Zomato on Monday recorded fiscal third quarter earnings with profit recording a significant drop of 57.25 per cent to Rs 59 crore, primarily due to the ongoing store expansion. The company had posted profit at Rs 138 crore recorded during the third quarter of previous financial year. Zomato said that its margins continued to face pressure from increased spending on opening more centres to fulfill orders at its Blinkit platform. The food delivery company posted revenue from operations at Rs 5405 crore, up 64.39 per cent as against Rs 3288 crore during the third quarter of FY24. The company EBITDA stood at Rs 162 crore.
Akshant Goyal, CFO of Zomato, said, “As we continue to bring forward store expansion, our networks may have to carry a greater load of under-utilized stores which will impact near-term profits in the next one or two quarters. These investments will however also likely result in GOV growth remaining meaningfully above 100%, at least for FY25 and FY26. Once we come out from this period of expansion, the business is likely to turn sharply from being loss making to becoming meaningfully profitable as a larger part of our business starts comprising mature stores compared to newly added ones.”
Investments on expansion drive
In the last two quarters, Zomato added 368 net new stores (152 in Q2FY25 and 216 in Q3FY25) accounting for about 37 per cent of its total store network of 1,007 stores. In the same time period, it also added 4 warehousing spaces of 1.3 million sqft, accounting for 30%+ of its overall warehousing network. “New warehouses take longer to ramp up than new stores, and hence are even more margin-dilutive in the short term (as compared to new stores). We also ramped-up the digital marketing spends in Q3FY25. As a result, the average monthly transacting customer (MTC) growth gathered pace in Q3FY25 with average MTC of 10.6 million during the quarter. The customer acquisition cost (CAC) for these new customers remains attractive. In addition to the operating expenditure mentioned above, we have also incurred capital expenditure of around Rs 370 crore in the last two quarters for setting up the 368 net new stores and 1.3 million sqft of warehousing space,” said Albinder Dhindsa, CEO, Blinkit.
As the company continued to expand its network rapidly, Zomato expected the quarterly capex to stay elevated at these levels for the next few quarters, said Albinder Dhindsa, while adding that the higher capex is also the key reason behind the quarterly increase in depreciation. “As mentioned earlier, we expect the steady-state impact of depreciation to be about 0.5-1 per cent of GOV,” he said.
Q3 performance across business segments
Zomato said that Gross Order Value (GOV) of its B2C businesses grew 57 per cent YoY to Rs 20,206 crore in Q3. On a like-for-like basis (excluding the impact of the acquisition of Paytm’s entertainment ticketing business), GOV growth was 52 per cent YoY.
Zomato’s GOV for the food delivery business grew by 17 per cent from last year but only 2 per cent on a quarter-on-quarter basis. The management attributed the muted growth in the food delivery GOV to a broad-based demand slowdown. The quick commerce GOV grew by 120 per cent YoY, while it posted a growth of 27 per cent sequentially. The going-out business posted GOV growth of 191 per cent YoY. Zomato said that its B2B business Hyperpure’s revenue grew 95 per cent YoY.
On a consolidated basis, Zomato’s a food ordering and delivery business posted revenue at Rs 2072 crore, Hyperpure posted Q3 revenue at Rs 1671 crore, quick commerce recorded revenue of Rs 1399 crore and going out segment reported revenue at Rs 259 crore.
On an EBITDA basis, Blinkit reported an EBITDA loss of Rs 30 crore, in comparison to a positive EBITDA of Rs 48 crore from the same quarter last year. Blinkit also reported a net loss of Rs 103 crore.