Flipkart Burns $1.1 Bn Worth Cash In Six Months: Walmart

Flipkart In Talks To Raise $3 Bn, Targets Valuation of $40 Bn

SUMMARY

Walmart said in a filing that of the $3.5 Bn cash in the market, $1.1 Bn was expected to be used by Flipkart

Last year, Flipkart received $3.6 Bn in new equity, raising funding at a post-money valuation of $37.6 Bn

The Indian ecommerce major just wrapped up its ‘The Big Billion Days’ sale, seeing more than one billion visits and over four million first-time customers

Ecommerce major Flipkart has reportedly burnt $1.1 Bn in cash between February and July this year.

“As of July 31, 2022, and January 31, 2022, cash and cash equivalents of $3.5 Bn and $4.3 Bn, respectively, may not be freely transferable to the U.S. due to local laws or other restrictions,” said Walmart in its quarterly report for the quarter ended July 31.

The cash that is not freely transferable to the US is denoted as cash in the market by Walmart in its filing with the Securities and Exchange Commission (SEC).

“Of the $3.5 Bn at July 31, 2022, approximately $1.1 Bn can only be accessed through dividends or intercompany financing arrangements subject to approval of the Flipkart minority shareholders; however, this cash is expected to be utilised by Flipkart,” the US-based retail major added.

Therefore, between the end of January and the end of July this year, Flipkart has burnt the said $1.1 Bn in its operations.

Last year, Flipkart received $3.6 Bn in new equity, raising funding at a post-money valuation of $37.6 Bn. At the same time, Walmart’s stake in the ecommerce major diluted slightly to 75%.

Even as Flipkart’s cash burn remains high, people at Walmart are confident that the ecommerce major would turn profitable. In June, Judith McKenna, Walmart International CEO, said there was clear proof of value in Flipkart as it remains on track for profitability.

“They’ve hit our deadlines… We wouldn’t have invested if we didn’t believe they could become profitable in the longer term, and we continue on track for that,” she added.

Media reports have been suggesting that Flipkart would go for a public listing in 2023. In April, reports emerged that indicated that the ecommerce major has increased its IPO valuation to $60-70 Bn.

Big Push For The Festive Sales

Recently, the ecommerce giant also received a cash infusion of INR 1,594.76 Cr from its Singapore-based parent entity to prepare for the festive season sales in India. Earlier in March, the parent company infused $553 Mn more into its marketplace business.

The Indian ecommerce behemoth just wrapped up its ‘The Big Billion Days’ sale. According to the ecommerce major, the sale saw more than one billion customer visits, including over four million first-time customers.

Flipkart, which is also India’s most-valuable startup, increased its seasonal workforce from 115K to 250K for the festive season. Therefore, it is reasonable to expect that Flipkart would burn through more of its cash reserve during the ongoing festive season.

At the same time, its rival Amazon has also been busy preparing for the festive season. The US-based ecommerce giant has a 30-day sale going on, having incorporated 30 more fulfilment centres to cater to the increased demand.

Per a report by consulting firm Redseer, online sales during the festive season in India would amount to $11.8 Bn in 2022, up 28% from the previous year’s $9.2 Bn.