Zomato Q3 Results: Muted Performance As PAT Declines by 57% While Revenue Up by 64.4%; Shares Slip 7%

Zomato India, the food delivery giant, has announced its financial results for the October to December quarter of FY 2025. The company reported a significant decline in its profit after tax (PAT) due to challenges in the current quarter, even as revenue witnessed robust growth.

Zomato Q3 Financial Highlights

Profit After Tax (PAT) for Q3 FY25 stood at Rs. 59 crore, a sharp decline of 57.25% year-on-year (YoY) from Rs. 138 crore in Q3 FY24. Quarter-on-quarter (QoQ), PAT dropped 66.5% from Rs. 176 crore in Q2 FY25.
Meanwhile, the revenue surged 64.4% YoY to Rs. 5,405 crore from Rs. 3,288 crore in the corresponding quarter in FY24. EBITDA improved to Rs. 162 crore from Rs. 51 crore YoY. Whereas the EBITDA margin rose to 3% from 1.6% in the same period last year.

10-Minute Delivery and New Initiatives

Zomato's CEO, Deepinder Goyal, emphasized the importance of reducing delivery times to drive incremental demand for restaurant food.
"We have launched Bistro, targeting the in-office market with quick access to snacks, meals, and beverages within 10-15 minutes. Additionally, we introduced a quick delivery feature enabling restaurants to offer under-15-minute deliveries using curated menus and a dedicated delivery fleet," Goyal explained.

Expansion Strategy On The Cards

Zomato is aggressively investing in its quick commerce segment, pulling forward growth investments that were initially planned over the next few quarters. The company, as mentioned in the earnings report, aims to achieve its target of 2,000 stores by December 2025, a year ahead of its previous guidance. In Q3 FY25, Zomato added 216 net new stores, bringing its total store count to 1,007. Additionally, 1.3 million square feet of warehousing space was added, accounting for over 30% of its warehousing network. While new warehouses take longer to ramp up compared to new stores, the company remains optimistic about its long-term profitability.

Zomato Expects Losses in the Near Term

In a letter to shareholders, Zomato acknowledged that near-term losses are likely due to its aggressive expansion strategy. The company stated: "As we continue to expand our network, underutilized stores will impact profits in the next one or two quarters. However, we anticipate strong GOV growth exceeding 100% for FY25 and FY26. Post this expansion phase, we expect to transition from being loss-making to significantly profitable as a larger portion of our business shifts to mature stores."

Zomato Share Performance Today

Zomato shares opened at Rs. 251.00 on January 20 but declined sharply following the announcement of disappointing Q3 results. By market close, the stock was down 7.27%, ending at Rs.230.70.