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Case ID: GCICBP| Tomato + Profitability | 221 | 16th Mar 2024
©2024 This case is written by Suhruta Kulkarni, Co-Founder, GoCrackIt & Junaid K, GoCrackIt and as the basis for class discussion & education rather than to illustrate either effective or in effective handling of any entity/ management. This case can not be copied and circulated without the explicit permission of GoCrackIt.
Zomato, India’s top food delivery app, recently made history by earning its first-ever consolidated net profit of ₹2 crore in the first quarter of fiscal year 2024 (Q1FY24) and which continued to grow to ₹138 crore in Q3FY24 . It took the company 15 years to achieve this milestone despite facing 1 tough challenges like rising food prices and lower consumer spending. However, Zomato managed to overcome these hurdles by changing its business approach and expanding its services.
Founded in 2008, Zomato started as an online restaurant discovery platform and has since evolved into a comprehensive ecosystem offering food delivery, quick commerce (Blinkit), B2B supplies (Hyperpure), and Dining Out experiences. The company turned public in July 2021 with a valuation of USD 12 Bn and was subscribed 35 times. , facing fluctuations in share prices but 2 regained momentum with its profitability milestones in Q1 FY24. (Exhibit 1)
Zomato has successfully navigated towards profitability through several strategic moves. Firstly, the company diversified its revenue streams by expanding into various sectors, such as a food marketplace platform, Hyperpure B2B supplies, and Blinkit quick commerce . This diversification 3 reduced reliance on any single segment, ensuring stable income. The segments other than food market place are yet to deliver profitability, but have been seeing steadily decreasing losses. Secondly, Zomato implemented cost-cutting measures like adjusting commission rates, optimizing delivery partner payments, and exiting underperforming markets. These actions enhanced operational efficiency and improved profit margins. Even at Blinkit, stores have been concentrated only in 8 cities. Additionally, Zomato prioritized a customer-centric approach, evident in initiatives like the Zomato Gold loyalty program and the “On Time Guarantee” feature. By focusing on customer satisfaction and loyalty, Zomato drove revenue growth.
While Zomato celebrates its profitability, challenges remain, including competitive pressures, rising expenses, and the need to sustain growth momentum. The company must continue to innovate, optimize costs, and focus on customer satisfaction to maintain its competitive edge in the dynamic foodtech landscape. Additionally, Zomato’s strategic expansion into new verticals and its commitment to operational excellence position it well for continued growth and profitability in the future.
1 https://entrackr.com/2024/02/zomato-posts-rs-3288-cr-revenue-and-rs-138-cr-profit-in-q3-fy24/ 2 https://hbr.org/2021/08/what-zomatos-12-billion-ipo-says-about-tech-companies-today
3 https://www.zomato.com/
Food Delivery |
Detail Revenue |
Q3FY23 1565 |
Q4FY23 1530 |
Q1FY24 1742 |
Q2FY24 1925 |
Q3FY24 2025 |
EBITDA |
23 |
78 |
181 |
204 |
252 |
|
HyperPu re |
Revenue |
421 |
478 |
617 |
745 |
859 |
EBITDA |
-53 |
-45 |
-35 |
-34 |
-34 |
|
BlinkIt |
Revenue |
301 |
363 |
384 |
505 |
644 |
EBITDA |
-227 |
-203 |
-133 |
-125 |
-89 |
|
Dining & Out |
Revenue |
58 |
41 |
42 |
49 |
73 |
EBITDA |
-7 |
-2 |
3 |
1 |
1 |
|
Others |
Revenue |
17 |
2 |
1 |
3 |
8 |
EBITDA |
-2 |
-3 |
-4 |
-5 |
-5 |
|
Consolid ated |
Revenue |
2362 |
2414 |
2786 |
3227 |
3609 |
EBITDA |
-266 |
-175 |
12 |
41 |
125 |
Source : https://www.zomato.com/investor-relations/financials
Source : GoCrackIt Analysis
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