Zomato reports 389% rise in Q2 consolidated net profit: key takeaways

Food delivery platform Zomato reported 389% growth in its consolidated net profit at Rs 176 crore in the July-September quarter, compared with Rs 36 crore a year ago. It also reported a 68% year-on-year (YoY) jump in July-September revenue at Rs 4,799 crore. Its chief executive Deepinder Goyal, chief financial officer Akshant Goyal and Blinkit chief executive Albinder Dhindsa address some of the business questions in their shareholder letter.

Here are the key takeaways:

On the proposed fundraise:

• Fundraise meant to strengthen the company’s balance sheet
• The business is now generating cash but needs to enhance the cash balance given the competitive landscape and the large scale of Zomato’s business
• To ensure that the company is on a level playing field with its competitors who continue to raise additional capital

Also Read | Zomato to raise Rs 8,500 crore via QIP to fight quick commerce competition

On Blinkit expansion:

• 152 net stores added in Q2 of FY25, with Rs 5 lakh gross order value (GOV) per store per day
• New stores now reach Rs 7 lakh of GOV per day in the first full quarter post launch
• Serving customers well in an area leads to more GOV from the same store
• These stores continue growing every quarter after that as well

On Blinkit economics:

• Most stores today are profitable with expanding margins
• Zomato is not seeing margin expansion at the aggregate level due to its investments in scaling the infrastructure
• New stores and warehouses take a few months to ramp up, ending up being margin-dilutive in the short term

Also Read | Blinkit unit economics hit in July-September on back of investment ramp up

On District (new app for going-out business):

• New app should be live in the next four weeks
• Currently, focused on migrating the business from Zomato and Paytm platforms to the new District app
• Going-out business saw a 171% YoY jump in Q2FY25 at Rs 1,849 crore

On cash balance:

• Cash balance reduced by Rs 1,726 crore from the previous quarter
• This is due to the deal consideration of Rs 2,014 crore for the acquisition of Paytm’s entertainment ticketing business.