Omnichannel home interior and renovation platform Livspace attained the unicorn status after its $180 million investment led by KKR & Co with a 2X jump in valuation at the end of FY22. The big-ticket investment was followed by modest growth in its operating scale in FY22.
Livspace’s revenue from operations grew 54.9% to Rs 570 crore in FY22 from Rs 368 crore in FY21, as per its consolidated annual financial statements filed by the group company in Singapore.
The 8-year-old company allows homeowners to discover pre-created looks for rooms, kitchens, and storage areas on its platform. The sale of products was the primary source of revenue, forming 54.4% of the total collection which surged 46.2% to Rs 310 crore in FY22.
Livspace provides a marketplace for interior services to residential customers and related vendors. With over 3,500 designers, income from the marketplace vertical contributed 45.6% of the operating revenue and grew 66.7% to Rs 260 crore in FY22.
The firm also has financial income which shrank 42% to Rs 9.24 crore in FY22 from Rs 16.10 crore in FY21. This income will grow multifold in the ongoing fiscal year (FY23) as it raised fresh funding in February 2022.
On the cost side, the employee benefit expenses turned out to be the largest cost center for the company accounting for 34% of the total expenditure. This cost grew 48.9% to Rs 414 crore in FY22 which also includes Rs 76 crore expense on ESOPs.
The cost of interior designing which includes both material and service costs became the second largest cost which surged 42.2% to Rs 394 crore during the last fiscal year (FY22).
Livspace launched ‘Love the way you Liv’ campaign featuring Virat Kohli and Anushka Sharma as their brand ambassadors during FY22. This must have come with a huge cost, and marketing spending reflects that: spiking 3.9X to Rs 164 crore in FY22.
Brokerage, subcontracting as well as professional and legal costs increased 60.7% and 273% to Rs 63 crore and Rs 25 crore in FY22 which pushed its overall cost by 55% to Rs 1,215 crore in FY22.
On the same lines as its revenue growth, Livspace’s losses escalated 55% to Rs 645.2 crore in FY22 from Rs 416 crore in FY21. It’s worth noting that we have ignored the cost of Rs 382 crores against impairment of financial loss (an adjustment of accounting standards).
Its ROCE and EBITDA margin registered at -48.10% and -102.84% in FY22. On a unit level, Livspace spent Rs 2.13 to earn a single unit of operating revenue during the year.
Those numbers make for unflattering reading in a category that is considered massively underpenetrated by the organized sector. There are obvious bright spots, like the income of Rs 260 crore from the marketplace vertical, which dictates some serious progress in this massive category. Livspace seems to have a real challenge on its hands, when it comes to costs, though it’s tough to say just where it needs to start first. A vast market beckons, if it can crack the code.