Nykaa Q1: Net Profit More Than Doubles YoY To INR 13.6 Cr, Revenue Grows 23%

Beauty and fashion ecommerce major Nykaa’s consolidated net profit jumped almost 152% to INR 13.6 Cr in the June quarter (Q1) of the financial year 2024-25 (FY25) from INR 5.4 Cr reported in the same quarter last year.

Its operating revenue also increased 22.8% to INR 1,746.1 Cr in the reported quarter from INR 1,421.8 Cr in Q1 FY24.

During the company’s Q1 earnings call, Nykaa’s MD and CEO Falguni Nayar credited the improvement in the bottom line to restructuring and various such measures taken in the recent past.

On a quarter-on-quarter basis, Nykaa’s operating revenue increased 4.6% from INR 1,667.9 Cr. Its net profit also grew from INR 9.07 Cr in the preceding March quarter.

Nykaa’s total gross merchandise value (GMV) rose 25% YoY to INR 3,320.9 Cr in Q1 FY25, with its beauty and personal care (BPC) vertical witnessing a higher growth than Nykaa Fashion.

The GMV of Nykaa’s BPC business rose 28% YoY to INR 2,542.9 Cr in the reported quarter, while the fashion vertical’s GMV saw a 15% YoY rise to INR 774.1 Cr.

It is pertinent to note that Nykaa’s fashion vertical witnessed slower growth than the company had projected earlier, which it attributed to the newness of the business and seasonalities involved.

Meanwhile, the startup announced two acquisitions in the BPC segment along with its Q1 earnings. While it acquired an additional 39% stake in its subsidiary Dot & Key for INR 265.3 Cr, Nykaa also bought an additional stake in the beauty brand Earth Rhythm for INR 44.5 Cr.

Speaking on the Dot & Key acquisition, Nayar said the brand has grown 9X over the last three years and its growth continues to accelerate.

“This has been a fantastic investment by Nykaa and (that’s why we have) decided to go ahead and acquire an additional 39% stake… What we like about Dot & Key is it has a differentiated assortment. It also has clutter-breaking packaging, unique and patented. And finally, they also tend to focus on core categories like sunscreen and moisturisers, which constitute a very large part of the skincare category. So, this gives a presence to Nykaa in some very important categories,” Nayar said.

Meanwhile, she mentioned that the GMV of Earth Rhythm grew 3X over the last three years. 

“What we like about this brand (Earth Rhythm) is it has a very differentiated positioning. It’s sustainable and inclusive. It’s certified organic, plant-based, and 99% plastic-free… that’s what we like about the positioning of this brand,” said Nayar.

Nykaa’s total store count also touched the 200 mark in July 2024.

Zooming Into Expenses

Nykaa’s total expenses increased 22% to INR 1,731.4 Cr in Q1 FY25 from INR 1,418.8 Cr in the corresponding period last year.

Purchase Of Traded Goods: The ecommerce major spent INR 1,171.8 Cr in this bucket in the reported quarter, which was an increase of 77% YoY.

Also, it comprised over 67% of Nykaa’s total spending during the quarter.

Employee Cost: Nykaa’s spending towards employee benefit expenses jumped 12.5% to INR 155.9 Cr in the reported quarter from INR 138.58 Cr in Q1 FY24.

Marketing & Ad Expense: As per the startup’s investor presentation, it spent INR 194.9 Cr under this head in Q1 FY25 with the largest portion going towards the beauty vertical. In last year’s quarter, Nykaa’s ad spending stood at INR 156.7 Cr.

Fulfilment Cost: The company spent INR 166.7 Cr under this head in Q1 FY25, which increased 22.8% YoY.

Ahead of Nykaa’s Q1 earnings announcement on Tuesday (August 13), its shares declined 4% to settle at INR 186.6 on the BSE.