Zomato, the leading food delivery company, reported a sharp 57% decline in its consolidated net profit for the December quarter, amounting to Rs 59 crore, compared to Rs 138 crore in the same period last year. Despite this drop, the company saw a robust 64% increase in revenue from operations, which stood at Rs 5,405 crore in Q3FY25, up from Rs 3,288 crore in the previous year.
Shares of Zomato plummeted by more than 7% after the announcement, closing at Rs 230.70 on the National Stock Exchange (NSE). This dip followed the release of the company’s quarterly earnings during market hours, with the stock dropping 3% to Rs 241.75 at one point in the day.
In addition to the annual decline, Zomato’s profit after tax (PAT) also dropped by 66% sequentially, from Rs 176 crore in Q2FY25. On the other hand, the company’s topline grew by 13% compared to the previous quarter’s Rs 4,799 crore.
Zomato’s gross order value (GOV) in the B2C businesses grew by 57% year-on-year (YoY) and 14% quarter-on-quarter (QoQ), reaching Rs 20,206 crore in Q3FY25. Despite this positive growth, Zomato acknowledged a broad-based slowdown in demand that began in the second half of November, which it attributed to the ongoing market conditions. In its shareholder letter, the company clarified that while the short-term slowdown is noticeable, it remains confident in achieving its long-term goal of 20%+ YoY GOV growth for the food delivery business, supported by solid fundamentals.
On a like-for-like basis (excluding the impact of its acquisition of Paytm’s entertainment ticketing business), the GOV grew by 52% YoY and 12% QoQ. The food delivery GOV rose 17% YoY, while the Quick Commerce segment posted a massive 120% YoY growth. Additionally, Zomato’s going-out GOV surged by 191% YoY, reflecting significant growth in that segment.
Regarding profitability, Zomato’s consolidated adjusted Earnings Before Interest, Taxes, Depreciation, and Amortisation (EBITDA) grew by 128% YoY, driven by a strong performance in food delivery, which improved its adjusted EBITDA margin to 4.3% of GOV, compared to 3% a year ago. However, sequentially, adjusted EBITDA declined by 14%, or Rs 45 crore, mainly due to higher investments in Zomato’s quick commerce expansion. CEO Deepinder Goyal revealed that the company’s accelerated investment strategy in its quick commerce business was the primary reason for the increased losses in this segment, where quarterly losses rose by Rs 95 crore QoQ.
Zomato added 368 new stores in the past two quarters, accounting for 37% of its total store network of 1,007 stores. The company also added 1.3 million square feet of warehousing space, which now makes up over 30% of its total warehousing network. Zomato expects to reach its target of 2,000 stores by December 2025, ahead of its previous goal of 2026.
Zomato also highlighted its ongoing competition in the market, noting that despite pressure on margins, there has been no loss of core customers. The company remains positive about Blinkit’s performance, which has seen strong revenue growth. Blinkit reported Q3FY25 revenue of Rs 1,399 crore, up 117% YoY, although its quick commerce (QC) segment posted an EBITDA loss of Rs 103 crore.
The going-out business, operated via the ‘District’ app, also saw impressive growth, with revenue surging by 255% YoY and 68% QoQ, although it still reported an adjusted EBITDA loss of Rs 17 crore.
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