With venture capitalists and private equity firms tightening their purse strings, stressing on profits rather than just the focus on growth, startups seem to be showing results.
A large number of startups have either been able to narrow their losses or posted positive bottomlines in FY24. This came on the back of cost-cutting measures as revenues have largely remained muted.
Audio and wearable device maker boAt managed to nearly halve its losses during the fiscal to Rs 53 crore, while the topline fell by around 5% to Rs 3,122 crore. The company’s marketing spends came down by 14% during the year.
Online pharmacy player PharmEasy managed to halve its losses to Rs 2,533 crore, mostly from lower goodwill impairment charges and an overall decline in expenses. However, due to severe competition in the online pharmacy space, the company’s revenue declined 15% to Rs 5,644 crore.
PharmEasy is struggling to gain back market share due to competition from players such as Tata 1mg, Reliance-owned Netmeds, and Apollo 24×7, among others.
With the deepening of the funding winter during the last two years, unicorns such as Meesho, Purplle and Lenskart, among others, have focused on cutting operational costs and meaningfully reducing their losses. Meanwhile, travel-tech unicorn Oyo turned profitable, posting a profit of Rs 229 crore in FY24, from a loss of Rs 1,286.5 crore a year ago. Profitable startups such as Infra.Market and OfBusiness have continued to scale up their profit.
Analysts said that even though now the funding winter seems to be easing a bit, startup firms are not expected to be bitten by the growth euphoria of 2021. Instead, sustainable growth projections and lean cost structures are going to be the guiding business principle.
The trend is similar for startups which are listed on the bourses. During the July-September quarter of the current fiscal, Delhivery, Paytm and flexible workspace provider Awfis turned profitable. These firms had registered losses during the same quarter last year.
Recently-listed startup firms such as Ola Electric and FirstCry also managed to narrow their losses. While FirstCry halved its losses to Rs 50 crore in Q2, Ola Electric was able to reduce the same by around 6% to Rs 495 crore. Go Digit, Zaggle, Zomato, Nykaa and Unicommerce were also able to improve their bottomline. Among these, Zomato’s performance was the best with a nearly 5x jump in net profit to Rs 176 crore during the July-September period, from Rs 36 crore last year.