Introduction
Zomato, India’s leading food delivery platform, released its Q3 FY25 financial results, showcasing a mix of strong revenue growth and declining net profits. The company’s performance was shaped by robust growth in its core food delivery segment and rapid expansion of its quick commerce business, Blinkit.
Company Background
Founded in 2008, Zomato started as a restaurant discovery platform and quickly evolved into a comprehensive food delivery service. Headquartered in Gurugram, India, Zomato operates in over 25 countries, offering services like food delivery, restaurant reservations, and subscription-based dining programs. The company’s public listing in July 2021 marked a significant milestone, positioning it as a key player in India’s growing food-tech industry. With a strong focus on innovation, Zomato has expanded into quick commerce through its acquisition of Blinkit (formerly Grofers) in 2022, aiming to capture the growing demand for fast grocery deliveries.
Financial Highlights
Revenue Surge
Zomato’s revenue from operations surged by 64% year-on-year, reaching ₹5,405 crore, compared to ₹3,288 crore in the same quarter last year. This significant growth is primarily attributed to the expansion of its food delivery and quick commerce segments.
Profit Decline
Despite revenue growth, Zomato reported a 57% decline in net profit, amounting to ₹59 crore compared to ₹138 crore in Q3 FY24. The profit dip is attributed to higher operational costs associated with scaling Blinkit.
Segment Analysis
Food Delivery
- Adjusted Revenue: Food delivery revenue rose to ₹2,413 crore, up from ₹2,062 crore in Q3 FY24.
- Gross Order Value (GOV): The GOV for the segment increased by 17% year-on-year, reaching ₹9,913 crore.
- Customer Base: The average monthly transacting customers dipped slightly to 20.5 million, down from 20.7 million in the previous quarter.
Blinkit (Quick Commerce)
- Revenue Growth: Blinkit’s revenue grew by 117% year-on-year, reaching ₹1,399 crore.
- GOV: Quick commerce GOV surged by 120%, reaching ₹7,798 crore.
- Losses: Blinkit’s adjusted EBITDA loss widened to ₹103 crore, up from ₹89 crore in Q3 FY24. Increased competition and aggressive expansion efforts contributed to the higher losses.
Strategic Developments
Blinkit Expansion
Zomato has accelerated the expansion of Blinkit, aiming to achieve 2,000 stores by December 2025, a year ahead of its original target. As of Q3 FY25, the company surpassed 1,000 stores, reaching this milestone one quarter early.
Cash Reserves
The company’s cash balance rose to ₹19,235 crore, bolstered by net proceeds of ₹8,446 crore from a qualified institutional placement (QIP).
Future Growth Prospects
Focus on Technology
Zomato continues to invest heavily in technology to improve the user experience. The company is leveraging artificial intelligence and machine learning to optimize delivery routes, enhance order accuracy, and predict customer preferences. This focus on technology is expected to drive operational efficiency and customer satisfaction.
Expansion in Tier-2 and Tier-3 Cities
With rising internet penetration and disposable incomes, Zomato sees immense potential in India’s smaller cities. The company is strategically expanding its presence in Tier-2 and Tier-3 cities to tap into new customer segments.
Sustainability Initiatives
Zomato has committed to achieving carbon neutrality by 2030. Efforts include transitioning to electric delivery vehicles, reducing food wastage, and adopting sustainable packaging solutions. These initiatives align with growing consumer demand for environmentally responsible businesses.
International Growth
Zomato is exploring opportunities to expand its international footprint, focusing on high-growth markets in Southeast Asia and the Middle East. By adapting its services to local preferences, Zomato aims to strengthen its position in the global food-tech industry.
Challenges and Outlook
Demand Slowdown
Zomato observed a broad-based slowdown in demand starting in November 2024, impacting the food delivery business. The company has identified efforts to improve delivery times and expand service offerings as key drivers for future demand.
Leadership Optimism
Despite the profit decline, Zomato’s leadership remains confident about the company’s long-term growth trajectory. They aim to balance growth with profitability by optimizing operations across all business segments.
Conclusion
While Zomato’s Q3 FY25 results highlight impressive revenue growth, they also underscore challenges in managing profitability amid aggressive expansion. The company’s strong focus on technology, sustainability, and market expansion positions it well for long-term success. The success of Blinkit and its broader operational strategy will likely play a pivotal role in shaping Zomato’s performance in the coming quarters.
