Zomato - Q4 Review Of Financial Result

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By MOFSL

2024-05-14T11:41:37.000Z

6 mins read

Zomato - Q4 Review Of Financial Result

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2024-06-10T10:35:06.000Z

Zomato – Q4 Review of Financial Result

As the results season aligns with the upcoming elections, investors and traders are closely watching various companies, including Zomato. Following its first-time profits last quarter, there's heightened anticipation for its latest financial numbers. This blog delves into Zomato's performance in the final quarter of FY 2024, offering insights to help investors weigh their investment decisions, whether to hold onto their investments or consider profit-taking.

Zomato Ltd, India's top food delivery platform, has demonstrated exceptional financial performance in Q4 2024, showcasing its unwavering commitment to growth and innovation, causing significant industry attention. The company displayed a significant increase to its consolidated net profit of ₹175 crores, an improvement from the ₹188 crore loss in the previous year, attributed to strategic initiatives, expanding customer base, and growing service popularity.

But what’s helped Zomato to bring in these numbers on the table?

Zomato's success can be attributed to its diverse business segments, each contributing significantly to the company's overall performance. The core food ordering and delivery business in India remains the bedrock of operations, with revenue increasing significantly in Q4 FY24 to ₹1,739 crores and to ₹6,361 crores for the full financial year FY24. Not only this, but Blinkit, Zomato's quick commerce arm, generated ₹769 crores in Q4 FY24, doubling its Q4 FY23 revenue. Blinkit also turned adjusted EBITDA positive in March 2024, demonstrating Zomato's strategic focus on profitability and operational efficiency.

Robust Profitability Metrics

Zomato's financial performance in Q4 FY24 was impressive, with a consolidated adjusted EBITDA of ₹194 crores. The company's contribution margin expanded due to its strategic decision to charge a platform fee on all grocery and food orders, demonstrating its ability to optimize revenue streams.

Aggressive Expansion Plans

Nonetheless, the company is aiming to expand its quick commerce segment, adding 75 new stores in Q4 FY24, bringing its total to 526. The company plans to add 100 more stores in Q1 FY25, with the ultimate goal of reaching 1,000 stores by the end of FY25. This growth demonstrates Zomato's commitment to scaling operations and capturing a larger share of the market. The market value for this industry is expected to blast beyond $5 billion by 2024 and BlinkIt stands at the top leaving its rivals at the bay.

Operational Excellence and Customer Delight

Zomato's success is not just measured by financial metrics but also by its exceptional customer experiences. In March 2024, the company achieved an average delivery time of 12.5 minutes, with 75% of orders delivered within two minutes of the promised time. The accuracy of fulfilling items exceeded 99%, highlighting Zomato's commitment to operational efficiency and customer satisfaction, crucial for brand loyalty and long-term growth.

Embracing Innovation: Zomato Everyday

Zomato is expanding its "Zomato Everyday" service, offering fresh, home-cooked meals starting at ₹89. After a successful pilot in Gurugram, the company plans to expand to Bengaluru and Mumbai. The gradual expansion represents a significant opportunity to tap into the growing demand for affordable home-cooked meals. Zomato's extensive delivery network and technological capabilities make it well-positioned to capitalize on this emerging market segment.

Staying in touch with its roots!

Zomato has surrendered its payment aggregator and wallet license to the Reserve Bank of India (RBI) to focus on its core competencies. This move aligns with Zomato's strategy of collaborating with established payment partners like ICICI Bank, which introduced the "Zomato UPI" solution in May 2023. This allows Zomato to focus on enhancing its core offerings and delivering favourable customer experiences.

Employee Empowerment and Retention

Zomato is aiming to empower and retain its workforce by seeking shareholder approval for a fresh employee stock option plan (ESOP) worth over ₹3,500 crores (approximately $424 million). This initiative aligns employees' interests with the company's long-term success and fosters a culture of innovation among senior employees. By empowering the workforce through incentive programs, Zomato aims to drive a high-performance culture and retain top talent, ensuring sustained growth and competitive advantage.

Challenges and Opportunities Ahead

Zomato, despite its impressive Q4 FY24 performance, faces both challenges and opportunities in the food tech industry. The company faces rising competition from Swiggy, which has relaunched its home style meal delivery service, "Swiggy Daily," in Bengaluru. The nascent quick commerce segment requires Zomato to navigate its complexities. However, the growing demand for convenient and affordable food delivery services and the adoption of digital platforms presents an opportunity for Zomato to expand its reach and solidify its market position.

Zomato's performance in Q4 FY24 underscores its dedication to growth, innovation, and operational efficiency. With a wide-ranging business portfolio, ambitious expansion strategies, and a strong emphasis on profitability, Zomato is well-positioned for sustained growth. As the food tech sector evolves, Zomato must stay attuned to changing consumer tastes, harness technological progress, and nurture innovation to stay competitive. Backed by a strong foundation and visionary leadership, Zomato is poised to overcome challenges and seize opportunities ahead.

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