Zomato is likely to focus on growing its quick commerce vertical over growing profits quickly in the near-term, the food delivery platform said in its earnings release on Monday.
What Happened: Zomato said it expects to add another 100 stores to support its Blinkit business and aims to get to reach 1,000 stores by the end of FY25.
The company added 75 net new stores in the fourth quarter, taking its store count to 526 stores—greater than the number of stores it added in the three preceding quarters put together. the division also turned adjusted EBITDA breakeven in the month of March 2024, the company added.
Consequently, the business’ profitability margins are likely to remain in the low single digits for the time being.
See Also: Big-Ticket Investors’ Net Worths Dip In Q4—But Jhunjhunwala Family, RK Damani Get Richer
Looking Ahead: “With this aggressive store expansion planned (almost 2x store count in 12 months), the overall Adjusted EBITDA in our business is likely to hover around zero for the next few quarters. In steady state, we expect a 4-5% Adjusted EBITDA margin (as a % of GOV),” CEO Deepinder Goyal was quoted as saying in the release.
He added that over the next few quarters, the aim is for the vertical to get Bengaluru and other large cities like Mumbai and Hyderabad to the penetration of Delhi NCR in terms of store footprint and gross order value. “This alone will lead to ~4x increase in our GOV,” Goyal said.
The group’s net profit jumped 27% quarter-on-quarter to ₹175 crore but missed analyst expectations. While Blinkit did manage to narrow its adjusted EBITDA-level losses to ₹37 crore from ₹89 crore in the preceding quarter, the business’ average order value — a key unit-level revenue metric — shrank slightly to ₹617 from ₹635, quarter on quarter.
Price Action: Zomato’s share price ended the session down 2.31% at ₹196.65 following the results.
Read Next: Apple’s iPhone Exports From India Nearly Double, Sights Set At ₹1 Lakh Cr For FY25
Don't miss a beat on the share market. Get real-time updates on top stock movers and trading ideas on Benzinga India Telegram channel.
© 2024 Benzinga.com. Benzinga does not provide investment advice. All rights reserved.