Zomato's Net Profit Declines While Blinkit Continues to Lead the QC Space
On January 20, foodtech giant Zomato released its financial results for the third quarter (Q3) of the fiscal year 2024–2025 (FY25). 57% Profit Slumps in Q3 of FY25: The foodtech giant's consolidated net profit fell 57.2% to INR 59 Cr from INR 138 Cr in the same quarter the previous year. Profit fell 66% sequentially from INR 176 Cr in Q2 of FY25. Among the main causes of the drop in the bottom line were a slowdown in the food delivery market and an increase in Blinkit's adjusted EBITDA loss as a result of growing competition in rapid commerce. According to Akshant Goyal, Zomato's chief financial officer, the company's rapid commerce division would continue to lose money in the foreseeable future. As the company keeps expanding its locations, its networks might have to handle more underutilised stores, which will affect short-term earnings in the upcoming quarter or two. However, these investments will also probably keep Gross Order Value (GOV) growth far over 100%, at least in FY25 and FY26.
Financial Outlook of Zomato
In the meantime, Zomato's operational revenue increased by more than 64% to INR 5,405 Cr in the reviewed quarter, up from INR 3,288 Cr in the same period the previous year. It increased 12.6% sequentially from Q2 FY25's INR 4,799 Cr. With ESOP expenses excluded, Zomato's consolidated adjusted EBITDA increased 120% year over year (YoY) to INR 285 Cr in Q3 FY25. This was mostly due to gains in the food delivery adjusted EBITDA margin (as a percentage of GOV), which increased from 3% to 4.5% during the reviewed quarter. From INR 2,062 Cr in Q3 FY24 to INR 2,413 Cr in Q3 FY25, the segment's adjusted revenue increased by 17%. In Q3 FY25, the food delivery vertical's GOV increased 17% year over year to INR 9,913 Cr.
The company had anticipated 20%+ YoY GOV growth, which this GOV growth fell just short of. Additionally, the food delivery GOV climbed 2% sequentially, which was less than the 5% sequential rise in Q2 FY25. Rakesh Ranjan, the CEO of Zomato's food delivery division, provided an explanation for the slowdown in the food delivery vertical. He stated that Zomato is currently seeing a widespread slowdown in demand that began in the second part of November. Despite the present slowdown, the company is optimistic that it will soon recover and is still confident in the long-term outlook of 20%+ yearly GOV growth in the industry due to the solid foundations.
The Sustainability of the 10-Minute Food Delhivery
In December 2024, Blinkit released Bistro, a 10-minute meal delivery app. Later this month, Zomato also launched a delivery service called Bistro that takes 15 minutes.
Zomato CEO Deepinder Goyal commented on this emphasis on meal deliveries that take ten to fifteen minutes, stating that research indicates that reducing delivery times generates additional demand for restaurant food and results in "meaningful expansion" of the platform's demand.
"We think deliveries of ten to fifteen minutes can result in something like." According to Goyal, "This is also the reason we tried Zomato Instant, but we were unable to identify the best business plan and had to shut it down."
According to him, the goal of the Bistro is to appeal to the sizable "in-office market," which demands easy access to meals, snacks, and drinks in ten to fifteen minutes. Although he acknowledged that vending machines and on-site vendors currently serve this market, he said that the current food delivery solutions do not fairly serve people across geographic areas. However, Zomato is presently working to determine whether Bistro is a good fit for the market.
In order to create a proof of concept, Bistro is building infrastructure and collaborating with chefs, producers, food experts, and eateries. "The company hopes that this platform could be replicated by different restaurants and cuisine types where demand exists," Goyal continued, adding that if the brand is successful in finding product-market fit and profitability.
Nitin Konde
