Zomato Q3 Results: Profit Down 66%, Misses Estimates

Zomato reported a quarter of strategic investments and robust growth in key segments despite near-term challenges. The company’s consolidated adjusted EBITDA declined sequentially due to accelerated investments in expanding its quick-commerce store network, reflecting its focus on long-term growth.

Notably, Blinkit, Zomato's quick commerce arm, added 216 new dark stores during the quarter, significantly up from 152 in the previous quarter, with a revised target of achieving 2,000 dark stores by 2025, a year earlier than initially planned. Blinkit’s gross order value is expected to grow over 100% in both fiscal 2025 and fiscal 2026, underscoring the strong potential of the quick-commerce segment.

However, these expansion efforts have driven elevated capital expenditures, leading to higher depreciation costs and near-term losses. Employee costs are also expected to remain high, with the timeline for reducing them to 6-8% of adjusted revenue extended to fiscal 2027.

Zomato acknowledged a broad-based slowdown that began in November but remains optimistic about recovery and achieving a 20% long-term GOV growth. The company anticipates profitability will improve sharply once it exits the expansion phase, with margins expected to rise to 5% in the coming quarters.