Valuations may have skyrocketed for many, but the pandemic had a serious impact on late-stage earnings for most of India’s late-stage growth and start-ups in FY21. And this can be seen in the decline in sales of Ola, Oyo and Droom during the last fiscal year. For some, however, it opened up a number of new opportunities that they used to grow during that time.
One such company is Urban Company, which became a unicorn with a valuation of $ 2.1 billion when they a $ 255 million Series F round in June. During the fiscal year troubled by the Covid pandemic, the company posted operating revenue growth of 13.3% to Rs 247.7 billion in FY21 from 218.6 billion.
Urban Company operates with six supporting subsidiaries based in India, Singapore, Australia, Saudi Arabia and the Netherlands. These subsidiaries generated total consolidated income of nearly Rs 290 billion for FY21.
79% of income came from consumer and partner services
Revenue from providing services to both customers and service staff was the company’s primary source of revenue, accounting for 79.2% of total revenue from operations. These collections grew 26.4% YoY to Rs 196.3 billion in FY21.
Income from the sale of goods to its service professionals for the provision of services on the platform was reduced by 19.4% year-on-year to 50.3 billion rupees in FY21. This shows the impact on both the important segment of beauty services and others like water filters etc.
Notably, Urban Company also gave discounts of Rs 27.7 billion in FY21. Investment income added an additional Rs.42.1 billion to the company’s coffers last fiscal year.
Pension costs Rs 227 Cr for Urban Company
Developer salaries and other key roles have skyrocketed, and this is reflected in Urban Company’s spending on employee benefits in FY21. Salaries and other allowances were the company’s largest expense, accounting for 42.1% of annual costs. These costs increased 62% to Rs 227 billion in FY21 from Rs 139.5 billion in FY20.
Importantly, 31.5% of these payments come from stock-based payments of Rs 71.6 billion. The Urban Company added new stock options to its ESOP pool towards the end of FY21, which are now valued at around Rs.292.7 billion.
Marketing and promotional expenses have proven to be the company’s second largest cost center, accounting for 23.4% of annual costs. This spending increased 5.8% year over year to Rs.126 billion in FY21.
While the cost of acquiring trade inventory (goods sold to service partners) fell 22% to Rs 44.6 billion in FY21, the company spent another Rs 21 billion on safety materials (PPE kits, etc.), which were packed with each service …
In addition, during the fiscal year ended March 2021, payments to contract employees increased 6.4 times to 19.2 billion rupees.
Overall, the company spent Rs 539 billion in FY21, 29% more than the Rs 418.3 billion annual spend it spent in FY20. At the unit level, Urban Company spent 2.18 rupees to generate a single rupee in revenue.
Conclusion: The Urban Company’s losses increased 61% to Rs 249 Cr
Annual losses posted by the company increased 61% YoY in FY21 to Rs 249.3 billion compared to Rs 155.2 billion in FY20… While the scope of operations has not shrunk in the troubled time of the pandemic, the persistently high losses come as a surprise.
EBITDA margins deteriorated from -48.75% in FY20 to -73.82% in FY21 and the company’s balance sheet showed accumulated losses of Rs 654.12 billion as of March 31, 2021.
Other companies like PhonePe, which also grew during the pandemic, did so with slightly better margins. The Urban Company’s high growth costs with a gap between revenue and loss growth of around 50% will affect the company run by Abhiraj Bhal. Especially since it is aiming for an IPO in FY23.