FSN E-commerce, which owns the fashion e-commerce portal Nykaa, reported a weak year-on-year (YoY) profit in Q3 of FY22. The e-commerce company led by Falguni Nayar reported a net profit after tax of Rs 29 crore, a 58 percent decrease from the Rs 68.9 crore reported in the third quarter of FY21. This is, however, a 24X increase over the Rs 1.2 crore reported in the second quarter of FY22.
Nykaa generated Rs 1,098.4 crore from its operations in Q3 of FY22, a 36 percent increase from Rs 808 crore earned during the same period in FY21. This is also a 24 percent increase from the company’s Rs 885.3 crore in Q2 of FY22. Its overall operating expenses climbed by 91 percent year on year. Nykaa’s operating expenses increased to Rs 439.8 crore in the third quarter of FY22. Nykaa’s operating expenses in the third quarter of FY21 were Rs 230.8 crore. Its operational expenses were Rs 349.4 crore in the second quarter of FY22, a 26 percent rise year on year.
The startup’s advertisement costs increased by 155 percent in the third quarter of FY22, from Rs 60 crore in the third quarter of FY21 to Rs 153.6 crore in the third quarter of FY22. Employee benefit expense, which includes salaries, gratuities, and Provident Fund, among other expenses, cost Nykaa Rs 115.9 crore in Q3 FY22, a 56 percent increase.
Its EBITDA (earnings before interest, taxes, depreciation, and amortization) plunged 36percent year on year to Rs 69 Crore. In the third quarter of fiscal year 22, the EBITDA margin slipped to 6.3 percent from 13.2 percent in the third quarter of fiscal year 21. The gross merchandise value (GMV) for its cosmetics and personal care totaled Rs 1,533 crore in the third quarter of FY22, a 32 percent increase from Rs 1,158.7 crore in the third quarter of FY21. The GMV of its fashion business was Rs 510 crore in the third quarter of FY22, up 137 percent from Rs 215.4 crore in the same quarter of FY21.
Nykaa, founded in 2012 by former investment banker Falguni Nayar, has emerged as the go-to online marketplace. The company directly competes with major players like Amazon, Flipkart, Myntra, and Big Basket, among others. The company, which went public in October to raise around Rs 4,000 crore, had a positive response from the market. However, the share price has recently fallen in sync with the major markets due to concerns about the Omicron variant of Covid-19. FSN E-commerce-owned Nykaa is among the few profitable startups that went public, with the promoters holding 51 percent of the company.