Diving into Zomato’s Q2 FY2025 earnings

Short note: This post focuses on Zomato’s Q2 FY2025 earnings, and my quantitative insights and qualitative beliefs. Please reply to my email or comment here with your thoughts, concerns and new post ideas. Enjoy reading and keep your macros in check for all meals 🤝🤝. Thank me by sharing my newsletter with friends and family.

Table of Contents

• 1. Introducing Zomato

• 2. Business in Numbers

• 3. Zomato’s next 6 months

1. Introducing Zomato

Zomato was founded in 2008 as ‘FoodieBay’. It served as an online restaurant discovery platform for its first six years. In 2015, it launched its food delivery offering and has not looked back since despite near-death experiences including the Covid-19 lockdown. 

Over the years, it has added business lines organically and through acquisitions. The company publicly listed in July 2021 on the back of its food delivery, dining and B2B restaurant supplies verticals. In the last 3+ years, it has acquired and scaled Blinkit as the QC industry leader, and in August 2024, it acquired Paytm Insider, a live events + ticketing business.

Its present B2C offerings include:

a) Food delivery
b) Quick commerce (Blinkit)
c) Going out (Dining out + Ticketing)

Zomato also runs Hyperpure as its B2B arm that enables farm to fork supplies for partner restaurants and Blinkit (QC arm).

2. Business in Numbers

a) Key takeaways from Q2 FY2025
i) Delhi NCR accounted for 47% of Blinkit’s QC GOV in Q4 FY2024 i.e. ₹1,892 crore. This dependence on Delhi NCR has reduced to sub 40% of GOV in Q2 FY2025. Assuming a 39% share, this ~₹2,300 crore number is still sizeable.

ii) Zomato’s capex rose 48% QoQ to ₹214 crore as Blinkit opened 152 stores and 7 warehouses. For context of scale, Blinkit opened 143 stores combined across Q2 FY2024 and Q4 FY2024

iii) Avg Blinkit GOV/day/store is ₹10 lakh. For 113 stores opened in Q1 FY2025 and 152 stores in Q2 FY2025, these averages are ₹7 lakh and ₹5 lakh respectively. As these 265 stores achieve the ₹10 lakh/day/store number, it will lift GOV by incremental ₹989 crore per quarter

iv) The PAT dipped QoQ from ₹253 crore to ₹176 crore. This 30% dip is attributed to rising capex but also a tax expense of ₹61 crore primarily attributable to treasury earnings and post adjustment of unabsorbed depreciation. No provision of tax on business income for the next 2 years as this will be set off against carried forward losses.

v) Zomato food delivery GOV has grown by 5% and 10% in the last two quarters to ₹9,690 crore. Blinkit GOV has grown by 24% and 22% in the same time period to ₹6,132 crore. At these growth rates, Blinkit GOV can cross Zomato food delivery GOV by March 2026.

b) Q2 FY2025 overview (Zomato food delivery and Blinkit)

Zomato (food delivery) operates as a duopoly with Swiggy (deep dive on Swiggy IPO filing). Online food delivery has been available for 10+ years. Initially, consumers were lured by deep discounts and irresistible convenience with no minimum order size and zero delivery fees.

Over time, the industry matured and players convinced customers to pay for delivery, forgo fat discounts and make economically viable orders. In parallel, restaurants were convinced to pay higher margins and sign up for ad packages to boost order volumes.

As of Q2 FY 2025, Zomato achieved a Gross Order Value (GOV) of ₹9,690 crore and adjusted EBITDA of ₹341 crore. On a YoY basis, the food delivery offering has grown upwards of 20% for the last 5 quarters. This looks healthy, however, on a QoQ basis, GOV grew ~5%. The average monthly transacting users have grown 12.5% YoY and 2% QoQ to 20.7 million (2.07 crore) users.

Zomato’s QC foray began as it acquired Blinkit (erstwhile Grofers) in June 2022. Online grocery delivery has been attempted for years but it never gained sufficient traction in India. Its marriage with 10 minute fulfilment has created a behemoth in quick commerce.

As of Q2 FY 2025, Blinkit achieved a Gross Order Value (GOV) of ₹6,132 crore and adjusted negative EBITDA of ₹8 crore. On a YoY basis and QoQ, the QC offering grew 122% and 25% respectively. The average monthly transacting users have grown 89% YoY and 17% QoQ to 8.9 million (89 lakh) users.

Blinkit’s growth is on a smaller base vis a vis Zomato’s food delivery growth. However, in 2.5 years with Zomato, Blinkit’s GOV is 63% of food delivery’s GOV and it has almost achieved breakeven EBITDA levels.

3. Zomato’s next 6 months

Zomato’s public market valuation is $28 billion (as of October 24). It is the #1 player in food delivery and quick commerce, and the #2 player in live events and ticketing. As per Q2 FY2025 earnings, it holds ₹10,813 crore in the bank and gained board approval to raise up to ₹8,500 crore to bolster its balance sheet (and benefit from its buoyant valuation).

It has built a strong brand. It ships features with social media announcements to widespread acclaim. Its founder-CEO acts as a food delivery rider and shares public feedback that is swiftly acted upon. It has hit every right chord possible with its turnaround of Blinkit and march towards sustained profitability. It can do nothing wrong. Can it?

In the next 6 months, it faces its toughest test. The underdog was always cheered and supported amid catcalls and boos from armchair critics. The underdog Zomato (and Blinkit) is now the incumbent. It is chased by regulators, competitors and gravity itself.

a) Fundamentals
Zomato’s valuation has defied gravity and actual earnings. By conventional measures, the math does not math for the share price. Its shareholders believe otherwise, as do analysts with share price projections of INR 300+. Approval to raise ₹8,500 crore helps it take chips off the table. These chips have greater value in the bank over a paper valuation.

Swiggy is raising upwards of ₹3,500 crore and Zepto recently raised ₹8,000+ crore (in talks for an additional ₹1,200 crore). They are coming for Zomato and the best defense is a phenomenal offense backed by a reservoir of cash.

b) Blink(it)ered Focus

Zomato’s biggest bet is growing Blinkit’s GOV, store count and AOV faster than its competition. With 791 dark stores, it is enroute to its 1,000 store March 2025 target. However, it has to scale fast as regulators investigate allegations of predatory pricing and unfair trade practices. You don’t get so big so fast without ruffling feathers. QC cracked retail distribution wide open and now everyone -- modern trade, general trade and conventional ecommerce is hurting. 

Blinkit has to push harder on the pedal before earnest regulation or eager competitors rein it in. It has to fight tooth and nail for every additional order and customer. Loyalty wavers, and without a loyalty program, its consumer retention is under threat. When people and companies get pushed to the edge, nothing is off the table.  

c) Going out and eating at home

District (going out app) was announced last quarter. Lined up for a November launch, user migration will be key from the dining out feature and Paytm Insider. Beyond user migration, the app has to stand on its own as a destination for all things commerce. Users will sign up if there is tangible value.

Dining at home will continue to be solved by food delivery. This is Zomato’s core and the biggest threat on the horizon is Swiggy’s shipping velocity which has ramped up pre-IPO. Bolt (10 minute food delivery) and international ordering are new but they represent an innovative company that will not settle for #2 in a maturing market.

Arjun’s picks

• Elon Dreams and Bitter Lessons is an impressive essay by Ben Thompson of Stratechery.

• Zero to One by Peter Thiel with Blake Masters is a formative read. Unnecessary fact: In 2012, I discovered Blake’s blog capturing Thiel’s lectures

• Tweet by Jack Altman. Read it, not going to TL;DR this

• Fun ad from today’s company in review. Not sponsored, just great content

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