Magicpin scales up over 83% in FY23; controls losses

Offline discovery and rewards platform Magicpin grew at a rapid clip with over 83% year-on-year growth during the fiscal year ending March 2023. Reduced spendings on advertising further helped the Gurugram-based company to keep losses in check during the same period.

Magicpin’s revenue from operations grew by 83.3% to Rs 297 crore in FY23 from Rs 162 crore in FY22, its consolidated financial statements filed with the Registrar of Companies show.

The sale of vouchers was the primary source of revenue for the Lightspeed-backed firm. While the collection from commission and marketing were other revenue drivers for Magicpin.

It also made Rs 18 crore from interest on fixed deposits and the sale of current investments, tallying the overall income to Rs 315 crore in FY23.

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For the rewards platform, the sale of procurement vouchers was the largest cost center for the company while its employee benefits increased by 26.7% to Rs 76 crore in FY23.

Its advertising and promotions, legal/professional, finance, traveling, and other overheads catalyzed the overall expenditure up by 34.5% to Rs 429 crore in FY23 from Rs 319 crore in FY22.

Check TheKredible for the detailed expense breakup.

Expenses Breakdown

FY22

Total ₹ 319 Cr

FY23

Total ₹ 429 Cr

• Employee benefit

• Information technology

• Advertising promotional

• Purchase of coupons and others

To check complete Expense Breakdown visit thekredible.comView full data

A 40% cut in advertising helped Magicpin reduce its losses by 23.5% to Rs 114 crore in FY23 from Rs 149 crore in FY22. Its ROCE and EBITDA margins stood at -48% and -35.2% respectively. On a unit level, it spent Rs 1.44 to earn a rupee in FY23.

The sharp cut in advertising signals the efforts at Magicpin to turn the corner on losses that still have a long way to go. The dependence of the business on constant advertising support will become starker in the FY24 numbers, but we believe growth will be impacted if the firm does that — which would indicate costs will need to be cut in many more areas to drive in revenues at a lower cost. While the firm does not share category wise breakups, we believe the dine-out category, and possibly electronics are key, but those are also where Magicpin bears the highest costs. It’s a business where assumptions have to be challenged constantly, and Magicpin, with all its experience in the business now, needs to figure out newer categories where it can cut better deals faster and take them to market more smartly as well. It could be something as extreme as lab diamonds, gardening equipment, or whatever research turns up, but a rethink is a must.

Meanwhile, the company says they have witnessed stupendous growth in the fiscal year ended 2024. “In FY24, we have more than doubled our scale and revenue. This growth is primarily driven by better penetration in our core localities, leadership in offline retail segments of fashion & mom-&-pop QSR and higher user engagement,” said Chunky Shah, head of finance, Magicpin.

“Our cash-burn reduced more than 50% in the same period, and we remain committed to achieve EBITDA break-even in the next fiscal year.” 

FY22-FY23

	FY22	FY23
EBITDA Margin	-86%	-35.2%
Expense/₹ of Op Revenue	₹1.97	₹1.44
ROCE	-44%	-48%

Over the past 12 months, the firm claims to have added more than 150 fashion brands, and 10,000 fashion stores. It also saw significant progress with the Open Network for Digital Commerce (ONDC) network where it claims to have witnessed two-fold growth in the food delivery orders and orders peaked at 50k in a single day. 

Note: Magicpin had previously recorded its revenue for FY22 as Rs 233 crore, but have now changed their methods to IndAS accounting standard, which brought down their FY22 revenue to Rs 162 crore.