Zomato Q3 Results: The food delivery and quick commerce giant Zomato, led by Deepinder Goyal, announced its financial results for the October-December quarter of FY2024-25 (Q3FY25) on January 20. While the company’s revenue from operations surged by an impressive 64.4% year-on-year (YoY) to ₹5,405 crore, its net profit took a significant hit, dropping by 57.3% to ₹59 crore compared to ₹138 crore in the same period last year.
The decline in profitability has been attributed to increased expenditure on expanding Zomato’s hyperlocal quick commerce platform, Blinkit. Despite the short-term impact on margins, the company is witnessing robust growth in its key business segments, including food delivery and quick commerce.
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Key Highlights of Zomato Q3 Results
- Revenue Growth: The company’s revenue from operations rose to ₹5,405 crore in Q3FY25, up from ₹3,288 crore in the corresponding quarter of FY2023-24.
- Gross Order Value (GOV): The Gross Order Value for Zomato’s B2C businesses—including food delivery, quick commerce, and dining-out services—grew by 57% YoY to ₹20,206 crore.
- Segment Performance: While revenue in the food delivery segment increased by nearly 22%, Blinkit’s revenue more than doubled during the quarter, highlighting its rapid growth trajectory.
- EBITDA Growth: Zomato’s earnings before interest, taxes, depreciation, and amortization (EBITDA) improved significantly to ₹162 crore, compared to ₹51 crore in the same quarter last year.
Blinkit: Rapid Expansion Amid Mounting Losses
Zomato’s quick commerce subsidiary Blinkit is experiencing rapid growth but continues to operate at a loss. The platform surpassed the milestone of 1,000 operational stores in the December quarter and aims to reach 2,000 stores by the end of 2025, a year ahead of its earlier projections.
However, Blinkit’s aggressive expansion strategy has weighed on Zomato’s profitability. The platform reported a net loss of ₹103 crore for the quarter. Blinkit’s EBITDA also fell into the red, with a loss of ₹30 crore compared to a positive EBITDA of ₹48 crore in the same period last year.
Despite these challenges, Zomato remains optimistic about Blinkit’s potential. The company stated that while losses are expected for another one to two quarters, they anticipate improved utilization of new stores over time, which should enhance profitability.
Rising Expenses and Competitive Pressure
Zomato’s total expenses for the quarter surged to ₹5,533 crore, up from ₹3,383 crore a year earlier. The increased spending is primarily due to the company’s investments in expanding Blinkit and other strategic initiatives.
The quick commerce market, where Blinkit operates, is highly competitive. Rivals such as Swiggy Instamart, Zepto, Walmart-backed Flipkart, and Tata Group’s BigBasket are intensifying the battle for market share. Nevertheless, Zomato retains a strong position, with Blinkit commanding a 46% market share in the segment.
To stay ahead, Zomato is investing heavily in infrastructure, including new warehouses and dark stores, to support faster deliveries in urban centers. These investments, combined with discounts and free delivery promotions, are aimed at solidifying its leadership in the quick commerce space.
Strategic Investments in New Business Segments
Beyond quick commerce, Zomato is also focusing on its “going-out” segment, which includes dining, live events, and ticketing services. This vertical, acquired from One97 Communications (the parent company of Paytm), is expected to remain loss-making for at least another year. However, the company sees it as an important long-term growth driver.
Additionally, Zomato has acknowledged that rising employee costs, driven by fierce competition for talent, may put further pressure on margins in the near term. Despite these challenges, the company remains confident in its ability to deliver sustainable growth.
Brokerages and Market Response
Shares of Zomato fell by 3.14% on Monday, closing at ₹240.95 apiece on the BSE. Despite the short-term dip, analysts remain optimistic about Zomato’s long-term prospects.
Brokerage firm JM Financials noted that Zomato is the only major hyperlocal delivery player in India currently generating free cash flows without compromising growth. With food delivery accounting for over 38% of total revenue and projected to grow at an annual rate of 30% over the next five years, Zomato is seen as a resilient player in the industry.
Experts also highlighted Zomato’s strong execution capabilities, which position it well to fend off competition. “We continue to prefer Zomato over Swiggy due to its ability to balance growth and profitability. The recent correction in stock prices makes it an attractive investment,” JM Financials stated in its analysis.
Outlook for Zomato’s Growth
While Zomato Q3 results faces near-term challenges in the form of rising costs and competitive pressures, its strategic investments in quick commerce and other verticals position it for long-term success. The company’s strong market share, innovative business model, and ability to generate cash flows make it a leader in the hyperlocal delivery space.
Disclaimer: This article is for informational purposes only and does not constitute financial advice. Investors should consult certified financial experts and conduct thorough research before making investment decisions.
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