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Zomato’s Strong Q3 Performance: Surpasses Profit Expectations, Drives Revenue Growth

8th February, 2024| By Business Desk
Zomato
Zomato | Credit: News24Online
  • Zomato reported a net profit of Rs 138 crore for Q3 FY24, surpassing analysts’ expectations and marking a significant improvement from the previous year’s loss of Rs 347 crore.
  • Consolidated revenue rose by 69%, reaching Rs 3,288 crore, with notable growth in both the food delivery and quick commerce divisions.
  • The company’s contribution margin increased to 7.1% due to effective revenue enhancement strategies, including the implementation of a customer fee on the food delivery platform.
  • Blinkit, Zomato’s grocery delivery arm, saw a doubling of gross order value (GOV), while the core food delivery business experienced a 27% growth, although it fell short of expectations due to subdued demand.
  • Despite challenges, including muted demand in the December quarter, Zomato remains optimistic about future growth prospects and its ability to sustainably expand its market presence and operational efficiency.

Zomato Ltd disclosed its financial performance for the third quarter of fiscal year 2024, revealing a consolidated net profit of Rs 138 crore, surpassing analysts’ expectations. This profit marks a significant improvement compared to the same period last year when the company reported a net loss of Rs 347 crore. The company’s robust performance was primarily driven by increased demand, particularly during events such as the Cricket World Cup and the festive season.

The consolidated revenue for the quarter stood at Rs 3,288 crore, marking a substantial increase of 69 per cent compared to the revenue of Rs 1,948 crore recorded in the corresponding period of the previous year. Notably, revenue from Zomato’s food delivery business witnessed a growth of 5 per cent during the quarter, while revenue from its quick commerce division more than doubled, indicating diversification and expansion within its business segments.

Zomato also reported a notable improvement in its contribution margin, a key measure of profitability, which increased to 7.1 per cent from 6.6 per cent in the preceding quarter. This improvement was attributed to the implementation of a customer fee on the food delivery platform, demonstrating effective revenue enhancement strategies.

In terms of gross order value (GOV), Zomato’s grocery delivery arm, Blinkit, experienced significant growth, more than doubling its GOV during the quarter. Meanwhile, the core food delivery business saw a growth of 27 per cent. However, Zomato acknowledged that the growth in its food delivery segment fell short of expectations due to subdued demand. Nevertheless, the company remains optimistic about future growth prospects, expecting the GOV to increase by more than 20 per cent in the forthcoming quarters.

The positive financial results led to a surge in Zomato’s stock price, with shares rising more than 3 per cent following the earnings announcement. However, at the close of trading, Zomato shares settled 1 per cent higher at Rs 142 on the Bombay Stock Exchange (BSE), reflecting investor sentiment in response to the company’s performance.

Looking ahead, Zomato’s CEO, Deepinder Goyal, expressed confidence in the company’s continued growth trajectory, emphasizing its commitment to maintaining both top-line growth and margin expansion. Goyal highlighted the strategic utilization of Zomato Gold as a tool for customer acquisition and retention, acknowledging the importance of remaining competitive on pricing in a dynamic market environment.

Despite challenges such as muted demand in the December quarter, Zomato remains focused on enhancing its platform’s supply ecosystem, with a continued emphasis on expanding its network of partner restaurants. The company’s strategic initiatives, coupled with its relentless focus on operational efficiency, position it favorably for sustained growth in the evolving landscape of the food delivery industry.