Baby and mother care brand Mamaearth became the first unicorn for this year after raising $52 million in its Series F funding round led by its early backer Sequoia. The company has emerged as a leader in the direct to consumer (D2C) space for beauty and skincare and was valued at around $1.07 billion in this latest round.
While Mamaearth is the first unicorn of 2022 and 44th since January 2021, it’s different from most unicorns as it is one of the few that has turned profitable in FY21 with a four-fold jump in its collection.
Mamaearth collected operating revenue of Rs 461 crore in FY21, a massive jump from the Rs 109.8 crore during FY20, per its annual financial statements with the Ministry of Corporate Affairs (MCA). The firm made 98% revenue from its domestic sales (India) while its global sales, which formed the remaining, grew 9.5X during FY21.
The boom in sales coupled with improved operational efficiencies helped Mamaearth record a post-tax profit of Rs 24.6 crore in FY21 as compared to the loss of Rs 5.92 crore during FY20.
The five-year-old company focuses on digital marketing channels, mainly social media and influencer marketing to push its product lines. As a result, its marketing costs stood as the largest cost center, accounting for 44.1% of the annual costs in FY21. These expenses surged nearly 4X to Rs 192.23 crore in FY21 from Rs 49.2 core during FY20.
With an increase in demand, the cost of raw materials consumed by Mamaearth also surged 3.5X to Rs 133.1 crore in FY21 from Rs 38.3 crore in FY20. Transportation and secondary packaging costs also grew in line with the overall scale, surging 4.2X to Rs 62.7 crore in FY21 from Rs 15.02 crore incurred in the preceding fiscal.
Unlike most startups valued at over $1 billion where employee benefits expenses form a large percentage of the company’s expenses, in the case of Mamaearth, they accounted for only 6.4% of its annual costs. This cost grew 3.3X to Rs 27.8 crore in FY21 while IT and payment gateway costs also increased 3.1X to Rs 6 crore during the same period.
Overall, Mamaearth’s annual costs ballooned 3.7X to Rs 435.6 crore in FY21 from nearly Rs 118 crore during FY20. On a unit level, it spent Rs 0.95 to earn a single rupee of operating revenue in FY21. EBITDA margins also improved from nearly -5% in FY20 to 6.5% during FY21.
Despite the pandemic affecting financial statements of several companies, Mamaearth scaled at a scorching pace and crossed Rs 460 crore in sales in FY21. The company also set itself apart from other unicorns and late-stage consumer-facing internet companies by churning a profit. At the moment, it’s one of the most successful D2C brands in India and the company’s financial numbers convey the same.