Indian food delivery platform Zomato reported a smaller-than-expected quarterly profit on Monday, hurt by surging advertising expenses as it grappled with intensifying competition, sending its shares down 4.2%.
It reported a consolidated net profit of 1.75 billion rupees ($20.96 million) for the quarter ended March 31, below analysts' expectations of 1.88 billion rupees, according to LSEG data.
The Gurugram-based firm had posted a loss of 1.89 billion rupees a year earlier.
Quick commerce retailers, such as Zomato, have steadily been increasing their advertising and marketing spends to attract more customers amid intensifying competition from other domestic players such as SoftBank-backed rival Swiggy.
Zomato's total expenses swelled nearly 50% due to a jump in marketing and sales promotion costs.
Its contribution margin, a key profit metric, however, expanded to 7.5% from 5.8% a year ago as the company started charging a platform fee on all grocery and food orders.
Revenue from operations jumped 73% to 35.62 billion rupees, beating analysts' estimate of 34.60 billion rupees, while the gross order value (GOV) - the total value of all orders placed in its mainstay food delivery business grew 28%.
Blinkit's GOV jumped 97% during the quarter.
