Droom's revenue plummets 66% to Rs 85 Cr in FY24

Used car unicorn Droom is set to raise Rs 1,000 crore through an initial public offering (IPO) at a valuation of $1.2 to $1.5 billion. However, the company’s financial health has declined, with its revenue from operations nosediving by two-thirds in the last fiscal year.

According to its consolidated financial statements filed with the Registrar of Companies (RoC), Droom Technologies reported a 66% decline in revenue from operations, dropping to Rs 85.3 crore in FY24.

Droom's primary revenue sources were selling service fees, which included commissions on vehicle sales and related services on its marketplace platform, as well as fees from pro-seller subscriptions.

The company has not disclosed a detailed revenue breakup. However, it generated Rs 4.6 crore from non-operating sources, including interest on investments and excess provisions for write-offs. This brought its total income to Rs 90 crore in FY24, down from Rs 262 crore in FY23.

On the cost front, the Sandeep Aggarwal-founded company allocated 65.3% of its total expenses to promotions and incentives. With the decline in scale, this expenditure fell by 67.3% to Rs 85 crore in FY24. Employee benefit expenses also saw a reduction of 39.5% during the year. Overall, the company’s total expenditure dropped by 60%, declining to Rs 130 crore in FY24 from Rs 325 crore in FY23.

Despite a 66% drop in revenue, Droom managed to reduce its overall burn, lowering losses by 34.8% to Rs 40.4 crore in FY24. The Gurugram-based company spent 1.52 to earn every rupee in FY24.

Droom’s financial metrics worsened, with its ROCE (Return on Capital Employed) declining to -304% and EBITDA margins to -41.56%. By the end of FY24, the company’s total current assets stood at Rs 30 crore, including cash and bank balances of Rs 3.5 crore.

Although Droom achieved unicorn status due to its growth and a frothy market until 2021, however, its ambitious projections for future growth and profitability did not materialize as expected, leading to the company pausing its Rs 3,000 crore IPO plans in October 2022. Meanwhile, the pre-owned vehicles market has undergone significant changes, and it may require an exceptionally innovative offering—such as a two-year zero maintenance guarantee on every vehicle sold—for a firm to differentiate itself and attract buyers based on its brand. The plans remain ambitious even now- the question is, can it deliver? 

Update on February 10: We have revised our concluding paragraph in response to the company's concerns regarding a couple of points.