D2C Unicorn Mamaearth Turns Profitable In FY22, Revenue Inches Closer To INR 1,000 Cr Mark

Ghazal and Varun Alagh-led D2C ecommerce unicorn Mamaearth turned profitable in the financial year ending March 31, 2022. The startup, which entered the unicorn club in earlier this year, posted a net profit of INR 19.8 Cr on a standalone basis in FY22 as against a net loss of INR 1,332.2 Cr in FY21. 

Mamaearth is also closing on touching the INR 1,000 Cr revenue mark. Its total income rose 101% to INR 952.4 Cr in FY22 from INR 472.1 Cr in the previous financial year. The Tiger Global-backed startup’s revenue from operations rose 2X to INR 931.7 Cr from INR 459.9 Cr in FY21.

In an interview with a national daily, Mamaearth CEO Varun Alagh said that the surge in repeat percentage of customers followed by proliferation of other channels (online+offline) helped the startup turn profitable. Currently, 70% of the sales of the startup are coming from online channels, with the remaining 30% coming from offline channels, he said. 

Mamaearth’s other income stood at INR 20.6 Cr during the year. Other income usually comprises revenue earned on investments. 

The startup’s EBITDA margin improved to 3.89% in FY22 from -280% in FY22. 

Decline In Expenses

The Gurugram-based D2C startup is among a handful of Indian startups which managed to reduce its expenses in FY22. Mamaearth’s expenses narrowed 48.5% to INR 924 Cr in FY22 from INR 1,796.7 Cr in FY21, led by a sharp decline in its miscellaneous expenses. 

Mamaearth’s miscellaneous expenses declined to INR 10.8 Cr in FY22 from INR 1,369 Cr in FY21. 

Meanwhile, employee benefit expenses jumped 160% to INR 72 Cr in FY22 from INR 27.7 Cr in FY21. Employee benefit expenses usually comprise employee salaries, PF contributions, gratuity, and other employee welfare benefits. Rise in employee benefit expenses is a clear indication that the company has increased its employee headcount. 

D2C startups are known for spending big on advertising to grab the attention of customers, and the story was no different for Mamaearth. Its advertising expenses grew 120% to INR 390.6 Cr  in FY22 from INR 177.9 Cr in FY21.

The startup’s total cost of transportation increased to INR 91.9 Cr in FY22, a 1.6X jump from INR 54.2 Cr in the previous fiscal. 

Founded by the husband-wife duo of Varun and Ghazal in 2016, Mamaearth initially started with selling baby care products. However, it gradually moved on to become a complete personal care brand. The startup currently delivers products to over 500 cities in India. 

In May, Mamaearth acquired a majority stake in skincare brand Dr Seth’s at a valuation of INR 28. Prior to that, it acquired hair colour brand BBLUNT from Godrej Consumers. The deal was pegged at around INR 134 Cr. Mamaearth also acquired Momspresso in 2021.

Mamaearth became a unicorn after raising $52 Mn at a $1.2 Bn valuation. The unicorn round was led by Sequoia Capital and saw participation from Belgium-based Sofina Ventures, Evolvence. 

Its last valuation of $1.2 Bn was almost 9.3 times of its total revenue in FY22.

Mamaearth competes against the likes of publicly listed Nykaa, unicorn Purplle, Plum Skincare, Juicy Chemistry, and Wow Skin Science. 

According to an Inc42 report, the D2C segment in the ecommerce sector is expected to touch the $100 Bn mark by 2025. The beauty and personal care sub-segment is expected to grow at 21% CAGR and the market opportunity is anticipated to be worth $8.2 Bn.

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