Earlier this month, workplace solution startup IndiQube raised $30 million in one of the largest funding rounds for a co-working startup in the post covid period. The investment was led by the company’s promoters, joined by Westbridge Capital and angel investor Ashish Gupta.
While many co-working and corporate infrastructure companies faced massive reductions in scale due to the Covid-19 lockdowns, IndiQube actually managed to increase its revenues. Its revenue from operations grew by 23.4% from Rs 238.75 crore in FY20 to Rs 294.5 crore during FY21, as per the company’s annual financial statement.
The Bengaluru– based company currently has around 4.5 million Sq Ft office space in its 60 properties spread across 8 cities. Apart from office rentals, it also offers workspace management solutions including facility management, cafeteria and employee transport handling.
The company has generated around 83% of its revenues from pure rental income which surged by 32.3% YoY to Rs 244.35 crore during FY21. IndiQube also collected another Rs 35.62 crore from maintenance and other related services and Rs 14.53 crore as electricity charges during the fiscal ended in March 2021.
The company also earned non-operating income of Rs 3.2 crore from its financial assets during the same period.
IndiQube rents out corporate infrastructure from real estate companies for its office spaces and naturally rental payment is the largest cost centre for the company, accounting for 52.6% of its annual costs. These payments grew by 40% to Rs 164.7 crore during FY21 from Rs 117.63 crore paid in FY20 as the company increased its presence across the country.
Maintenance and utility costs were reduced by 22.3% to Rs 28.4 crore in FY21 from Rs 36.53 crore incurred during FY20 due to limited operations during the fiscal marred by Covid 19. Housekeeping expenses also dropped by 10.8% YoY to Rs 10.04 crore as the office spaces remained close due to work from home orders.
On the other hand, employee benefit expenses remained fairly stable, growing by only 8% to Rs 25.11 crore during FY21 from Rs 23.22 crore paid in FY20.
The Westbridge backed company is fairly leveraged, financing its operations with loans from banks and its own promoters (Rs 61.6 crore loan from Rishi and Anshuman Das still outstanding as of balance sheet date) and its finance costs make up 7.1% of its annual costs. These interest payments grew by 20.4% to Rs 22.1 crore during FY21 from Rs 18.4 crore paid in FY20.
The company also paid out Rs 5.7 crore as brokerage, pushing its annual expenses to Rs 313.2 crore in FY21 from Rs 259.5 crore spent in total during FY20. IndiQube spent Rs 1.06 to earn a single rupee of revenue during the fiscal ended in March 2021.
Due to a temporary reduction in variable costs, the company’s EBITDA margin also improved from 10.12% in FY20 to 14.58% in FY21. Coupled with a 23.4% increase in revenues and improved margins, its annual losses amounted to Rs 15.5 crore in FY21 registering a marginal 4.4% reduction as compared to Rs 16.21 crore lost in FY20.
While IndiQube has done very well to buck the trend in its category during the pandemic, the big challenge will start now, as the company seeks to make the most of the new ‘hybrid’ work environment. Not having been scarred by pre-pandemic fundraising and shocks unlike category creator WeWork for instance, the company has clearly got the advantage of promoters with significant ‘skin in the game’ too, besides their equity ownership, as seen in the loans they have advanced to the firm. FY23 and beyond should be when the firm turns profitable without going off the growth trajectory if all goes to plan.
