Zomato Ltd, a prominent player in the food delivery and quick commerce sectors, reported an impressive financial performance for the third quarter of the fiscal year, surpassing market expectations and demonstrating robust growth across various key metrics.
Record-Breaking Profits and Revenue Surge: The company announced a consolidated net profit of Rs 138 crore for the December quarter, marking a significant leap from previous quarters and a substantial turnaround from the year-ago period’s loss of Rs 367 crore. This profit figure not only exceeded street estimates but also underscored the company’s resilience and strategic prowess in navigating market challenges.
Consolidated adjusted revenue surged by 53% year-over-year (YoY) and 12% quarter-over-quarter (QoQ), reaching Rs 3,609 crore. Zomato CEO, Deepinder Goyal, attributed this remarkable growth to the company’s consistent performance, exceeding the stated expectation of 40%+ YoY growth, with the anticipation of sustained growth rates of 50%+ YoY.
Strategic Insights and Future Projections: Goyal highlighted the resurgence in Gross Order Value (GOV), with a growth rate of over 25% YoY, and anticipated continued growth momentum, projecting a 20%+ YoY growth trajectory. The company’s annualized Adjusted EBITDA profit exceeded Rs 1,000 crore, indicating a strong focus on margin expansion and operational efficiency.
While discussing the platform fee strategy, Goyal emphasized the company’s cautious approach, focusing on long-term viability and stakeholder welfare. He reiterated the company’s commitment to optimizing growth and margins while ensuring a balanced ecosystem for customers, restaurant partners, and delivery partners.
Blinkit Update and Expansion Plans: Zomato’s subsidiary, Blinkit, demonstrated remarkable growth with a 103% YoY GOV increase, driven by robust demand and strategic initiatives. Despite challenges, Zomato remains on track to achieve adjusted EBITDA break-even for Blinkit by Q1FY25, showcasing its commitment to sustained growth and profitability.
The company’s expansion efforts include the addition of 40 net new stores in the quarter, reflecting a strategic approach to scaling operations while maintaining healthy same-store sales growth.
Navigating Market Dynamics: In a subdued demand environment, particularly evident in the December quarter, Zomato continued to outperform industry peers, leveraging its expansive restaurant base and strong market presence. The company’s focus on enhancing service levels and optimizing operational efficiencies enabled it to mitigate the impact of market challenges effectively.
Zomato Gold and Margin Expansion: Zomato’s loyalty program, Zomato Gold, remains a key driver of customer acquisition and retention, although pricing dynamics continue to evolve. The company emphasizes the need for sustainable pricing strategies while acknowledging the competitive landscape and customer preferences.
Margin expansion remains a key focus area for Zomato, with incremental improvements across various business segments contributing to sustained profitability and operational excellence.
Key Financial Highlights: Zomato’s gross order value (GOV) for the quarter surpassed Rs 12,886 crore, reflecting robust growth across B2C businesses. Notably, food delivery GOV grew by 27% YoY, quick commerce GOV by 103% YoY, and Going-out GOV by 154% YoY. Consolidated adjusted EBITDA remained positive for the third consecutive quarter, reaching Rs 125 crore, a significant improvement compared to the same period last year.
Zomato’s stellar performance in the third quarter underscores its resilience, strategic agility, and commitment to delivering value to stakeholders amid evolving market dynamics. With a focus on sustainable growth, operational excellence, and customer-centric innovation, Zomato is well-positioned to capitalize on emerging opportunities and drive continued success in the dynamic landscape of the food delivery and quick commerce industries.
