Zomato Ltd (BOM:543320) Q2 2025 Earnings Call Highlights: Robust Growth and Strategic Expansion

• Business Growth: Over 120%-130% year-on-year growth.

• Market Expansion: Share of Delhi NCR in business reduced from 47% to less than 40%.

• Geographical Presence: Largest player in major metros outside Chennai and Hyderabad.

• Average Order Value (AOV): Similar AOVs across top seven cities, with some non-Delhi markets having higher AOVs than Delhi.

• Warning! GuruFocus has detected 6 Warning Signs with BOM:543320.

Release Date: October 22, 2024

For the complete transcript of the earnings call, please refer to the full earnings call transcript.

• Zomato Ltd (BOM:543320) reported a significant year-on-year growth of over 120% to 130% in its quick commerce business, indicating robust expansion.

• The company is successfully expanding its presence beyond Delhi NCR, with the share of business from this region falling below 40%, showing growth in other major metros.

• Average Order Values (AOVs) in the top seven cities are similar, with some non-Delhi markets even surpassing Delhi, indicating strong performance across regions.

• Zomato Ltd (BOM:543320) has launched Blinkit in over 40 markets, demonstrating its aggressive expansion strategy in quick commerce.

• The company is focused on maintaining good service levels and sustainable profitability, even amidst heightened competition and market expansion.

• Zomato Ltd (BOM:543320) faces increasing competition in the quick commerce space, with new entrants like Flipkart and existing peers raising capital.

• The company's take rates have been somewhat flattish, attributed to the higher velocity of new store openings and the mix of new stores.

• There is a noticeable increase in fixed costs, particularly in the quick commerce segment, due to store and warehouse expansions.

• Despite the growth, Zomato Ltd (BOM:543320) has not seen any contribution margin expansion in recent quarters, largely due to ongoing expansion efforts.

• The company has not yet decided on implementing a loyalty program for its quick commerce business, which could be a disadvantage compared to competitors who have such programs.

Q: How is Zomato addressing the increasing competition in the quick commerce sector, and what are the key focus areas for the next few quarters? A: Akshant Goyal, CFO, mentioned that Zomato is concentrating on its own business growth, which is expanding at over 120-130% year-on-year. The company is focused on maintaining service levels and expanding categories, rather than aggressively pursuing market share amidst rising competition.

Q: Can you provide insights into Zomato's expansion strategy beyond Delhi NCR and the impact on average order values (AOVs)? A: Akshant Goyal, CFO, stated that the share of Delhi NCR in their business has decreased to less than 40%, indicating growth in other cities. The AOVs in the top seven cities are fairly similar, with some cities outside Delhi even having higher AOVs.