Zomato profits dragged down 57% amid ‘broad-based demand slowdown’

Food aggregator Zomato saw its profits in the third quarter of the fiscal year 2025 plunge by over half compared to the same quarter of the previous fiscal, amid what it termed a "demand slowdown".

Zomato on Monday reported a profit of Rs 59 crore for the third quarter (Q3) of the fiscal year 2025, a decline of 57.24% compared to Rs 138 crore in the same quarter of the previous financial year.

Zomato's revenue from operations was up 64.35% to Rs 5,405 crore in the third quarter of the financial year 2024-25, against Rs 3,288 crore in the same quarter of the previous year, according to a BSE filing. Meanwhile, profit after tax (PAT) was down by 66.47% compared to Rs 176 crore reported in Q2 FY25 on a sequential basis.

The company’s online food delivery business revenue rose 21.59% to Rs 2,072 crore in the October to December quarter results, compared YoY with Rs 1,704 crore in the same period the previous year.

The Deepender Goyal-led company, in its letter to shareholders, attributed the slowdown in the company's food delivery segment to a “broad-based demand slowdown."

Its B2B vertical Hyperpure’s revenue rose 94.52% to Rs 1,671 crore in Q3 against Rs 859 crore in the same period last year.

Zomato’s going out vertical saw a 254.79% rise with Rs 259 crore in revenue compared to Rs 73 crore last year. Zomato has launched District, a separate app for its events and ticketing business, after acquiring Paytm Insider.

Zomato Ltd's expenses for the October to December quarter rose 63.55% to Rs 5,533 crore, compared year-on-year with Rs 3,383 crore in the previous year. Its delivery expenses termed as 'delivery and related charges' 35.76% to Rs 1,450 crore in the October to December quarter, compared year-on-year with Rs 1,068 crore in the same quarter the previous year.

Blinkit back in red

Blinkit, which is Zomato’s quick commerce arm, saw its revenue grow 117.23% to Rs 1,399 crore, compared to Rs 644 crore last year. The foodtech major had recently infused Rs 500 crore into Blinkit. In terms of average order value (AOV), Blinkit recorded Rs 707 in Q3, up from Rs 635 last year.

However, Blinkit posted a net loss of Rs 103 crore in the quarter. On a management call, it attributed the losses to its growth investment. The management stated that Blinkit’s goal of reaching 2000 stores by December 2026 will be reached by the end of calendar year 2025. It has already crossed the 1,000 store mark.

Previously, in its annual results for FY24, the company announced its plans to increase to 1,000 quick commerce stores by March 2025. It expects to reach 2,000 stores by the end of 2026 while remaining profitable.

A dark store is a warehouse located close to high demand localities which enables quick deliveries.

“In the last two quarters, we have added 368 net new stores (152 in Q2FY25 and 216 in Q3FY25), accounting for about 37% of our total store network of 1,007 stores,” said Albinder Dhindsa, CEO, Blinkit.

“We have also incurred capital expenditure of about Rs 370 crore in the last two quarters for setting up the 368 net new stores and 1.3 million square feet of warehousing space. These spends largely comprised fit-outs (racks, cold storage) and IT hardware at the stores and warehouses. As we continue to expand our network rapidly, we expect the quarterly capex to stay elevated at these levels for the next few quarters. The higher capex is also the key reason behind the quarterly increase in depreciation,” added Dhindsa.

The quick commerce segment witnessed wide adoption in Indian cities, making Blinkit rework its strategy. Blinkit has been focusing on investing in its dark store infrastructure in a staggered manner, but due to competition, it is looking to get on the growth path again.

"The biggest impact of the intensifying competition has been the acceleration in customer awareness and adoption of quick commerce. We have seen this play out in the early days of the food delivery business as well," the company said in an investor presentation.

Zomato’s cash balance stands at Rs 19,235 crore, largely on account of proceeds from its QIP.

The shares of Zomato closed 7.12% lower at Rs 240.95 after Monday's trading session, compared to Rs 248.75 at the previous market close.