early to comment on what happens in the medium term.
Of course, the idea is that we progress and pull forward only if it feels like something that unlocks incremental growth. I think just to add one thing to what Harsha said is if you look at toying and what the proposition is, it is intended to open up a set of users who are best case infrequent on the food delivery system as we use today. Right. So hopefully along the calculation if this plays out we should also see a very new set of users adopt food delivery because of the proposition being different.
Rahul Bothra
So I mean I
Suman Sharma
Understand it’s very early but you’re not seeing any signs of down trading from sweet to. Okay. So moving to the quick comment side I wanted to double click on the medium term targets a bit. You know we said about talked about five times growth and 5% kind of margin. Now this probably implies 50 to 70% or if look at this on a three to four year basis is that number one fair to expect and two what needs to happen to industry structure for this to be possible.
Rahul Bothra
So as you rightly said we are talking of the medium term here and if you think of medium term between say three to six years and depending on how the category growth pans out, how the penetration pans out, how much of the new users and new frequencies those the category get to and again the number of players that are participating. I think a lot of this is therefore not something which is clearly which we can project from the data available today. However the journey is very clear that we have achieved a certain scale and a certain profitability in this business and any growth from here on is going to be good growth because it’s going to add to the contribution for line through the profitability journey.
So very hard to remove the timeline to it. But as I said anywhere between 35 to 50% can get you to the same place in between three and a half to five years.
Suman Sharma
Got it. But thank you for the timeline. If I could add one quick follow up to this. In the more near term given competitive
Rahul Bothra
Activity continues to go on, are you happy to give up market share consistently in the search of profitability?
Suman Sharma
Hi Harsha here. I don’t think we’ve said anything about being comfortable giving up market share. I think we have to keep making choices between growth and profitability to get closer to the aspiration that we’ve talked about. If fighting for short term relevance and going after spending in places that will hurt us later I think that will compromise our long term relevance. So honestly it is a balanced act but I don’t think there is any commitment to go and lose market share. I think it’s important to build a more durable business.
But as we’ve mentioned, even more growth will come from executing on the clarity on positioning that we’ve been talking about. There was a question even on market structure. Honestly we do not know yet how many players will be on the other side of all of this spending and overall category growth. But if anything we’ve learned from multiple categories like modern trade or telecom etc. I think whoever got clarity earlier is the one that is still standing today. So we just want to be clear about what our price is and keep making sure that the strategy speaks to that medium term price.
Sometimes it may have to be these paid through calls, but our intention fully and as Amitesh has also talked about, hopefully with the contribution behind us and some parts of the proposition coming together, we want to get back on the growth engine and start making investment calls on accordingly. Thank you for the.
Operator
Thank you. Next question is from the line of Sachin from Bank of America. Please go ahead.
Suman Sharma
All right, thank you for the opportunity. I had a couple of follow up questions which are remaining so just we are following up on that. Number one, Rahul, you did mention about focusing and targeting good growth. One of your peers is talking about more like a 60% in a week either for three years. And as I did mention in the last question answer, you know, it’s also about maintaining market share and not giving market share. So is that fair to assume that kind of a growth we could also expect from Sriji while the focus towards profitability sort of, you know, continues?
Operator
Not able to hear you. May I ask you to repeat your answer once again?
Suman Sharma
I think there is a thing about short term market share and long term market share. Even if you look at the category around today Sachin, there’s a player who’s probably at 4.5percent of contribution. We have our own guidance of getting closer to zero. As we’ve talked about, there are a bunch of players in the -10, -15. So maybe only talking about market share in the next quarter probably takes away from what’s going to play out over the next few years. We don’t have some stated desire to lose market share.
We believe that our chances to improve long term market share come from purposefully balancing this path between growth and profitability. Of course crossing a big side of the fence of the CM0 allows us to see growth as profitability and we hope that that coupled with the proposition, coupled with everything we’ve learned over the last two three quarters gives us a fighting edge again as we invest for profitable growth
Rahul Bothra
Got it. And lastly, you know, I mean, there has been a good amount of again, expansion
Suman Sharma
Which is done by some of your other peers. Also, when you think about expanding into, let’s say eventually, tier two, tier three cities, what are your thoughts on those lines?
Sachin Salgaonkar
Yeah, so see, the reason that we will expand to T2, T2 cities is one, as we said that if there is a need for essentially densification because we are simply getting that many orders, we will actually do that. The second will be that yes, there are something that we do even right now, even in the last two quarters as well. We look at cities that are more likely to make an impact based on the kind of consumer base that we essentially have. That level of expansion will eventually happen, though it will be smaller based on the number that we have.
The third level of expansion that we see is expanding in existing cities where we would have left out some of the other areas. But the way to think about it is in the current network that we have, there is a headroom for orders which is good enough to sustain us for the next few quarters. Expansion will be more a need because we are already crossing those limits in only certain geographies and which is the way that we will move forward as well.
Suman Sharma
Got it. Thank you.
Operator
Thank you. Next question is from the line of Gaurav Malhotra from Access Capital. Please go ahead.
Suman Sharma
Yeah, hi. Thanks for the opportunity. Just a couple of questions, you know, on, on this shareholder letter and I think this question was raised earlier as well. You mentioned that, you know, as you sort of will achieve a contribution margin breakeven right. You will possibly look to, you know, accelerate growth. So does that mean that essentially, you know, the contribution margin break even becomes like the floor and anything extra you sort of gain from there will be then reinvested back into the business at least in the medium term.
Is that understanding correct?
Sachin Salgaonkar
Even last time when we were speaking about how where we will invest and where we will not, we have always maintained that in the area that we believe investment is right, we will keep on investing. And in the area where we believe that it is buying growth, we will essentially not be doing it medium term. We will keep it very, very calibrated. Things that are essentially working out, we will essentially go behind it as well. So yes, if things are working out, there is not a need for us to necessarily reinvest contribution marking gains going forward.
But if we believe that there are areas where it will make sense to invest, we will essentially keep on doing that. So it’s hard for me to give A guidance but the floor information remains true and we will. And that means that yes, if there are areas where the growth is happening without specific investment needed, we will be on that path and we will also increase our contribution margin.
Suman Sharma
Just one follow up. So what we understand that, you know, it’s pretty competitive and you don’t want to chase or buy growth. But you know, given that there are multiple players, some of them, some of them are larger, quite aggressive, there are some newer guys who are becoming more aggressive in that regard. If you were to sort of, sort of feed some market share and for hypothetically the competitive intensity sort of remains for another three, six, nine months, isn’t there a risk that some of your users who are sort of maybe experimenting there to other platforms will basically then permanently shift and hence to rename them will become more expensive later
Rahul Bothra
On?
Suman Sharma
Ultimately, as we’ve talked about, I think the biggest thing for us to be solved is the proposition that is the only structural way to keep users engaged in sticky. Otherwise we will have to go up now. And again, as you mentioned, there are multiple players in the category and it is not clear when anyone will make a choice saying I’m not going to play this anymore. So we want to start building already with the clarity that some of them may also just be forever value focused players. So to play that game that we don’t have any right to win does not strike us as rude.
If we were indeed like a value focused platform, then we would say okay, let’s embrace this and go and try to win in this specific part of the market. But if that is not our trader strategy, then I don’t think we can go and win that fashion. For us, we are very certain that working on our proposition is the only durable answer for long term growth.
Vijit Jain
Understood. Just one quick question. There was a improvement in Nov to Gov in quick commerce this
Suman Sharma
Quarter. How much was this related to you sort of reducing your discounting and how much was it just some mix because of seasonality?
Rahul Bothra
Yeah. So one of the factors was that we stopped the no fee experiment sometime around the third week of January so that gain came through. So roughly half of the gain came through because we stopped the NOFI experiment. The other one is more structural where we’ve been able to offer lesser incentives to our customers until, you know, on a sequential, you know, basis, grow faster.
Amitesh Jha
Thank you.
Operator
Thank you. Next question is from the line of Abhishek Banerjee from ICICI Securities. Please go ahead.
Jignanshu Gor
Yeah, thank you for the opportunity. A couple of quick questions from me. First One is we had the, you know, we had a guidance that we will break even at the EBITDA level in four quarters from contribution break even. So is that, does that still hold? And one more thing is in this quarter you spoken about, you know, the contribution margin for the month of March. Now when we say contribution break even quarter. Right.
Rahul Bothra
So on the first question, Abhishek, I think we have, you know, carefully decided not to, you know, speculate on when EBITDA profitability will come through. As we have rightly said that having achieved the scale that we have is also good to harness a larger share of the growth that is going to come through. And again, what is the right kind of growth and that’s where we will continue to invest in. So I think EBITDA profitability will be a choice that will be made at a later point in time and again depending on how the market forces play out.
On the second question, yes, you’re right. This is for the entire quarter and not just on an exit basis.
Jignanshu Gor
Okay, I’m just trying to understand one thing. So given you will be contribution breakeven beyond that at the, you know, the, the non direct expenses, things like, you know, new user acquisition costs, etc. How should one model that in going forward? Especially even we are not really seeing an MPU acceleration to the level that, you know, one would have kind of hoped for elevated levels of customer acquisition spends.
Sachin Salgaonkar
Our, I mean, I’m slightly not sure where the question was, so I’ll try to answer in the best way that I understood. The new user acquisition is something that we will continue to do. It’s a part of our growth engine and obviously one of the more important aspect that we look at and something that you will see coming from us going forward as well is the retention of that particular user base as well. So yes, the MTU growth, a big chunk of that will come from the new user that we acquire and we retain.
As I had said, there is a chunk of users that also go out of the platform. Part of that is because of competitive intensity and those users typically have lower frequency and lower AOV as well. And it is something that we are also comfortable with because we want to retain more consumers who are more long term on the platform as well.
Jignanshu Gor
Thanks.
Suman Sharma
That’s the question. That was not the question.
Jignanshu Gor
No, so, so I was trying to understand whether the overall customer acquisition spends will remain at this level also. But I kind of understand that, you know, the MTU numbers that you are talking about is, is not the gross addition. It’s rather the net MTU addition and probably churn rates are slightly higher. But if you can guide on the overall expenses also that will be helpful.
Sachin Salgaonkar
We won’t be able to guide on the gross versus net. I mean the number that we have is net of both acquisition as well as retention. The commitment that we have is that yes, it’s a growth industry. We will continue to invest on acquiring new consumer base. We will continue to make sure that the efficiency of this acquisition is also better. The more and more hours our proposition lands, we believe those acquisition numbers will go up. We are already seeing that happen. Even right now you would see that in the kind of investment we are making and the growth that we are seeing.
We believe that specific trajectory of higher or acquisition going on the level that we want with a spend that is more efficient will continue to happen.
Suman Sharma
Okay, thanks.
Operator
Thank you. Next question is from the line of Vivek Meshwari from Jefferies, India. Please go ahead.
Suman Sharma
Hi, good evening. A few questions. First on the food delivery side, you know this recent increase in commercial gas prices, do you think there could be some impact on volumes in the near term because of this issue for aggregator?
Rahul Bothra
Yeah. So look, I
Suman Sharma
Think the LPG crisis started sometime in first week of March, right? And there was an impact on the restaurant industry as we reported in the media in terms of availability of, you know, cylinder etc. But two things. One, we’ve seen a slight bit of price increase because of that which the restaurant industry has taken. We can see that on platform which is not significant and it’s less than 0.5%. So that did probably offset some bit of the cost pressure from our standpoint. I think we were able to navigate this to support the restaurants in terms of increased analytics, increased ability for them to, you know, just spread out the demand.
And also I think our supply configuration the consumer will able to access lookalike restaurants, right? So both in terms of, you know, the growth as well as the profitability side, we were able to navigate this in the month of March and since then the situation has continued to ease out as two things have happened. Probably the supply has become better and B the restaurant industry is also like all Indian entrepreneurs do, quite quickly devoted to finding alternates whether it’s electrification, whether it is alternate sources of supply as well as, you know, just the supply situation stabilizing itself somewhat.
Okay, got it. Thank you for that.
Amitesh Jha
Moving
Suman Sharma
To quick commerce. One thing Rahul, that you mentioned about the Nov gov bit, you know and what has contributed to that increase in nov. But you know When I look at your take rate as a percentage of nov, that number is flat on a quarter on quarter basis. Why would that be the case? And sorry if it’s a naive question.
Rahul Bothra
No it’s a 50 basis points pick up. If you look at our take rate
Suman Sharma
That’s on gov but when I look at it on nov basis that number is flat. It’s at I think 19.2%.
Rahul Bothra
So as I said there’s obviously I don’t think that we do on the consumer side and then things that we do on the merchant side which you know is a combination of the take rate. So a large part of this increase is, you know, has been on the consumer side because we have as platform given better incentives we have also started to monetize on the delivery fee side. So these are the things that have impacted the Nov Gov and it’s a structural move for us because as we had said we are not participating some of the lower EOV orders and the consumers who are generally attached themselves to lower basket sizes.
So that’s the choice that we have made and as we have also written, we have halved the mix of these low EOB orders over the last year which has also helped in the overall, you know, ratio increase.
Suman Sharma
I see, Got it. And lastly, you know while we have discussed quite a bit on the contribution margin but when we look at overheads in QC business, those are running at about 7, 10, 715 crores at least for the last two quarters. Now from here to let’s say a journey to break even whenever that happens. What will be the driver for this? It’s essentially going to be, it should ideally be a mix of like, you know, higher take rate operating leverage and maybe if there is some inefficiency, this line item or anything that you can do, you know, can, can optimize on.
But this 700 crore plus number is still very, very high. Right? That will still translate into 2,800 crores of full year EBITDA loss. How do you think about the journey to breakeven in the next few years or whenever
Rahul Bothra
While yes, the absolute number is at around the 700 crores record. A large part of this is marketing spending and as you’re aware today we are seeing heightened levels of spending across various platforms which has meant that there is certain amount of inflation on the customer acquisition cost. Now we do expect and we have seen this even in the food delivery business when the market structure matures we see significant operating leverage coming out of some of these spending days as platforms we actually have reduced our absolute spending while continuing to get user penetration.
So it’s going to be a combination of scale as well as efficiencies getting unlocked on the marketing spending site.
Suman Sharma
But you know Rahul, that’s what you know in the context of the two new competitors who have or the horizontals who have come into the space this, you know, the marketing spend we could be here for longer period. Right? Is that a fair understanding? Which means that this overhead line may take quite some time before starting to drift down.
Rahul Bothra
It’s going to be extremely hard to guesstimate on that. You know, where does the market structure, you know, evolve? How much competitive does it get before it settles down? I think we have the levers to continue to extract efficiencies on the other lines and not just the marketing line. So you will see continuous operating leverage now that any growth is going to deliver contribution dollars to the P and L.
Suman Sharma
Understood Rahul, thank you and wishing you and your team all the best.
Operator
Thank you. Next question is from the line of God of Rtaria from Morgan Stanley. Please go ahead.
Suman Sharma
Hi. Thank you for taking my question. My first question is on understanding the trends around the retention ratio in the quick commerce business. For your MTUs at the peak we were adding 3 million consumers a quarter. Right now we are adding half a million and our marketing spend largely would have remained intact. So it appears that the gross ads would have remained less largely same and the retention ratio would have come down for existing users. Is there any metric to give get a comfort on how the retention ratio has changed in the last couple of quarters.
Any repeat business percentage now about a year back.
Rahul Bothra
Hi. So one of the things that we have decided to do is really turn out some of these low AOD customers who have alternative platform choices today which are winning from whom they’re getting serviced. So there’s an active churn that we are seeing in that segment of the user at the same time the cohorts that we care about which are the high spenders, higher frequency ones, those continuously are being in kind of. So periodically we will share I think couple of quarters back we had shared the gov retentions for these acquired users and we will share that periodically going forward.
But a large part of that user growth reduction that you have seen is the user that we have deliberately turned out from the platform.
Suman Sharma
Okay, fair enough. My second question is on the Nov growth if you look at this year was very heavy lifting was done from the AOVs with all the initiatives that you took place and maybe now and therefore Next year growth would be driven more from an order growth perspective. Right. And the current competitive market, whatever we are seeing in the order growth in the last two quarters as an example would kind of be a right reflection of the growth in the coming quarter as well. Right. So is it fair to say that from a next year growth perspective, keeping where our CM targets are in mind, the order growth will be a right reflection.
AOVs have largely normalized and you know, the current level of growth that we are seeing is a right reflection of the growth.
Amitesh Jha
Hi Asha here. I
Suman Sharma
Wouldn’t read too much into OPD growth in the last year and therefore extrapolating it into the next year as we talked about in the letter as well, this year is an unusual one. There are six players, seven players on the annual and we’ve paced the most in contribution over the last four five quarters. The overall climb from here is going to be a different climb from what we have gone through in the last four quarters. So I mean there are so many things that are changing that I don’t think there’s much value to be gotten by looking at what happened in the last 34 quarters because the context is very different.
Sachin Salgaonkar
Okay, I would just like to figure out for next year, but I understand that you will not give
Suman Sharma
A forward looking statement. So I was just trying to understand the mix or the qualitative aspects of it. But fair enough. My last question is on the steady state margin that you talked about in commerce on a medium term basis and you also shared very interesting data on the utilization of the floors at 40% kind of number. So what’s the right utilization rate required for you to get to that hit? The steady state margin?
Rahul Bothra
No, it’s a function of the maturity of the stores. Right. So for example, whenever a store hits close to 80 to 85% capacity, we end up densifying that particular area and we open another store there. So depending on when we achieve those scale and what is the utilization of those respective stores, I think the store additions will continue basis that utilization which typically happens at around 80 to 90%. Right.
Suman Sharma
Okay, thank you.
Operator
Thank you. Next question is from the line of Ashwin Mehta from Ambed Capital. Please go ahead.
Suman Sharma
Yeah, hi. Thanks for the opportunity. So the first question is we talked about break even next quarter, which is a swing of almost 180bips in terms of your CM. Now that’s higher than what we’ve done over the last eight quarters. So what are the big drivers for a, for a Mac? Massive swing. Would it be discount reduction Are there other factors which are at play?
Rahul Bothra
We have called out in the letter. So why 180 basis points was the average for the quarter. We exited the month of March with 110 basis points. And this was as we had mentioned, there were certain experiments that we were running on the monetization side that we have reversed and therefore on an exit basis we got a better pickup. So the journey itself is more like 100 basis points versus 180 basis points. And now that April is behind us, we are pretty confident of being able to achieve that. And therefore, Yeah, just to complete several levers, I think there is monetization, there’s advertising, there’s operating leverage.
You’ve seen sequential volume growth continuing to pick up. So these are the levers that are available.
Suman Sharma
We saw at an entity level advertising promotions fall by almost 8% sequentially. Now our say fixed cost in the QC business have not fallen. So is it some other business where there has been rationalization or is it something else?
Rahul Bothra
No, I think we don’t share specifically this number across the business units. But as I had directionally mentioned to you, there are, there are categories that are at a mature stage which give us more operating leverage and lesser tax on that spending.
Suman Sharma
And the last question is in terms of CapEx, so we didn’t see much of a dark store addition or our area of the dark store has also not gone up materially. But the capex is at around 195 crore more or less similar over the last two quarters. So what are the areas where this capex is going to.
Rahul Bothra
So largely on the warehousing investment. So as we have, you know, overall increased, you know, the geographical footprint, there are these tier two markets where we see the need to open warehousing which helps us in also reducing our middle mile as well as, you know, serviceability to those cities. So most of these investments have been made in the warehousing, you know, part of the business which again gives us structural capability to continue, you know, growing for the future. So that’s, you know, a lot of that expansionary phase is now behind us.
So as we also mentioned that we expect the CapEx numbers to significantly come down from the last couple of years.
Suman Sharma
Okay, okay. And just one small question I can squeeze in. What is our non grocery share in the QC side? I think we used to disclose that earlier.
Rahul Bothra
Yeah, so we will continue to periodically disclose that. So we hit the early 30s and as you have, you know about that, we expect this number to be somewhere in the range of 30 to 40% because beyond that we still want to retain the the benefits of have, you know, being on a high frequency platform. So those are the numbers about 30%.
Suman Sharma
Okay, fair enough. Thanks a lot in all the best.
Operator
Thank you. Next question is from line of Pratik Meshwari from HSBC Securities. Please go ahead.
Amitesh Jha
Hi. Thank you for the opportunity. My question was more on the commerce victim guidance. So as you said the guidance is for 1 lakh crore in Nov in probably three to six years. I was just looking at. I. I actually wanted to understand the drivers in terms of the Nov user data and frequency. Right. So frequency for sure has fallen for you guys to 2.8 times versus what you guys were doing. Probably it was 30 higher. But let’s say if I even think about 3.5, 3.6 times the number of users that you would need at the current state of Nov would be somewhere between 45 to 50 million.
Right. And if. If we look at the largest player in the market their their guidance is also to reach in a way if you convert their guidance their. Their guidance also to reach similar size of the user base. Right. So. So two questions here. One is this is what you want to apply for the positioning related to the player and also also how would this would be used user editions of half a million or a million. Right. This would take really long time. Right. Considering even if the industry consolidates from seven to three players.
So just wanted to understand from you on this point.
Sachin Salgaonkar
Hi See one of the ways to think about growth is exactly in the terms which you spoke about. How many, how many users we add, how do the how many time definitely transact and you know what are the Nov of those users. We believe that the movement will happen. Obviously we know one part on the frequency as well. We don’t believe the frequency that we are in right now is the right frequency to do essentially medium term planning. That frequency will essentially then there is a movement that we expect to happen on NUV as well that will also drive some part of that particular growth.
But as you rightly mentioned, the majority of that number will essentially come from the acquired customer that we are getting now. We spoke about this number and I think one of the other callers spoke about the net versus Gross. The headwind that we have on our MTU growth now is right now specifically related to removal of the consumer page. That stands out very infrequently with our platform. You will see that movement happen when that particular consumer base will be low enough where our acquisition will allow for overall number to be Essentially driven up as well.
We believe that churn will be another two quarters and after that you will see a healthy movement on our NTU numbers.
Amitesh Jha
I have a follow up on this. So still it seems the acceleration required is quite steep. Right. And you said that probably you guys, after the breakeven Target you will try to like, you try to do activities around it. Right. So just in just wanted to understand, did the guidance tie you guys into anything of such thought? Right? Because it seems that organically you should still be trying because the target is very high, like 45 million users. So just I want to understand that. Second thing just wanted to understand, since you guys have given the dark store, Top designer D in every geography has reached 3 to 5% of contribution margins.
So just. And we had reached about breaking in ebitda margins at 4% contribution. So have you guys, are you guys profitable on those dark stores and even in your top city? So those two questions, if you can expand on.
Rahul Bothra
Absolutely. Right. So our top city, for example, is already operating at 3%, you know, positive CM. And you know, at the city level it’s already, you know, breaking even on the EBITDA level. And one question on the mtu, I think as I had called out, this is a net addition that you have seen which has been also driven partly by some of the, you know, changes that we have done to our proposition around these low AOV users. So I think we will continue to, you know, be relevant. And as we’ve discussed, the differentiation that we are creating on the platform will attract a certain set of users and user growth.
And it is important, I think both frequency AOB as well as the MDU is going to be an important criteria in our overall growth journey. So very hard to give you specific numbers right now. But directionally we do want to continue to acquire a lot more users than the current run rate.
Amitesh Jha
Okay, thank you so much.
Operator
Thank you. Ladies and gentlemen. We’ll take the last question from the line of aditya Suresh from McBury Group. Please go ahead.
Suman Sharma
Yeah, thank you for the opportunity. Just one question. If I look at cash flow statement, despite the improvement in margin and delivery reduction loss in quick commerce, the absolute kind of negative number in cash from operations remains elevated. Free cash to analyze is about say negative four. So I just wanted your thoughts on
Operator
That scale of loss.
Suman Sharma
Thank
Operator
You.
Rahul Bothra
Yeah, so there are a couple of things. One is on CapEx, we have already said that we have seen heightened levels of investment over the, you know, last four to eight quarters which will start to moderate as we have. We are behind on the overall warehousing investment that we have done. Some of the working capital changes are cyclical, and you should expect us to sequentially improve that in the coming year.
Jignanshu Gor
Thank you.
Operator
Thank you very much, ladies and gentlemen. We’ll take that as the last question. On behalf of Swiggy Limited, that concludes this conference. Thank you for joining us, and you may now disconnect your lines. Thank you.