Zomato’s Q1 Ad Spend Soars 69% But Profits Plunge

Zomato’s parent company, Eternal Ltd, reported a dramatic surge in advertising and promotion spending for the first quarter of FY26, underlining the company’s aggressive push for growth across all business lines. However, the growth comes with a deep drop in profits—spotlighting today’s new-age trade-off: scale versus short-term profitability.

Advertisement Blitz: Rs 671 Crore in Q1

Eternal (formerly Zomato Limited) spent a staggering Rs 671 crore on advertising and promotions in Q1 FY26, a jump of 69.4% year-on-year from Rs 396 crore in the same period last year. The numbers mark a sequential growth as well, up from Rs 634 crore spent in Q4 FY25. This escalation comes as the company invests heavily in gaining new customers and cementing its leadership across food delivery, quick commerce, B2B, and the growing entertainment segments.

Revenue Hits New Highs But Profits Take a Hit

The company’s revenue from operations soared by 70.4% YoY to Rs 7,167 crore in Q1 FY26, compared to Rs 4,206 crore in Q1 FY25, and up 22.9% from Q4 FY25. Every business segment saw double- or triple-digit revenue growth:

• Food ordering and delivery: Rs 2,261 crore revenue (+16.4% YoY)
• Hyperpure (B2B supplies): Rs 2,295 crore revenue (+89.3% YoY)
• Going-out (dining & entertainment): Rs 207 crore revenue (+117.9% YoY)
• Blinkit (quick commerce): Rs 2,400 crore revenue (+154.8% YoY), surpassing core food delivery for the first time

Despite this robust topline, net profit plunged by 90.6% year-on-year to Rs 25 crore, down from Rs 266 crore in Q1 FY25. The profit drop was primarily attributed to substantial investments in marketing, new store openings, tech, and infrastructure—especially as Blinkit rapidly expands its reach and Zomato explores new business models.

Blinkit: The Growth Engine

Blinkit, Eternal’s quick commerce arm, was the clear star of Q1. Revenue skyrocketed to Rs 2,400 crore, a 155% surge over last year. The company added 243 net new stores in the quarter, bringing its total to 1,544, with plans to cross 2,000 stores by December 2025 and a vision to potentially reach 3,000 stores in the long run.

This momentum means that Blinkit now contributes almost half of Eternal’s B2C annualized net order value, making it the company’s largest business by volume—overtaking the original food delivery segment.

Core Segment Performance

• India Food Delivery: Grew moderately by 16.4% YoY, signaling maturity in the food delivery space and increased competition.
• Hyperpure (B2B Supplies): Continues robust expansion, delivering nearly Rs 2,300 crore in revenue.
• Going-Out/Entertainment: Includes dining-out and ticketing, up 118% YoY, showing strong post-pandemic recovery and growing consumer appetite for experiences.

Profitability: The Price of Rapid Growth

While investors have cheered the record revenue and store expansions—pushing Eternal’s share price up 7.5% intraday after results—the sharp profit decline demonstrates the mounting costs of fast expansion, especially in hyper-competitive, cash-intensive domains like quick commerce and food tech. Founder Deepinder Goyal acknowledged the challenge, noting that while “current focus is on ramping up investments to drive further growth,” there is room for margin expansion over the longer term.

What Lies Ahead?

Eternal’s management remains optimistic but cautious, with Goyal noting the inevitability of competition and the need to continuously innovate to defend the company’s lead. Quick commerce, instant deliveries, and premium urban experiences will continue to drive the agenda as Zomato-Blinkit beds down its pan-India platform.

But the key task remains: balancing relentless scale with a pathway to sustainable profitability—a challenge familiar to all digital-first businesses today.