B2B marketplace Jumbotail’s scale has grown more than 6.6x since fiscal year ending March 2021. Its revenue surged from Rs 123 crore in FY21 to Rs 819 crore in FY23. However, the spurt in growth has come at a cost as losses have grown in a similar proportion – nearly six-fold – in the said period.
Jumbotail’s revenue from operations grew 2.17X to Rs 819 crore in FY23 from Rs 377 crore in FY22, its annual financial statements filed with the Registrar of Companies show.
The sale of traded goods formed 94% of the total operating revenue which increased 2.1X to Rs 767 crore in FY23 while the rest of the revenue came from marketplace commission and shipping. Importantly, the company posted GMV (gross merchandise value) worth Rs 2,262 crore in FY23, which is a two-fold growth from Rs 1,128 crore in FY2.
See TheKredible for the detailed revenue breakup.
Being a B2B marketplace and retail platform, the cost of procurement of materials accounted for 66% of the overall expenditure. In line with the scale, this cost grew 2.1X to Rs 740 crore in FY23 from Rs 341 crore in FY22. Its employee benefits cost increased by 94% to Rs 101 crore in the previous fiscal year.
- Employee benefit expense
- Cost of material consumed
- Subscriptions membership fees
- Advertising promotional expenses
- Transportation distribution expenses
Rent, subscription fees, advertising, transportation, distribution, and other overheads that took the overall expenditure up by 112% to Rs 1,114 crore in FY23 from Rs 524 crore in FY22.
Check TheKredible for a complete expense breakup.
Jumbotail’s 112% cost surge outpaced the revenue growth, leading to a 2.1X spike in its losses to Rs 264 crore in FY23 as compared to Rs 125 crore in FY22. Its ROCE and EBITDA margin stood at -57% and -10% respectively. On a unit level, it spent Rs 1.36 to earn a rupee in FY23.
|Expense/₹ of Op Revenue
While the disproportionate increase in costs to revenue growth needs no elaboration, it needs to be highlighted that it is an even larger issue for B2B firms that are expected to have lower promotion costs. Jumbotails has reached a scale where costs should speak out, and start reducing. Signs that it is not the case will place a serious question mark on the firm’s viability as well as business model.
Jumbotail, with its multi pronged approach to the opportunity it saw in retail will probably point to the gestation period in each of these segments, be it the B2B platform, the logistics offering, the SME lending or even the Retail-As-A Service offering. However, one of these will need to transition to becoming a ‘star’, if not a cash cow to allow the firm breathing space to achieve its business plans. In a tough funding environment, every quarter that goes by will mean more pressure on the firm.