Cashify, a recommerce platform for used electronics, has pushed out its timeline to turn profitable by about six to nine months, as it lets growth take precedence over profitability to maintain its leadership position in the industry, co-founder and CEO Mandeep Manocha said.
The company now hopes to turn profitable by the end of FY24, about 18 months from now. Cashify had earlier aimed to turn profitable by the end of FY23.
This is not the first time the firm moved its goal to turn profitable, according to several media reports.
However, prioritising growth over profitability even at a time when most of the new-age companies have been pushing towards a path to profitability seems to be working in Cashify’s favour. “We are doing certain experiments that are taking money and we’ve realised that if we have to grow our e-commerce business, we have to invest money. It’s a small unit but that’s where the marketing dollars will be spent,” Manocha said.
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“We’ll still take a pragmatic approach and not throw money unnecessarily around hyper-growth because markets are getting cold and it is difficult to raise money. Our target is to become profitable in 18 months, pushed out by about six to nine months.”
As part of its experiments, Cashify is beta-testing an image recognition device, a physical box that its on-ground sales executives will carry to diagnose used phones and arrive at a much accurate price for devices. Currently, Cashify’s price estimates, which it pays to customers while buying their phones, stands at about 85%. After the tool is deployed, the prices would be bettered to 95-100%, near perfect, Manocha said.
That will be a move away from some 300 of its sales executives who manually test devices for physical and software damage, a model widely followed in the industry currently. The company is in the process of filing its utility patent for the image recognition device currently and it will roll it out to all cities in the next few quarters.
Further, increasing the revenue from selling refurbished phones is another area Cashify said it will focus on to grow its business. About 15% of the company’s revenue comes from selling refurbished smartphones currently and that the share will increase to around 35% over the coming 12 months, Manocha said. He added that equated monthly instalment (EMI) options, six-month warranty on refurbished phones and pricing them at 60% of what the new device costs will help the company reach its goal.
Cashify ended FY21 with a revenue of Rs 340 crore, while its losses stood at Rs 35 crore. In FY22, the top line jumped to Rs 520 crore, while losses doubled to Rs 70-80 crore. Further, Manocha said the company was on track to end FY23 with a top line of Rs 850-900 crore, while its losses will likely hold near Rs 70-80 crore, paving Cashify’s path towards profitability in FY24, likely indicating its decision to choose growth over profitability yielded desired results.
“No founder is chasing growth and fully ignoring profitability. But when liquidity is high, founders use the capital to build and not lag behind their competitors, that is when growth takes precedence over profitability. Growth is needed to be successful,” Venkatesh Peddi, managing director at Chiratae, said.
The refurbished smartphone market is expected to grow to $10 billion by FY26, from $6 billion currently, according to various estimates. Gurugram-based Cashify has raised about $136 million from Blume Ventures, Amazon India, Bessemer Venture Partners and others, and is valued at around $250 million. It is understood to be the largest player in the space, while Flipkart-owned Yaantra is a close second. Amazon Renewed, Olx, Quikr and Xtracover are a few other companies in the space where roughly 75% of the market still remains unorganised.