Proptech firm Square Yards came under the spotlight in late 2021 following reports that it was planning to launch an IPO to raise about Rs 1,500 crore in a mixed offering. While there has been no further development on that front, the firm has continued to scale up with its revenue nearing the Rs 400 crore mark during FY22.
Square Yards’ revenue from operations grew by 55.5% to Rs 382.13 crore in FY22 from Rs 245.75 crore in FY21, while the losses jumped 2.76X to Rs 225 crore in the last fiscal year, according to the consolidated financial statements filed with the Registrar of Companies.
Revenue from real estate consultancy is the sole source of income for Square Yards. The company, however, also earned Rs 12.76 crore mainly from interest on deposits during FY22.
On the cost side, employee benefit expenses were the largest cost center for the company accounting for 51.5% of the overall expenses. This expense surged 60.3% to Rs 319.3 crore in FY22 from Rs 199.23 crore in FY21. It also includes Rs 6.58 crore as ESOP expenses which is non-cash in nature.
The company has raised around $125 million in total, which includes $65 million in debt. As a result, the finance cost which consists of (interest on debt), became the second largest cost center. This cost grew 75% to Rs 86.48 crore in the last fiscal year.
Square Yards’ spending on advertisement and commission given to selling agents grew 171.8% and 98.7%, respectively, to Rs 51.08 crore and Rs 60.44 crore during FY22.
The company added another Rs 18.83 crore on legal and professional fees which catalyzes the overall expenditure by 82% to Rs 619.82 crore in FY22 from Rs 340.55 crore in FY21.
Outpacing the revenue growth in the last fiscal year, losses of the Reliance-backed company jumped 2.76X to Rs 225.1 crore in FY22 from Rs 81.43 crore in FY21.
Moving on to the ratios, the ROCE and EBITDA margin for the company worsened to -59.74% and -29.25% in FY22. On a unit level, the company spent Rs 1.62 to earn a single unit of operating revenue.
The rising losses are a surprise for a firm that was profitable at an EBITDA level till FY21. Positioning itself as a rare ‘integrated’ real estate platform offering everything from consultancy to SaaS to brokers, Square Yards has pushed aggressively for market share in India, besides expanding abroad in 9 countries. One would have to assume that it has been this push to expand fast, including through its adjacent offerings like Square Capital, Azuro, Interior Company, PropsAMC & PropVR that has led to the spike in losses. FY23 should bring in a better story indeed.