Zomato Q3 Results: Zomato announced its October-December quarter results for fiscal 2024-25 (Q3FY25) on Monday, January 20, reporting a drop of 57.3 per cent in net profit to ₹59 crore, compared to ₹138 crore in the corresponding period last year. The leading food delivery app major's net profit plunged due to margins, which continues to face pressure from the high spending on opening more centres to fulfil orders at its quick commerce platform, Blinkit.
Deepinder Goyal-led food delivery and hyperlocal quick commerce giant's revenue from operations in the third quarter of the current fiscal rose 64.4 per cent to ₹5,405 crore, compared to ₹3,288 crore in the year-ago period. The gross order value (GOV) of its B2C business (quick commerce, food delivery, and going-out) rose 57 per cent to ₹20,206 crore in the December quarter.
Follow Live Updates: Zomato Q3 Results LIVE: Net profit plunges 57% YoY to ₹59 crore; revenue up 64% YoY
Revenue in the food delivery business increased nearly 22 per cent in the quarter, while revenue from Blinkit, the market leader in the country's quick commerce space, surged more than two-fold. On the operational front, Zomato's earnings before interest, taxes, depreciation, and amortization (EBITDA) surged to ₹162 crore, compared to ₹51 crore in the same period last year.
Zomato's total expenses surged to ₹5,533 crore compared to ₹3,383 crore in the year-ago period. While Blinkit is growing faster than food delivery, it faces competition from rival Swiggy's Instamart, start-up Zepto and deep-pocketed rivals such as Walmart-backed Flipkart and Tata Group-backed BigBasket. Blinkit remained loss-making, reporting a net loss of ₹103 crore in the quarter.
Blinkit will reach the 2,000-store mark by December 2025, a full year ahead of its initial guidance of December 2026. Zomato announced that Blinkit crossed the 1,000-store mark in the December quarter. The company's EBIT margin rose to three per cent, compared to 1.6 per cent in the year-ago period.
Zomato said in its earnings statement that Blinkit is expected to continue making losses for the next one to two quarters as the aggressive store expansion strategy would mean underutilized stores in the short term. The company added more than two stores a day in the December quarter.
Zomato sees its employee costs rising in the near future because of a “war for talent.” It is also investing in its going-out business — dining, ticketing and live events — that it acquired from One97 Communications (which operates fintech major Paytm) last year. The segment should remain loss-making for about a year but immaterial to overall profits.
Blinkit reported an EBITDA loss of ₹30 crore, compared to a positive EBITDA of ₹48 crore in the year-ago period. Zomato, which has a market share of 46 per cent in the quick commerce segment, has boosted discounts and free deliveries while investing in expanding the number of 'dark stores' and warehouses to ship orders in urban centres. On Monday, shares of Zomato settled 3.14 per cent lower to ₹240.95 apiece on the BSE.
Food delivery, accounting for more than 38 per cent of total revenue, is expected to grow 30 per cent annually over five years. According to brokerages, Zomato is seen as the most resilient player in the hyperlocal delivery space. According to experts at JM Financials, Zomato is the only major hyperlocal delivery company in the country that, at a consolidated level, is generating free cash flows without compromising topline growth.
It indicates the strong execution capabilities of the management, giving the confidence that Zomato is the best-placed company to fend off emerging competitive threats in quick commerce. “We, therefore, prefer Zomato over Swiggy (BUY, ₹550) amongst the two listed hyperlocal delivery players, post a recent correction in both stocks,” said analysts at JM Financials.
Disclaimer: The views and recommendations provided in this analysis are those of individual analysts or broking companies, not Mint. We strongly advise investors to consult with certified experts, consider individual risk tolerance, and conduct thorough research before making investment decisions, as market conditions can change rapidly, and individual circumstances may vary.
Catch all the Business News , Market News , Breaking News Events and Latest News Updates on Live Mint. Download The Mint News App to get Daily Market Updates.