Udaan Struggles Financially Despite Recent Fundraising; Revenue Stagnates
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Synopsis
Udaan, a B2B e-commerce platform, is grappling with financial issues, even after raising funds. Its revenue remains stagnant in FY24, while its valuation has dropped significantly. The company is focusing on cost-cutting and managing its losses but may need further funding soon.
Key Takeaways
- Udaan's revenue has stagnated in FY24
- The company’s valuation has decreased by 59.3%
- GMV growth was only 1.7%
- 98.5% of GMV comes from traded goods
- Udaan reduced total expenses by 4.4%
Bengaluru, Feb 18 (NationPress) The B2B e-commerce platform Udaan is encountering significant financial difficulties even after obtaining new funding, as the company’s revenue has remained nearly unchanged in FY24.
Its valuation has also plummeted by 59.3%, dropping to $1.3 billion from its previous peak of $3.2 billion, based on its financial reports.
This downturn occurs despite Udaan successfully reducing its losses by 19.4% over the year.
In FY24, Udaan’s gross merchandise value (GMV) experienced a mere 1.7% increase, reaching Rs 5,706.6 crore compared to Rs 5,609.3 crore in the last fiscal year. This represents a significant decline from the much higher GMV of Rs 9,900 crore in FY22.
The company, based in Bengaluru, primarily earns revenue through the sale of traded goods, platform fees, logistics services, credit services, and advertising.
However, 98.5% of its GMV is derived from the sale of traded goods, highlighting a substantial dependency on this revenue source.
Despite the stagnant revenue, Udaan has been proactively reducing costs to stabilize its finances.
The company has lowered expenditures in crucial areas, including employee benefits (down 35.4%), logistics and packaging (down 16.8%), and outsourced manpower (down 39.3%).
This cost-cutting strategy has successfully decreased total expenses by 4.4%, bringing them down to Rs 7,407.6 crore in FY24.
Nevertheless, the cost of materials—the company’s largest expense—rose by 4.2%, totaling Rs 5,576.8 crore.
Udaan’s losses have been reduced to Rs 1,674.1 crore from Rs 2,075.9 crore, according to its financial disclosures.
To maintain operations, Udaan recently secured Rs 300 crore (over $35 million) in debt funding from investors including Lighthouse Canton, Stride Ventures, InnoVen Capital, and Trifecta Capital.
To date, the company has accumulated approximately $1.9 billion in debt and equity funding. However, reports indicate that Udaan may require additional funding soon.
In FY24, the firm has managed to enhance its EBITDA margin and operating cash flow.
