Pepperfry is one of a groups of late stage companies that plan to submit draft document for their Initial Public Offering by the end of the current calendars year. However, the company financial performance has not been impressive in fiscal 2022, as its losses widened by 83% with average growth in operating incomes.
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Pepperfry revenue Rs 250 Cr
Pepperfry operating income grew around 23% to Rs 247 crore in FY22 from Rs 201 crore in FY21, according to the company annual financial statement with the Registrar of Companies RoC. It earns revenue primarily from commission on goods & item sold through its marketplace & offline store. These revenues grew by 14% to Rs 224.5 crore in FY22.
Pepperfry also sell furniture & mattresses, with collections from these two verticals rising 7.3X to Rs 22 crore in FY22.
On the expense side, storage cost was the largest cost center for Pepperfry, accounting for 33.6% of the total cost. This cost rose 19.4% to Rs 154 crore during the fiscal year ending March 2022. Advertising & promotions costs soared 78% to Rs 130 crore in FY22 and these, together with storage cost, they alone accounted for 62% of the company total spend in FY22.
Pepperfry spent Rs 81 crore on employee benefit expenses, which also include Rs 9.61 crore as employee stocks options ESOP expenses, while transports costs increased by more than 27% to Rs 42 million. rupees rupees in FY22.
It also added Rs 20.8 crore as cost of materials consumed, bringing the total spend by 40% to Rs 458 crore in FY22 from Rs 327 crore in FY21.
With a 40% growth in total cost, Pepperfry’s loss increased by 83% to Rs 194 crore in FY22.
Due to increased expenses, its cash outflow from operation was recorded at Rs 173 crore in FY22. At the unit level, the company spent Rs 1.85 to earn a single unit of operating income. With such a high cost & loss, EBITDA margin & ROCE also significantly worsened to -46.97% & 50.59% during the last fiscal year.
Talk of IPO plans with these number certainly seems surprising, considering the strong markets bias for return on promise today. Pepperfry, while operating in a category that is impressively large, inspires little confidence when it comes to turning that presence into a profitable one. You will need real progress & not incremental changes, that will change the narrative of the company.