Udaan's scale nears Rs 10,000 Cr in FY22, losses go past Rs 3,000 Cr

Business-to-business e-commerce company Udaan maintained its leadership in the category with the company knocking at the Rs 10,000 crore revenue mark.

The Bengaluru-based firm witnessed a 66.8% growth in its scale (gross revenue) to Rs 9,900 in FY22 from Rs 5,934 crore during the previous fiscal year (FY21), as per the annual financial statements accessed from Singapore. This comes after a six-fold jump in revenue of the company during the FY20-21 period.

The sale of traded goods on the online platform was the leading revenue driver for the company, accounting for 97% of the total revenue which surged 72% to Rs 9,611 crore in FY22.

The company also collects platform fees from other sellers which dropped by 26.6% to Rs 138 crore in FY21. The revenue from logistics services provided to the marketplace buyers also decreased by 10.2% to Rs 53 crore in FY22.

Udaan offers financing services to traders and collects interest and processing fees from them. Credit facilities are given to sellers and buyers trading on the Udaan platform bearing interest ranging from 0% to 24% per annum and having a maturity period of 7 to 90 days. Income from these activities remained flat at Rs 34 crore in FY22.

The company also has its other income which grew 35% to Rs 44 crore in FY22 from Rs 32.5 crore in the preceding fiscal year (FY21).

Moving over to the cost sheet, the cost of procurement of stock from manufacturers is the largest cost center for the company accounting for 72.8% of the overall cost. This cost surged 71% to Rs 9,452 crore in FY22.

Employee benefits expenses were the next biggest cost followed by the cost of procurement forming 9% of the total cost. It surged 30.3% to Rs 1,203 crore in FY22. This also includes Rs 325 crore as ESOP expenses. The cost of logistics and packaging increased by 17.2% to Rs 552 crore in FY22. The company hired contract-based manpower for the company which cost around Rs 593 crore in FY22.

The cost for communication/ IT and legal and professional services increased 18% and 36% to Rs 156 crore and Rs 132 crore respectively in FY22 which pushed the overall cost of the company by 53.6% to Rs 12,978 crore in FY22.

Thus, in line with revenues, the total costs of the company surged equivalently. Consequently, losses at Udaan flew up 22.1% to Rs 3,030 crore in FY22 from Rs 2,563 crore in FY21.

With such a high cost, cash outflow from operations also increased by 10.7% to Rs 2615 crore in FY22. On a unit level, the firm spent Rs 1.31 to earn a single unit of operating revenue.

The ongoing calendar year has been quite eventful for the Lightspeed-backed company whether it’s back-to-back debt funding to the tune of $350 million or laying off more than 600 employees in two rounds. In October, the company’s chief financial officer (CFO) Aditya Pandey said that the company has reduced its burn by 60%. It also plans to become IPO-ready in the next 12-18 months.

What should be a cause for worry for the firm is the relative stagnation or shrinking of revenue streams besides trading of goods. Those usually offer higher margins, to compensate for the low margins in the trading segment. For Udaan to fly high, it will take a lot more than just high trading volumes to take off on a profitable journey.