It was in the year 2019 where intra-city mobility startups attracted a lot of attention from venture capitalists and private equity players alike. Companies such as Ather Energy, Vogo, Yulu raised their respective investment rounds including Bounce’s blockbuster $105 million round in December 2019.
Buoyed by this significant infusion of capital in conjunction with increased acceptability among its target customer base, Bounce has managed to churn revenue to the tune of close to Rs 100 crore in FY20. However, such a collection has come at a very high cost with the company spending over Rs 540 crore to achieve this topline, annual filings made by the company shows.
Bounce’s revenue from operations has scaled 6.3X to Rs 87.54 crore in FY20 from Rs 13.88 crore it earned during FY19. The company started selling products to its riders such as a safety kit, helmets, electric power packs etc during the last fiscal and these sales amounted to 1.3% of the operating revenues.
A bulk of operating income still comes from renting of motor vehicles, bicycles making up 98.2% of the revenues. Bounce also earned Rs 12.2 crore from financial instruments during FY20, this income has grown 5X during the last fiscal.
While the growth of scale in operations is quite evident, a look into Bounce’s expense sheet explains how expensive it is to operate a mobility company in India with high infrastructure costs. Its total costs grew in line with revenues, ballooning 6.2X to nearly Rs 542 crore in FY20 as compared to Rs 87 crore spent in total during FY19.
Bounce spent Rs 6.2 to earn a single rupee of operating revenue during FY20.
Employee benefits expenses were the single biggest cost factor, making up roughly 23.5% of the total costs incurred. These expenses jumped 4.44X to Rs 123.65 crore in FY20 from Rs 27.8 crore spent in FY19.
Bounce introduced the service of swapping batteries for its electrical scooters during late FY19. This service costs the company Rs 90.1 crore during FY20, jumping 500X from Rs 18 lakh spent on the same during FY19.
Bounce invested nearly Rs 247 crore in acquiring new motor vehicles during the previous fiscal, increasing giving a major push to its fleet. The company took out a loan of Rs 148 crore to purchase the new vehicles and its finance costs grew 3.6X to Rs 20.15 crore in FY20.
With the increased size of the fleet, the cost of running and maintaining the vehicles have also shot up drastically. Power and Fuel costs jumped 8.7X to Rs 49.6 crore while repair and maintenance expenses blew up 17.5X to Rs 31.5 crore during FY20.
Bounce outsources a large chunk of its on-ground operations and these subcontractor payments ballooned 17X to a little over Rs 77.03 crore inFY20. Haphazard parking of Bounce’s vehicles by reckless riders is a common sight in cities such as Bengaluru.
Besides causing traffic nuisance, such behaviour triggered Bounce to spend 10.8X to Rs 15 crore on towing during FY20. Advertising and promotions expenses jumped 5X to Rs 21.44 crore while rental expenses doubled to Rs 23 crore in FY20.
There was an unusual uptick in legal fees and communications costs paid by Bounce during the last fiscal. Legal expenses surged 7X to Rs 41.4 crore while communication costs ballooned 16X to 13.54 crore during FY20.
Another Rs 7.6 crore were accounted under “Cost of Helmets” pushing net cash outflow from operations to Rs 384.44 crore in FY20, growing by 430% from outflows of only Rs 72.7 crore in FY19.
Bounce lost Rs 442.13 crore during the fiscal ended in March 2020, a figure which grew 6.3X as compared to FY19 and is 405% more than the company’s total collections in the same period.
Operating at an abysmal EBITDA margin of -367.5% is not sustainable for the company in a situation where costs will continue to go up as it’s developing its infrastructure for electric and shared mobility solutions.
On the lines of a major chunk of venture capital-backed growth-stage startups, Bounce’s financial health is far from being healthy. However, it also has been able to churn close to Rs 100 crore revenue, unlike many B2C and a few B2B hyper-funded companies.
While the company had gone out of radar during peak Covid-19 phase and its business took a hard hit for most in the ongoing fiscal, Bounce has been making an aggressive push to regain pre-covid peak and grow further. The introduction of the electric fleet would also help it to improve unit economics and offer an affordable proposition to users.