Valuations might have soared for many, but the pandemic had a severe impact on the earnings of most of the growth and late-stage startups in India in FY21. And this is evident from the revenue shrinkage of Ola, Oyo and Droom during the last fiscal. However, for some, it created a new set of opportunities that they rode to grow during this time.
One such company is Urban Company, which turned unicorn with a $2.1 billion valuation when it raised a $255 million Series F round in June. During the fiscal marred by the Covid pandemic, it has recorded growth of 13.3% in operating revenue to Rs 247.7 crore in FY21 from 218.6 crore in FY20, regulatory filings show.
Urban Company operates with six supporting subsidiaries based out of India, Singapore, Australia, Saudi Arabia and the Netherlands. These subsidiaries generated a consolidated total income of nearly Rs 290 crore during FY21.
79% income came via services rendered to consumers and partners
Revenue from rendering services both to customers and service professionals was the prominent revenue stream for the company, accounting for 79.2% of total revenue from operations. Such collections grew by 26.4% YoY to Rs 196.3 crore during FY21.
Earnings from the sale of goods to its service professionals for rendering services on the platform were reduced by 19.4% year-on-year to Rs 50.3 crore during FY21. This indicates the impact on both the key beauty services segment, besides others like water filters etc.
Notably, Urban Company also gave discounts amounting to Rs 27.7 crore during FY21. Income from financial assets added another Rs 42.1 crore to the company’s coffers in the last fiscal.
Employee benefit costs Rs 227 Cr for Urban Company
Salaries of developers and other crucial functions have been skyrocketing and this is evident from Urban Company’s expense on employee benefits in FY21. Salaries and other remunerations stood out as the largest expenditure for the company, making up 42.1% of its annual costs. These costs grew by 62% to Rs 227 crore in FY21 from Rs 139.5 crore in FY20.
Importantly, share-based payments of Rs 71.6 crore made up 31.5% of these payments. Urban Company had added fresh stock options to its ESOP pool towards the end of FY21 which are now worth around Rs 292.7 crore.
Marketing and promotion expenses have emerged as the second-largest cost centre for the company, accounting for 23.4% of annual costs. Such expenses grew by 5.8% YoY to Rs 126 crore during FY21.
While the cost of procuring the stock in trade (goods sold to service partners) went down by 22% YoY to Rs 44.6 crore in FY21, the company spent another Rs 21 crore on safety materials( PPE kits etc) which were packaged with every service.
Further, payments to contractual employees ballooned 6.4X to Rs 19.2 crore during the fiscal ended in March 2021.
In total, the company spent Rs 539 crore during FY21, 29% more than the annual expenditure of Rs 418.3 crore it spent during FY20. On a unit level, Urban Company spent Rs 2.18 to earn a single rupee of revenue.
Bottomline: Urban Company losses surged 61% to Rs 249 Cr
Annual losses booked by the company surged by 61% YoY to Rs 249.3 crore in FY21 as compared to Rs 155.2 crore during FY20. While the operations’ scale has not contracted during the period marred by the pandemic, the continuing high losses are a surprise.
EBITDA margins worsened from -48.75% in FY20 to – 73.82% in FY21 and the company’s balance sheet sported accumulated losses of Rs 654.12 crore as of March 31 2021.
Other firms like PhonePe, which also grew during the pandemic, have done so with slightly better margins. Urban Company’s high cost for growth with the gap between revenue and loss growth at around 50% will concern the Abhiraj Bhal-led firm. Especially as it targets an IPO in FY23.
