📉 Zomato Misses Profit 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.
📊 Revenue and Expenses
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.
🛒 Contribution Margin and Platform Fee
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.
📈 Gross Order Value Growth
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?
