IPO-Bound Droom’s FY24 Loss Declines 35% To INR 40 Cr

IPO-bound automobile ecommerce platform Droom reported a 35% decline in its consolidated net loss to INR 40.4 Cr in the fiscal year 2023-24 (FY24) from INR 62.1 Cr in the previous fiscal year due to lower expenses.

With the improvement in its bottom line, the Lightbox-backed company’s EBITDA loss went down to INR 37.2 Cr during the year under review compared to an EBITDA loss of INR 57.3 Cr in FY23. 

However, EBITDA margin fell 21 percentage points year-on-year to -44% in FY24 as Droom’s top line took a hit. Its operating revenue slumped 66% to INR 85.4 Cr in the year ended March 2024 from INR 253.3 Cr in the previous fiscal year.

Founded in 2014 by Sandeep Aggarwal, Droom operates an ecommerce platform to connect used car dealers with customers. In 2022, it ditched selling budget-friendly cars and moved to selling mid/premium and luxury cars to increase its margin.

Apart from selling cars, Droom has a car financing vertical, a SaaS vertical and an advertising business. Last month, the company also launched car rental services.

The startup primarily earns revenue from commissions from buyers, income from seller subscriptions, and advertisement fees.

Including other income of INR 4.6 Cr, the used car marketplace unicorn’s total revenue stood at INR 90 Cr in the fiscal year 2023-24.

In January, Inc42 exclusively reported that Droom was planning to file its draft red herring prospectus (DRHP) with markets regulator SEBI for INR 1,000 Cr (about $115 Mn) initial public offering (IPO) by June.

The public issue will be a combination of a fresh issue of equity shares and an offer for sale. The company is eyeing a valuation of $1.2 Bn to $1.5 Bn for the IPO and has already finalised two bankers to manage its IPO. The unicorn has set its sights on a public listing by November.

This will be Droom’s second attempt to go public. It initially filed a DRHP with SEBI to raise INR 3,000 Cr back in 2021 but later withdrew its IPO plans due to market volatility.

It also plans to raise INR 200 Cr (around $23 Mn) in a pre-IPO round from existing and new investors in a bid to increase domestic shareholding in the company, mimicking the approach taken by IPO-bound quick commerce unicorn Zepto.

To date, Droom has raised a total funding of around $300 Mn. Besides Lightbox, the company also counts 57 Stars and Seven Train Ventures among its backers.

Zooming Into Expenses

Amid a slump in revenue, Droom’s total expenses fell over 64% to INR 100.9 Cr in the year ended March 2024 from INR 277 Cr in the previous fiscal year.

Employee Costs: The company spent INR 42.9 Cr on employees’ remuneration and welfare expenses during the fiscal year 2023-24, down 39% YoY. Of this, it spent INR 6.6 Cr in stock-based compensation.

Miscellaneous Expenses: The spending under this head slid 64% to INR 94.3 Cr in FY24 from INR 264.7 Cr in FY23. This included promotion and incentives expenses to the tune of INR 85 Cr and impairment on loans of INR 5.9 Cr, among others