Zomato ad spends at Rs 421 cr in Q2FY25

Zomato recently launched its financial results for the quarter ending September 30, 2024. It posted its advertisement and promotional expenses at Rs 421 crore, which were up 18.5% from the previous year’s corresponding quarter.

The half-year-ended (H1) advertisement and promotion expense was Rs 817 crore, a remarkable increase of 22.1% from Rs 669 crore in H1 of FY23.

In the earnings call, the brand specified that the food delivery business’ Gross Order Value (GOV) grew 21% YoY (5% QoQ). The quick commerce GOV grew 122% YoY (25% QoQ), and the going-out GOV grew 171% YoY (46% QoQ).

On the profitability front, consolidated adjusted EBITDA increased by Rs 289 crore YoY to Rs 330 crore in Q2FY25 driven by improvement in margins across all our businesses.

On the launch of the new District app for the going-out business, CEO Deepinder Goyal said, “The new app should be live in the next four weeks. At this point, we are focused on making sure we do a good job at migrating the business from Zomato and Paytm platforms to the new District app.”

But, the cash balance reduced by Rs 1,726 crore as compared to the previous quarter on account of the deal consideration (of Rs 2,014 crore) for the acquisition of Paytm’s entertainment ticketing business.

Goyal also stated, “ Zomato ’s consolidated annualised Adjusted Revenue has grown 4x in a period of about three years - from Rs 4,640 crore at the time of our IPO in July 2021 to Rs 20,508 crore now (Q2FY25 annualised). In the same time period, our cash balance has reduced from Rs 14,400 crore to about Rs 10,800 crore (mainly on account of funding past quick commerce losses and some equity investments and acquisitions).”

“While the business is now generating cash (vis-a-vis a loss making business at the time of IPO), we believe that we need to enhance our cash balance given the competitive landscape and the much larger scale of our business today,” he added.

All in all, the quick commerce business continues to operate at near Adjusted EBITDA break-even, the food delivery business margins continue to remain steady and there is also no plan for any minority investments or acquisition for Zomato .