SaaS-based logistics management platform FarEye showcased an impressive 42% year-on-year growth during the fiscal year ended March 2023 but the firm’s losses, at Rs 243 crore, while flat from the previous fiscal year, remained uncomfortably high.
FarEye’s revenue from operations grew 41.8% to Rs 139 crore in FY23 from RS 98 crore in FY22, its consolidated financial statements filed with the Registrar of Companies (RoC) show.
FarEye provides software solutions to manage large logistics platforms’ supply chain and delivery across manufacturing, e-commerce et al. The sale of logistics services was the sole source of revenue for the company.
Besides operating activities, the $150 million round helped FarEye to make Rs 27 crore from interest on investments (non-operating) which took its total collection to Rs 166 crore in FY23.
Like other technology startups, its employee benefits accounted for 61.2% of the overall expenditure. This cost grew only 8% to Rs 251 crore in FY23 from Rs 232 crore in FY22.
Expense Breakdown
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- Employee benefit
- Information technology
- Travelling conveyance
- Legal professional
- Advertising promotional
- Cost repairs
- Others
Its information technology, traveling, legal-professional, advertising, repair, rent, and other overheads catalyzed FarEye’s overall expenditure to Rs 410 crore in FY23 from Rs 361 crore in FY22.
FarEye’s prudent expense management helped the Microsoft-backed firm to register a mere 4.7% increase in its losses to Rs 243 crore in FY23. Its ROCE and EBITDA margin stood at -60% and -142.2%, respectively. On a unit level, FarEye spent Rs 2.95 to earn a rupee in FY23.
FY22-FY23
| FY22 | FY23 |
| EBITDA Margin | -176% | -142.2% |
| Expense/₹ of Op Revenue | ₹3.68 | ₹2.95 |
| ROCE | -36% | -60% |
FarEye’s total current assets stood at Rs 438 crore including current investments and cash/bank balance during FY23.
FarEye has raised over $150 million across rounds and was valued at $400 million in its last fundraiser. According to the startup data intelligence platform TheKredible, TCV is the largest stakeholder with 13.74% followed by Elevation Capital. As per Fintrackr estimates, its enterprise value to revenue multiple was 21X at the end of FY23.
While there are firm indications that the firm has turned, or is close to turning the corner as far as margin improvement goes, Fareye’s backers would know that much could go wrong from here as well. With FY24 over, the firm would have done well to not only maintain the growth rate from FY23, but also keep expenses in control as it did previously. Any major slip up here will lead to serious questions about it’s long term viability, leading to an adverse impact on the existing business sooner than later.
