Pepperfry is one of a clutch of late-stage companies planning to file draft papers for its Initial Public Offering (IPO) by the end of the ongoing calendar year. However, the company’s financial performance has not been impressive in FY22 as its losses widened by 83% with an average growth in operating income.
Pepperfry’s operating revenue grew around 23% to Rs 247 crore in FY22 from Rs 201 crore in FY21, according to the company’s annual financial statement with the Registrar of Companies (RoC). It primarily earns revenue from the commission on the goods and articles sold through its marketplace and offline stores. This income grew 14% to Rs 224.5 crore in FY22.
Pepperfry also sells furniture items and mattresses, collections from these two verticals surged 7.3X to Rs 22 crore in FY22.
On the expense side, warehousing cost was the largest cost centre for Pepperfry forming 33.6% of the overall cost. This cost increased 19.4% to Rs 154 crore during the fiscal year ending Mar 2022. Advertising/promotion costs soared 78% to Rs 130 crore in FY22 and these along with warehousing costs alone accounted for 62% of the company’s total expenditure in FY22.
Pepperfry spent Rs 81 crore on employee benefit expenses which also includes Rs 9.61 crore as employee stock option (ESOP) expenses while transportation costs grew over 27% to Rs 42 crore in FY22.
It also added Rs 20.8 crore as cost of materials consumed which pushed total expenditure by 40% to Rs 458 crore in FY22 from Rs 327 crore in FY21.
With 40% growth in the total cost, Pepperfry’s losses jumped 83% to Rs 194 crore in FY22.
Due to increased expenses, its cash outflow from operations was recorded at Rs 173 crore in FY22. On a unit level, the company spent Rs 1.85 to earn a single unit of operating revenue. With such a high cost and losses, EBITDA margin and ROCE also worsened significantly to -46.97% and -50.59% during the last fiscal year.
Talk of IPO plans with these numbers certainly seems surprising, considering the sharp market bias for profitability over promise currently. Pepperfry, while operating in a category that is impressively large, inspires little confidence when it comes to parlaying that presence into a profitable one. It will need a real breakthrough and not incremental changes, that will change the narrative for the firm.
Source @Entrackr
