FirstCry, the omnichannel baby and kids marketplace, is gearing up for an initial public offering (IPO) with its financials making headlines. The startup’s net loss for the financial year 2022-23 surged by a staggering 518%, reaching INR 486 Cr. This article delves into the intricacies of FirstCry’s financial performance, including the surge in losses, revenue milestones, expenditure breakdown, and the upcoming IPO prospects.
FirstCry’s IPO Aspirations
Founded in 2010 by Supam Maheshwari and Amitava Saha, FirstCry is on the brink of becoming a publicly listed company. Last year, it took the first step towards this transformation. As part of its IPO plans, the startup is expected to file its draft red herring prospectus (DRHP) by the end of the month. Reports suggest that FirstCry aims to raise $500 Mn-$600 Mn in the IPO, targeting a valuation of $4 Bn.
FirstCry: Financial Performance Overview
FirstCry’s financial journey in the fiscal year 2022-23 showcased remarkable contrasts. The consolidated net loss witnessed a staggering 518% increase, soaring from INR 78.6 Cr in the previous fiscal year to INR 486 Cr. The startup, which had recorded a net profit of INR 215.9 Cr in FY21, faced a significant turnaround in its financial trajectory.
Amid the challenging financial landscape, FirstCry’s operating revenue showcased resilience and growth. Crossing the INR 5,000 Cr mark, the operating revenue surged by 135%, reaching INR 5,632.5 Cr in FY23 from INR 2,401.2 Cr in the preceding fiscal year. The primary revenue stream remains the sale of baby care products, positioning FirstCry as a key player in the niche market.
FirstCry: Expenditure Breakdown
A granular analysis of FirstCry’s expenditure offers insights into the areas where significant investments were made. The startup reported a total expenditure of INR 6,315.6 Cr in FY23, marking a substantial 146% increase from INR 2,568 Cr in FY22. Key expenditure components include:
- Procurement Cost: As an ecommerce marketplace, FirstCry allocated a substantial portion of its expenditure to restocking, with procurement costs reaching INR 3,953.3 Cr in FY23 – a 150% increase from the previous fiscal year.
- Employee Benefit Expenses: Staff-related expenses saw a considerable uptick, with INR 769.8 Cr spent on salaries, gratuity, PF, and other welfare benefits – a 127% increase. Additionally, ESOP expenses surged by 292%, reaching INR 361.4 Cr.
- Transportation Cost: There was a notable spike in transportation costs, totaling INR 429.2 Cr in FY23 – a 604% increase compared to the previous fiscal year.
- Advertising Expenses: FirstCry’s advertising costs increased by 55%, reaching INR 416.4 Cr in FY23 from INR 268.6 Cr in FY22.
EBITDA Margin Deterioration
FirstCry’s EBITDA (earnings before interest, taxes, depreciation, and amortization) margin experienced a deterioration, declining to -2.9% from 4.05% in FY22. The negative margin reflects the startup’s strategic investments and operational challenges during the fiscal year.
As FirstCry navigates its financial landscape, investor interest remains evident. The startup, backed by significant investments from the likes of SoftBank, Chrys Capital, and Vertex Ventures, is poised to tap into the public markets. Recent stakes acquired by family investment offices, including MEMG Family Office, Sharrp Ventures, and the DSP family office, further solidify investor confidence.
FirstCry’s financial trajectory, marked by a substantial surge in losses, underscores the complexities and challenges of scaling in the competitive ecommerce landscape. As the startup prepares for its IPO, the resilience displayed in revenue growth, coupled with strategic investments, positions FirstCry at the intersection of risk and opportunity. The coming months will unravel the startup’s fate as it steps onto the public stage, inviting scrutiny and anticipation from investors and industry observers alike.
