Eternal (ETERNAL) Q2 25/26 earnings summary

Executive summary

• Quick commerce business saw significant MTU additions and robust revenue growth, supported by increased marketing investments and a shift to an inventory-led model, with plans to maintain elevated ad spend as long as CAC and LTV remain healthy.

• Food delivery profitability improved due to a mid-quarter platform fee increase, but growth remained subdued, attributed to macro headwinds and competition from quick commerce.

• Store expansion continues aggressively, targeting 2,100 stores by December and 3,000 by March 2027, with most new stores in top 10 cities.

• Consolidated revenue for Q2 FY26 was INR 13,590 crores, up from INR 7,167 crores in the previous quarter and INR 4,799 crores in Q2 FY25.

• The company completed the acquisition of Orbgen Technologies and Wasteland Entertainment, expanding into movies ticketing and events.

Financial highlights

• Gross margin in quick commerce expanded by 300 basis points, mainly from a shift to an inventory-led (1P) model, though much of the gain was offset by higher supply chain costs.

• Contribution margin did not improve meaningfully despite gross margin gains, as first mile and supply chain costs increased.

• Food delivery growth was around 14-15% year-over-year, with expectations for a slow uptick in the near term.

• Quick commerce revenue surged to INR 9,891 crores in Q2 FY26, up from INR 2,400 crores in Q1 FY26.

• Net profit margin for Q2 FY26 was approximately 0.5%.

Outlook and guidance

• Elevated marketing spend in quick commerce will continue in the near term, focused on new user acquisition, with operating leverage expected as scale increases.

• Food delivery medium-term growth guidance remains at 20%+, but management expects 15% for the current year, with improvement dependent on macro recovery.

• District business expected to maintain 30% year-on-year growth, with absolute losses remaining range-bound in the near term and improvement anticipated in FY 2027.

• The company is transitioning its quick commerce segment to a combination of marketplace and inventory-led model, impacting segment revenue mix.

• Management remains confident in the long-term growth of new business segments and continues to support loss-making subsidiaries.