Zomato logs third straight quarter of profit in Q3, revenue up 69%

Online food delivery behemoth Zomato has exceeded analysts’ expectations by reporting a net profit of Rs 138 crore in the third quarter of FY24. This impressive performance marks a significant turnaround from the year-ago period when Zomato reported a net loss of Rs 347 crore.

Factors driving strong performance

Zomato’s stellar performance in the third quarter can be attributed to increased demand during prominent events such as the Cricket World Cup and the festive season.

The surge in demand has bolstered the company’s revenue streams, particularly in its food delivery business, which witnessed a remarkable 48 per cent growth during the quarter.

Rapid growth in revenue

The company’s consolidated revenue soared to Rs 3,288 crore during the quarter, marking a remarkable 69 per cent increase compared to the same period last year.

Zomato’s contribution margin, a critical profitability metric, saw a notable increase to 7.1 per cent, up from 6.6 per cent in the second quarter. This growth was attributed to the successful implementation of a customer fee on the food delivery platform.

Promising performance across business segments

Zomato’s quick commerce division also showcased remarkable growth, with revenue more than doubling during the quarter. Moreover, the gross order value (GOV) at Blinkit, Zomato’s grocery delivery arm, more than doubled, further underscoring the company’s robust performance across multiple segments.

Challenges and outlook

Despite its overall strong performance, Zomato acknowledged that the growth in its food delivery segment fell short of expectations due to subdued demand. However, the company remains optimistic about future prospects and expects the GOV to increase by more than 20 per cent in the coming quarters.

Market response

Following the announcement of its strong Q3FY24 results, Zomato’s shares witnessed a positive trajectory, rising more than 3 per cent. However, at the close of trading, Zomato shares ended 1 per cent higher at Rs 142 on the Bombay Stock Exchange (BSE).

JPMorgan has maintained an ‘overweight’ call on the stock after the food delivery company.

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