Foodtech major Zomato reported its financial numbers for the third quarter (Q3) of the financial year 2024-25 (FY25) on January 20. Here’re the key takeaways from the reported financials:
Profit Slumps 57%
The foodtech major’s consolidated net profit declined 57.2% to INR 59 Cr in Q3 FY25 from INR 138 Cr in the same quarter last year. Sequentially, profit tanked 66% from INR 176 Cr in Q2 FY25.
A slowdown in the food delivery segment and increase in Blinkit’s adjusted EBITDA loss due to rising competition in quick commerce were among the major reasons behind the decline in the bottom line.
Zomato’s chief financial officer Akshant Goyal said that losses will continue in the near term in the quick commerce segment. “As we continue to bring forward store expansion, our networks may have to carry a greater load of under-utilized stores which will impact near-term profits in the next one or two quarters. These investments will however also likely result in GOV growth remaining meaningfully above 100%, at least for FY25 and FY26,” he added.
Meanwhile, Zomato’s operating revenue surged over 64% to INR 5,405 Cr during the quarter under review from INR 3,288 Cr in the same quarter last year. Sequentially, it rose 12.6% from INR 4,799 Cr in Q2 FY25.
Overall, Zomato’s consolidated adjusted EBITDA (excluding ESOP costs) soared 120% year-on-year (YoY) to INR 285 Cr in Q3 FY25. This primarily came on the back of improvements in food delivery adjusted EBITDA margin (as a percentage of GOV) to 4.5% during the quarter under review from 3% a year ago.
Food Delivery’s Growth Slows
Despite other Zomato verticals witnessing over 90% growth, the core food delivery vertical registered a muted growth. The adjusted revenue for the segment grew 17% to INR 2,413 Cr in Q3 FY25 from INR 2,062 Cr in Q3 FY24.
The food delivery vertical’s GOV grew 17% YoY to INR 9,913 Cr in Q3 FY25. This GOV growth was slightly below the company’s expectation of 20%+ YoY GOV growth. Sequentially, too, the food delivery GOV grew 2%, lower than the sequential growth of 5% in Q2 FY25.
Giving his reasoning for the slowdown in the food delivery vertical, the CEO of Zomato’s food delivery business, Rakesh Ranjan, said, “Currently we are going through a broad-based slowdown in demand which started during the second half of November. Notwithstanding the current slowdown, we are positive about a recovery soon and remain confident of the long term outlook of 20%+ yearly GOV growth in the business given the strong fundamentals”.
On the operational front, average monthly transacting users on Zomato’s food delivery platform jumped more than 9% to 20.5 Mn from 18.8 Mn in the year-ago period. Sequentially, the number declined marginally from 20.7 Mn.
Competition Takes A Toll On Blinkit
Amid the rising competition in the quick commerce segment, Blinkit’s adjusted EBITDA loss surged over 13X to INR 103 Cr in Q3 FY25 from INR 8 Cr in the preceding quarter on account of upfront investments made during the period.
On a year-on-year basis, adjusted EBITDA loss grew 15.7% in Q3 FY25 from INR 89 Cr in Q3 FY24.
Notwithstanding this, the heavy capex bet paid off as Blinkit’s revenue grew 117% to INR 1399 Cr in Q3 FY25 from INR 644 Cr in Q3 FY24.
The quick commerce platform also surpassed the 1,000-store mark in the quarter under review, with 368 net new store additions in the preceding two quarters (152 in Q2 FY25 and 216 in Q3 FY25). During the same two previous quarters, the company added 1.3 Mn sq ft of warehousing space, accounting for 30%+ of its overall warehousing network.
“In addition to the operating expenditure mentioned above, we have also incurred capital expenditure of ~INR 370 Cr in the last two quarters for setting up the 368 net new stores and 1.3 Mn sqft of warehousing space. The higher capex is also the key reason behind the quarterly increase in depreciation. As mentioned earlier, we expect the steady-state impact of depreciation to be about 0.5-1% of GOV,” Blinkit CEO Albinder Dhindsa said.
He further said that Blinkit has not seen any attrition in core customers despite the rise in competition. However, the competition has led to a pause in margin expansion in the business, which, he expects, to be temporary.
This follows parent Zomato earlier this week infusing around INR 500 Cr (about $57.7 Mn) in the quick commerce platform.
Going Out Business Continues Stellar Performance
The going out vertical continued its dream run in the quarter under review. The foodtech giant’s going out arm saw a 255% jump in operating revenue to INR 259 Cr in Q3 FY25 as against INR 73 Cr in the year-ago period.
On similar lines, the going out vertical’s GOV zoomed 191% YoY to INR 2,495 Cr in the quarter under review from 858 Cr in Q3 FY24. Excluding Paytm’s entertainment ticketing business, which Zomato acquired in August last year, the GOV for the going out business jumped 119% YoY and 15% QoQ.
Zomato unveiled its latest app for the segment, District, in November 2024. In its quarterly shareholders’ letter, the company said that the traction has been good for District, adding that the app has crossed the 6.5 Mn downloads mark since launch.
“There is still a lot of work to be done towards strengthening our dining-out offering and building a leadership position in entertainment ticketing, which is where we will focus most of our energies for at least the next couple of years,” said Rahul Ganjoo, head of District.
Hyperpure On Steady Growth Course
Zomato’s B2B arm Hyperpure, which supplies fruits, vegetables and groceries to restaurants, saw its revenue nearly double (95%) to INR 1,671 in Q3 FY25 from INR 859 Cr in Q3 FY24. Sequentially, it rose from 1,473 Cr in Q2 FY25.
Meanwhile, Hyperpure’s adjusted EBITDA loss improved to INR 19 Cr from an adjusted EBITDA loss of INR 34 Cr in the year-ago period. The adjusted EBITDA loss stood at INR 21 Cr in Q2 FY25.
The 10-Min Food Delhivery Viability
Blinkit launched its 10-minute food delivery app Bistro in December 2024. Following that, Zomato also rolled out a 15-minute delivery service earlier this month.
Commenting on this focus on 10-15 minute food deliveries, Zomato CEO Deepinder Goyal said data shows that bringing down delivery time creates incremental demand for restaurant food and leads to “meaningful expansion” for the demand on the platform.
“We believe something similar can happen with 10-15 mins deliveries. This is also the reason why we experimented with Zomato Instant, but we could not find the right economic model and hence shut it down,” Goyal added.
Bistro, he said, aims to target the large “in-office market” which wants quick access to snacks, meals, and beverages within 10-15 mins. While noting that this market is currently addressed by on-site vendors and vending machines, he said that the users are not being catered to evenly across geographies by the existing food delivery options.
But, Zomato is currently trying to figure out the product-market-fit for Bistro.
“Bistro is… creating infrastructure and working with food researchers, producers, chefs, and restaurants to provide a proof of concept. If we manage to find product-market fit and profitability, our hope is that this platform could be replicated by different restaurants and cuisine types where demand exists,” added Goyal.
Meanwhile, Zomato is helping the restaurants listed on its platform deliver their food items in under 15 minutes by curating their menu items and providing a dedicated delivery fleet. The company plans to scale this service, which is currently available in select cities, over time.
Shares of Zomato ended Monday’s (January 20) trading session 3.14% lower at INR 240.95 on the BSE.
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