Zomato reported a net profit of Rs 138 crore for the October-December period, marking the third straight quarter of the food aggregator’s earnings coming in the green.
Revenue rose 69 percent year-on-year to Rs 3,288 crore at a time when the broader e-commerce sector is reeling under the pressure of high inflation and muted demand.
During the same quarter last year, Zomato had posted a net loss of Rs 347 crore and revenue of Rs 1,948 crore.
While delivery costs have risen 63 percent to Rs 1,068 crore in Q3 from Rs 655 crore in the year-ago period, the company has been able to rein in the growth of advertising and promotional expenses in this period.
As such, these marketing expenses only grew 7 percent year-on-year to Rs 374 crore, even as revenue jumped 69 percent.
Its food delivery gross order value rose 6.3 percent quarter-on-quarter and 27 percent year-on-on year to Rs 8,486 crore, in line with the company's guidance for this quarter. This also means that a certain predictability has come to the company's numbers despite the fact that the 2023 New Year's Eve saw a big spike in orders.
The hyperlocal commerce company’s performance has been driven by a strengthening of its economies of scale as the money it makes on a per order basis has grown, and a surge in the subscriptions of its loyalty programme.
In a letter to shareholders, Zomato's management said that the company's improving margins have been driven by factors like greater ad monetisation and introduction of platform fees.
"We think it is too early to predict how the platform fee will shape up. Much like the Gold program, we are still testing the waters on what works and makes sense here from a long term perspective," said Rakesh Ranjan, the company's food delivery CEO.
"We will continue to tactically use levers like these to optimise both growth and margin expansion. Most importantly, as we do this, we will also continue to ensure the viability and well-being of each of our
stakeholders – our customers, restaurant partners and delivery partners," he added.
In the past six months, the Zomato stock price has shot up more than 50 percent after remaining subdued for a year on uncertainty over profitability and selling by its pre-IPO investors who looked to book gains in a choppy market for tech companies.
(This is a developing story, please check back for updates)
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