Category: Technology

“Zomato's loss of 15% in value in less than a day has a lot to do with profit margins getting hit in high-growth q-commerce,” wrote Aviral Bhatnagar, Founder and Managing Partner of AJVC. 

His statement underscores the mounting pressures faced by Zomato, particularly through its quick commerce arm, Blinkit.

As Bhatnagar put it, “Q-commerce has started to get extremely fierce and is showing in the profit margins for Blinkit. High-growth companies swing both ways on profit growth/miss.”

The sharp decline in Zomato’s stock reflects the challenges of balancing aggressive expansion with profitability.

Blinkit posted an impressive 27.2% QoQ surge in gross order value (GOV) in Q3FY25, achieving a staggering annualized run rate of ₹31,000 crore. Yet, the costs of this growth are evident, with EBITDAM plunging to -1.3% from -0.1% in Q2, largely due to accelerated store openings and higher customer acquisition expenses.

Zomato’s core food delivery business also faced headwinds, with GOV growth coming in at 2.3% QoQ, reflecting a broad-based slowdown. The company’s management acknowledged weaker demand since November but noted steady improvement in contribution margins.

Zomato’s B2B venture, Hyperpure, continues to scale effectively. With EBITDA margins nearing breakeven, this segment remains a key contributor, highlighting Zomato’s ability to diversify beyond food delivery.

To reduce dependency on food delivery, Zomato has entered the entertainment space with a new app targeting event and movie ticketing. With ambitions to rival BookMyShow’s 60% market share, this move reflects the company’s commitment to creating a broader ecosystem.

The quick commerce business added 216 stores this quarter, surpassing the 1,000-store milestone. Blinkit’s management now targets 2,000 stores by December 2025, a year ahead of schedule. Analysts like Nuvama suggest this expansion may “hurt profitability in the short term but shall ultimately lead to bunching up of profitability in future quarters as these stores mature.”

Zomato’s core food delivery business also faced headwinds, with GOV growth coming in at 2.3% QoQ, reflecting a broad-based slowdown. The company’s management acknowledged weaker demand since November but noted steady improvement in contribution margins.

Zomato’s B2B venture, Hyperpure, continues to scale effectively. With EBITDA margins nearing breakeven, this segment remains a key contributor, highlighting Zomato’s ability to diversify beyond food delivery.

To reduce dependency on food delivery, Zomato has entered the entertainment space with a new app targeting event and movie ticketing. With ambitions to rival BookMyShow’s 60% market share, this move reflects the company’s commitment to creating a broader ecosystem.

Global brokerage firms have slashed Zomato’s target prices, with Macquarie setting a low of ₹130. Analysts warn that rising competition in q-commerce and increased digital marketing costs could further strain margins, despite promising long-term growth potential.

Quick commerce company Zepto has established a new entity, Zepto Marketplace Private Limited, to streamline its operations prior to its upcoming initial public offering (IPO). 

According to media reports, Zepto Marketplace Private Limited was officially registered on 22 October, 2024.

Currently, the company operates on a business-to-business (B2B) model. Through its Indian subsidiary, Kiranakart Technologies Pvt Ltd, which Aadit Palicha and Kaivalya Vohra co-founded, Zepto procures goods from various brands and exclusively sells them to a select group of companies through the Zepto platform.

Kiranakart Technologies operates Zepto to directly source products from brands and distribute them to a select group of companies, including Geddit Convenience, Drogheria Sellers, and Commodum Groceries. These companies are Zepto's licensee firms, who then sell the products on the application through a licensing agreement.
In comparison, competitors such as Blinkit (owned by Zomato) and Swiggy Instamart have adopted a marketplace approach that allows multiple sellers to directly list their products for consumers. It seems that Zepto is also making a similar move by registering Zepto Marketplace Private Limited on 22 October, 2024. This move may indicate a shift away from its current B2B model, bringing it closer in alignment with its publicly listed counterparts Blinkit (owned by Zomato) and Swiggy Instamart.
 
Besides, Zepto is reportedly in the final stages of preparing draft documents for an initial public offering, with plans to file them by March or April. Following approval from Singapore, the quick-commerce firm will be moving its holding entity to India, the Economic Times reported.

The company, headquartered in Bengaluru, is scheduling a board meeting on January 19 to discuss the size of the IPO, select bankers for the issue, and finalise resolutions related to the shift of the holding entity to India.

Zepto initially aimed to secure a minimum of $450 million in funding, although this figure may see adjustments leading up to the submission of the IPO draft papers. Notably, prominent Wall Street firms such as Morgan Stanley and Goldman Sachs are currently engaged in discussions with Zepto regarding its upcoming IPO. 
Following a successful funding round on 22 November, Zepto amassed $350 million, elevating its total cash reserves to approximately $1.4 billion. This substantial capital infusion positions the company favorably amidst stiff competition from both established players and emerging contenders like Flipkart Minutes in the rapidly expanding market.

Disney has said it has an estimated 157 million global monthly active users watching ad-supported content across its streaming platforms — Disney+, Hulu and ESPN+.

That number includes 112 million users domestically and is an average per month over the last six months.

While traditional TV outlets have a standard way of measuring ratings and viewership, there is still no industry standard methodology for measuring global streaming advertising audience size, according to CNBC.

The company said that its Disney Advertising unit has “set out to define a globally consistent approach and methodology to estimate ad-supported audience numbers.” It’s providing the update and further insight into its ad-supported streaming business during the annual CES tech conference in Las Vegas, a go-to event for the advertising and media industry.

“Disney sits at the intersection of world class sports and entertainment content, with the most high-value audiences in ad-supported global streaming at scale,” said Rita Ferro, Disney’s president of global advertising, in a news release. “We wanted to be the first to offer our industry greater transparency into the methodology used to estimate our engaged global ad-supported monthly active users.”