Nykaa Q3: Beauty Segment Powers Company To Yet Another Profitable Quarter

Nykaa continued to see healthy growth across the board as it saw yet another profitable quarter. The beauty ecommerce giant’s consolidated net profit zoomed more than 51% year-on-year (YoY) to INR 26.4 Cr in the third quarter (Q3) of fiscal year 2024-25 (FY25).

EBITDA zoomed 42% YoY to INR 140.8 Cr in the quarter under review. 

Revenue from operations surged 26.7% YoY and 20.9% sequentially to INR 2,267.21 Cr in the October-December quarter. The uptick in the top line came on the back of robust growth across verticals, including the online beauty platform, owned beauty brands, physical retail stores, e-B2B distribution business.

While revenue from Nykaa’s beauty and personal care (BPC) business jumped 27% YoY to INR 2,060.01 Cr in Q3 FY25, the company also realised a profit of INR 100.31 Cr from this vertical, up 36.2% YoY. 

On the other hand, Nykaa Fashion continued to remain a loss-making entity in the quarter. While its revenue increased 21.3% YoY to INR 199 Cr, Nykaa’s fashion arm managed to trim its loss by 12.3% YoY to INR 25.41 Cr.  

Another loss-making entity for Nykaa was its international beauty business. The arm’s loss ballooned to INR 7.96 Cr in Q3 FY25, up nearly 84% from INR 4.11 Cr in the year-ago period. However, revenue from the international beauty business surged 176% YoY to INR 8.20 Cr during the quarter under review.

Meanwhile, Nykaa’s cumulative customer base increased 29% YoY to about 40 Mn and gross merchandise value (GMV) zoomed 25% YoY to INR 4,527.9 Cr in Q3. 

Now, let’s take a deeper look into how Nykaa fared on the financial front.

Nykaa Beauty Steals The Show, Again

Nykaa’s omnichannel beauty playbook continued to pay off as the vertical saw an “accelerated growth momentum” in the quarter under review, with its GMV rising 32% YoY to INR 3,389.9 Cr in the quarter ended December 2024. The company attributed this jump to its rising customer cohort.

Nykaa said that its cumulative beauty customer base grew to 32 Mn in the quarter under review. “The solid order volume growth of 30% YoY is the highest growth in the last 9 quarters,” the company added. 

During the quarter, the company also hosted its flagship “Nykaa Pink Friday” sale during which it offered massive discounts on beauty, skincare, haircare, and wellness products. Nykaa said it registered a 55% customer growth during the sale and clocked 86 Mn site visits. 

Further, it also added more than 200 brands on its platform in Q3 FY25, one of the “highest brand onboardings in recent times”. 

The company also claimed that it had India’s largest beauty retail network at the end of Q3 FY25. Nykaa’s retail network comprised 221 physical stores spanning 73 cities, with 12 new store launches in three cities in the December 2024 quarter.  

The company said that its offline beauty network is profitable at the PAT-level, adding that the business clocked 34% YoY growth in GMV during the quarter. Besides, the offline business now contributes 9% to Nykaa’s omnichannel beauty GMV.

“We now reach almost 6 Lakh retailers in 1,100 cities. So, we are now deep in Indian Tier-III and Tier-IV where we have a regular user base. This really helps improve our profitability,” the company said during its investor call.

Responding to a question about whether the company plans to trim its rising expenses towards growing the beauty vertical in the future, the chief executive of Nykaa’s beauty vertical Anchit Nayar said there is still a scope for penetration in the category. 

“There is a lot of category expansion that needs to be done and the benefit of larger TAM will ultimately accrue to us. So we see investment in customer acquisition as one of the larger buckets of our marketing expenses and we are seeing the benefits of that play out,” he added.

Fashion Continues To Be A Laggard

The fashion category continued to drag down Nykaa’s bottom line. During the call, the company’s management noted the overall fashion market is going through turbulent times, and said that the company’s next course of action will be to improve the profitability of its fashion business. 

“Revenue growth higher than GMV growth in Q3, driven by strong performance by LBB (strong marketing income including marquee events like – Nykaaland and Nykaa Wali Shaadi – and higher services related income,” Nykaa said in its investor presentation.

Nykaa’s fashion GMV grew a mere 8% YoY to INR 1,129.9 Cr in the quarter. However, the company improved its gross margin as a factor of its net sales value (NSV) for the fashion vertical to 51.3% from 43.9% in the year ago quarter.

Alongside, the listed giant also improved its fulfilment expenses for the fashion vertical by 93 basis points (bps) to 10% on the back of shift from air to land shipments and savings on packaging cost. 

Meanwhile, Nykaa splurged heavily on marketing for the fashion business, with expenses under the bucket rising sharply to 30.5% of its NSV from 24.6% in the year-ago quarter due to an increase on account of campaigns and customer acquisition. 

“The fashion vertical continues to show improvement in profitability with cost efficiencies across several cost items,” Nykaa added. 

This comes at a time when the competition in the fashion segment is heating up with the re-entry of Shein in India. Acknowledging the competitive landscape, Nykaa CEO Falguni Nayar said that the category is unlikely to see a clear leader. 

“The market is very wide, and no one brand can dominate it. We believe that Shein’s return should not have much of an impact,” Nayar added.

Dot & Key Emerges As The Crown Jewel Of The House Of Nykaa 

The beauty and fashion brands backed by the company continued to scale up. The ‘House of Nykaa’ brands saw their GMV zoom 49% YoY to INR 468.6 Cr in Q3 FY25. It said that the vertical has seen a significant growth since IPO, scaling over 3X in the last 3 years. 

“Nykaa Cosmetics, Kay Beauty and Dot & Key continue to garner significant customer love, and through their innovative launches and unique formulations embody deep understanding of India’s diverse beauty,” it said.

The company also claimed that its acquisition of Dot & Key has turned the beauty brand into “one of India’s biggest D2C acquisition success stories”. Dot & Key has grown 15X in the last three years and now commands a GMV run rate of INR 900 Cr, it added. 

Meanwhile, Katrina Kaif-backed Kay Beauty’s GMV grew 4X in the past three years and achieved an annualised GMV of INR 330 Cr in Q3 FY25. Nyka said that the brand boasts a strong offline presence across 150+ cities, encompassing 221 Nykaa stores and 520+ “selective doors” outlets. 

Nykaa’s House of Brands includes a plethora of company-owned brands like Nykaa Naturals, Nykaa Cosmetics, Kay Beauty, Nykd by Nykaa, 20 Dresses, RSVP, Mondano, Likha, and Pipa Bella, Dot & Key, Little Black Book (LBB), among others.

During the quarter under review, Nykaa also acquired an additional stake in Earth Rhythm for INR 39.50 Cr, taking its total shareholding in the fashion brand to 74.63%. 

Meanwhile, B2B beauty arm Superstore too remained a loss-making entity even though parent Nykaa expects its losses to decline over time. Overall. Nykaa Superstores’ total gross merchandise value (GMV) stood at INR 259 Cr in Q3 FY25, up 53% from INR 170 Cr in Q3 FY24. 

The company claims that its B2B vertical hosted 2.56 Lakh transacting retailers across 1,100+ cities and towns.

Shares of Nykaa ended Monday’s trading session 2.25% lower at INR 169.60 on the BSE.