Zomato has released its financial results for Q3 FY25, showing impressive revenue growth but a significant dip in year-on-year (YoY) profits. Despite a 64.4% increase in its operating revenue, profits for the period fell by 57%. The company’s diversified business model continues to thrive, but challenges remain as Zomato navigates market dynamics.
Revenue Growth Across Business Segments
Zomato’s revenue from operations for the third quarter of FY25 reached Rs 5,405 crore, a substantial jump from Rs 3,288 crore in the same quarter last year. This marks a 64.4% increase, which reflects a growing demand for Zomato’s foodtech and quick-commerce services. Compared to the previous quarter (Q2 FY25), revenue grew by 12.6%, showcasing consistent performance.
The company operates several units beyond its core food delivery platform, contributing to the overall revenue growth. Zomato’s diverse portfolio includes the food marketplace, Hyperpure (B2B farm-to-fork supplies), Blinkit (quick commerce), and the ‘Going-out’ segment, which allows users to discover restaurants and book entertainment events.
Here’s a quick look at Zomato’s revenue breakdown for Q3 FY25:
- Food Ordering and Delivery: Rs 2,072 crore (38.3% of total revenue).
- Hyperpure (B2B Business): Rs 1,671 crore (13.4% increase YoY).
- Quick Commerce (Blinkit): Rs 1,399 crore (117% growth YoY).
- Going-out Segment and Other Activities: Contributed the remaining revenue.
Zomato’s diverse segments reflect a strong positioning in the food tech space, with Blinkit’s rapid growth being a standout.
Blinkit’s Explosive Growth
One of the most significant highlights in Zomato’s financial performance this quarter is the remarkable growth of Blinkit. The quick-commerce arm of Zomato saw its revenue skyrocket by 117% YoY, from Rs 644 crore in Q3 FY24 to Rs 1,399 crore in Q3 FY25. This sharp increase reflects the growing demand for hyper-local, instant delivery services, particularly in the FMCG and kirana sectors.
For context, Zomato recently made a substantial investment of Rs 500 crore in Blinkit, raising its total investment in the company to Rs 2,800 crore since its acquisition. Blinkit’s success in the past quarter underscores the potential of the quick commerce sector and its role in Zomato’s long-term strategy.
Profit Decline Despite Revenue Surge
While Zomato’s revenue surged, its profit figures were less favorable. The company reported a profit of Rs 59 crore in Q3 FY25, marking a 57% decline from the previous year. This decrease in profitability is mainly attributed to rising expenses across various verticals.
A closer look at the expenses reveals the following:
- Delivery and Related Charges: Rs 1,450 crore (26% of total revenue).
- Stock Purchases: Rs 1,500 crore (after adjusting for changes in inventories).
- Employee Benefits: Rs 689 crore.
These growing costs, particularly in delivery and logistics, have affected Zomato’s profit margins, despite the revenue growth. This is a common challenge in the foodtech industry, where operational costs are high, especially for delivery-based services.
Non-Operating Income Boosts Overall Revenue
To offset some of the challenges on the operational side, Zomato also earned Rs 252 crore in non-operating income in Q3 FY25. This income largely stemmed from interest and gains on financial assets, helping to push its total revenue to Rs 5,657 crore for the quarter.
This additional income highlights the importance of non-core business activities in strengthening Zomato’s financial position, though the bulk of the company’s revenue still comes from its core operations.
Looking Forward: Zomato’s Growth Strategy
As Zomato navigates through Q3 FY25, the focus remains on continued growth across all segments, particularly Blinkit. The sharp revenue increase in the quick-commerce segment shows that Zomato is well-positioned to capitalize on the fast-evolving consumer demand for quick, hyper-local deliveries. However, the company must manage rising operational costs and continue to optimize its delivery and stock management processes to improve profitability.
Zomato’s investment in Blinkit, along with its solid performance in other areas, positions the company to grow in the highly competitive foodtech sector. The coming quarters will likely showcase whether the company can balance revenue growth with profitability improvements as it expands its market footprint.
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