Zomato Shuts Down Wallet, Surrenders License; Reports Rs 175 Crore Profit


Mohul Ghosh

Mohul Ghosh

May 14, 2024


In a surprising move, foodtech giant Zomato has opted to surrender its payment aggregator and wallet license to the Reserve Bank of India (RBI), signaling a shift in its payment strategy. Here’s a breakdown of the key developments:

Voluntary Surrender of License

Zomato disclosed that its subsidiary Zomato Payments Private Limited (ZPPL) has decided to voluntarily surrender the certificate of authorization obtained from the RBI. This decision marks a departure from its previous strategy of operating as an online payment aggregator under the Payment and Settlements Systems Act 2007.

Zomato Shuts Down Wallet, Surrenders License; Reports Rs 175 Crore Profit

RBI Approval and Impairment Loss

Previously, Zomato had obtained approval from the RBI to function as a payment aggregator and issuer of pre-paid payment instruments in January this year. However, the recent decision to surrender the license coincides with the firm’s declaration of a Rs 39 crore impairment loss on its investment in ZPPL.

Financial Performance and ESOP Announcement

Despite the strategic shift, Zomato reported robust financial performance for the last quarter of FY24. The company recorded a profit after tax of Rs 175 crore and reported a revenue of Rs 3562 crore, marking a 71% surge from the previous fiscal year. Moreover, Zomato announced fresh employee stock option (ESOP) options under a new plan valued at around $450 million.

Zomato’s Consolidated Net Profit

Zomato’s consolidated net profit for the fourth quarter of FY23-24 witnessed a significant surge of 26.8% to Rs 175 crore compared to the previous quarter. This marks the fourth instance of profit recorded by the company in its earnings history.

Acceleration in Topline Growth

The company’s year-on-year topline growth accelerated to an impressive 61%, surpassing the stated outlook of 40%. This growth was attributed to strong performances in both food delivery and quick commerce segments.

Adjusted EBITDA and Market Response

Zomato’s Adjusted EBITDA reached Rs 194 crore, marking a substantial improvement from the same quarter last year. Despite these positive financial indicators, the company’s shares experienced a decline of over 2% during Monday’s trading session, indicating mixed market sentiments.

Summary:

Zomato has voluntarily surrendered its payment aggregator license to the RBI, marking a shift in its payment strategy. Despite this move, the company reported robust financial performance for FY24, with a surge in net profit and revenue. Zomato also announced fresh ESOP options for its employees.


Mohul Ghosh
Mohul Ghosh
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