Zomato missed profit estimates with $20.96M in Q4, below the expected $22.5M. Expenses rose nearly 50%, causing shares to dip 4.2%. Revenue from operations jumped 73% to $426.6M, beating estimates.
Zomato reported a net profit of $20.96M for Q4, below analysts' expectations of $22.5M. This result was due to surging advertising expenses as the company faced stiff competition. A year earlier, Zomato posted a loss of $22.7M. This year, its shares dropped 4.2% following the earnings report.
Despite the profit miss, Zomato's revenue from operations jumped 73% to $426.6M, beating the estimated $414.4M. However, total expenses surged nearly 50% due to increased marketing and sales promotion costs. Zomato has been ramping up its advertising spend to attract more customers amid competition from rivals like Swiggy.
Zomato's contribution margin improved to 7.5% from 5.8% a year ago. This improvement was attributed to the introduction of a platform fee on all grocery and food orders. The increase in the contribution margin is a positive sign despite the higher expenses.
The gross order value (GOV) of Zomato's food delivery business grew by 28% during the quarter. Additionally, Blinkit's GOV saw a remarkable 97% increase. These figures indicate robust growth in order value, reflecting the company's efforts to expand its market presence.
Will Zomato's increased spending pay off in the long run?
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