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Zomato Q3FY24 Results: Company expects adjusted revenue to grow at 50% over next quarters

Company reports an INR 390 crore year-on-year improvement in EBITDA and a 53 percent year-on-year (YoY) growth of the Consolidated Adjusted Revenue for the third quarter of 2024

Zomato’s Adjusted Earnings Before Interest, Taxes, Depreciation, and Amortization (EBITDA) had an INR 390 crore year-on-year improvement in Q3FY2024 with the EBITDA going from INR -265 crore in 2023 to INR 125 crore in 2024. Akshant Goyal, Chief Financial Officer of Zomato, also reported a 53 percent year-on-year (YoY) growth of the Consolidated Adjusted Revenue (12% QoQ) to INR 3,609 crore. He also added that for Zomato the Adjusted Revenue is expected to continue growing at 50 percent over the next few quarters.

Revenue expected to grow over 50 percent in coming quarters: “We don’t want to give guidance on individual businesses at a quarterly level because there are multiple factors there. There’s seasonality, there’s competition and so on. Our base case guidance continues to remain that our Adjusted Revenue should grow at 40%+ YoY for the foreseeable future. And it’s possible that at least over the next few quarters, that remains north of 50 percent,” said Goyal during the earnings call, adding that this does not mean the growth profile for all businesses will remain consistent to last quarter performance.

Zomato also claimed that specific improvements like increased automation of the customer support workflow have led to an approximate 20 percent decline in order cancellations and rejections, and a similar reduction in orders requiring support for food delivery.


Ads and platform fees help increase Gold’s contribution margin: Zomato’s Gold membership prices remain low to compete with other platforms but its contribution margin went from 6.6 percent in Q2 to 7.1 percent in Q3. Goyal said this was due to incremental improvements areas like ad-monetization and introduction of a platform fee for all customers, including Gold members, in July 2023. When asked about Gold’s specific contribution to the business, Goyal said the service will help retain customers.

“It [Zomato Gold] is being used tactically to acquire (and re-acquire) customers and hence the pricing of the membership program is much lower than what we would want it to be. Customers have more than one option and hence we have to remain competitive on pricing. We are also seeing a lot of customers switching platforms at the time of membership renewal depending on who is offering the lowest price. While there is no debate on the need for a loyalty program, we are yet to get to sustainable pricing here,” said Goyal.

However, Goyal also added that the platform fees will not fully recover the reduction in Gold customer delivery charges since the “overall objective of the business is to maximize absolute profits.”

Q4 may report drop in quick commerce performance: While answering queries on quarter-by-quarter performance, Goyal agreed that Q4 will likely show a drop compared to Q3 due to the lack of seasonal events like the World Cup or festival activities. He agreed that “the fourth quarter should be a bit more moderate or sober than what has been seen in the third quarter.”


New stores won’t hurt profits, assures Zomato: Going forward with their earlier decision to introduce more stores on the BlinkIt front, Zomato said that it does not anticipate a ‘cannibalisation impact’ on the business.

What is cannibalisation impact? It is an occurrence where a new product or service negatively affects the sale and demand of existing offerings, particularly if the new and old products cater to the same customer base. In such a case, the new product does not create new sales but redistributes existing sales.

Goyal said that the company decided to open the new stores after the existing stores hit a baseline of 50 – 60 percent utilization, indicating a need for higher supply in the area. “To that extent, we don’t see that as cannibalization but more as an improvement of service levels for all customers in that micro market,” said Goyal.

He also estimated the stores that opened in October 2023 will take another two months to hit contribution breakeven. Responding to queries about the contribution reaching 5 percent, the company said “the business is very young” to confidently estimate when it will hit the percent margin.

“We also added 40 net new stores this quarter, taking the total store count to 451 as at the end of the quarter. Despite the increase in store count, our average GOV per day, per store grew 17 percent QoQ reflecting healthy same store sales growth,” said Albinder Dhindsa, Founder and CEO of BlinkIt.

Special incentives for women gig workers: Zomato said it has launched a maternity insurance plan for women delivery partners, that offers financial assistance for women during pregnancy and childbirth. The company said the plan is available to all women delivery partners “who meet certain criteria of orders delivered through the Zomato platform” although it does not explain what these criteria are.


Plans to set-up a processing plant for food supplies: Stating that Hyperpure’s revenue grew 15 percent quarter-on-quarter (104 percent YoY) Deepinder Goyal, CEO of Zomato, voiced plans to set-up a plant for processing value-added food supplies including, sauces, spreads, pre-cut and semi-finished perishable products, among others.

“Over time, this has the potential to expand margins and drive higher engagement with our restaurant partners,” he said.

Further, Akshant Goyal told investors that the company expected the payback on this capital expenditure “to be very attractive.” Goyal said that the company will first try with one facility and take a call on expansion thereafter.

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I'm interested in the shaping and strengthening of rights in the digital space. I cover cybersecurity, platform regulation, gig worker economy. In my free time, I'm either binge-watching an anime or off on a hike.

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