Purplle spent nearly double to make a unit of operating revenue

Online beauty and grooming products marketplace Purplle turned Unicorn after its back-to-back fundraising of $38 million (Series D) and $33 million (Series E) last year. The sizable funding for the Mumbai-based company followed a 71.6% growth in its operating revenue in the fiscal year ending March 2022. However, the 3.9X jump in losses is real trouble for the Goldman Sachs-backed company.

Purplle’s revenue from operations grew 71.6% to Rs 219.88 crore in FY22 from Rs 128.15 crore in FY21, according to its consolidated financial statements filed with the Registrar of Companies.

Purple operates an omnichannel of its products and sells retail products under its private label. The sale of its store brand products contributed 16.2% of the total revenue, which increased 4.34X to Rs 35.61 crore in FY22 from Rs 8.2 crore in FY21.

Being a hardcore omnichannel, revenue from advertisement and visibility services accounted for 60.96% of the total revenue, which grew 69.6% to Rs 134.04 crore in FY22 from Rs 79.02 crore in FY21. Royalty income from companies retailing on the Purplle platform also grew 18.7% to Rs 46.33 crore in the last fiscal year.

Purplle also offers a membership subscription for customers which includes a host of features including free gifts, shipping, and COD under 3 plans ( Purplle Elite, Elite Pro, and Elite Plus). Income from these subscription plans increased 34% to Rs 1.73 crore during FY22. Marketplace support and services is another revenue vertical that grew 3.6X to Rs 2.17 crore in the last fiscal year.

On the lines of almost all D2C and marketplace beauty startups, consumer acquisition cost turned out to be the largest cost center for Purplle accounting for 41% of the overall expenditure. This cost surged 3.14X to Rs 176.94 crore in FY22 from Rs 56.31 crore in FY21.

Employee benefits formed 19.74% of the total cost, which grew 2.30X to Rs 85.14 crore in FY22 from Rs 36.92 crore in FY21. It includes Rs 7.44 crore as ESOP expenditure which is non-cash in nature.

Purplle’s spending on legal professional fees and contract costs increased by 19.4% and 84.3% to Rs 16 crore and Rs 19.79 crore, respectively, during FY22. 

The company added another Rs 14.89 crore and Rs 16.65 crore on IT and rent, respectively, which pushed the overall expenditure by 125.6% to Rs 431.20 crore in FY22 from Rs 191.30 crore in FY21. It spent Rs 1.96 to earn a single unit of operating revenue in FY22.

With a growth of over 2.25X in the cash burn, losses for Purplle jumped 3.9X to Rs 203.63 crore in the last fiscal year from Rs 52.18 crore in FY21. As a result, its ROCE and EBITDA margins worsened to -17.09% and -82.15% during FY22.