Nykaa Q3 Results: Net Profit Slides 71% YoY To INR 8.5 Cr, Operating Revenue Up 33%

Beauty ecommerce giant Nykaa reported a 70.7% year-on-year (YoY) decline in its consolidated net profit to INR 8.5 Cr in the December quarter of the financial year 2022-23 (FY23) despite the festive season. 

Nykaa had reported a net profit of INR 29 Cr in the corresponding quarter last year. However, net profit increased 63.4% sequentially from INR 5.2 Cr in Q2 FY23.

Meanwhile, Nykaa saw a 33.2% increase in operating revenue to INR 1,462.8 Cr in the reporting quarter from INR 1,098 Cr in Q3 FY22. On a quarter-on-quarter (QoQ) basis, revenue from sales rose 18.8% from INR 1,230.8 Cr in Q2 FY23.

Nykaa’s  EBITDA increased 13% YoY to INR 78.2 Cr in Q3 FY23.

Gross merchandise value (GMV) grew 37% YoY to INR 2,796.5 Cr during the quarter under review. However, it grew only 19% QoQ from INR 2,345.7 Cr in September quarter.

The GMV of the beauty and personal care (BPC) segment rose 26% YoY to INR 1,901.4 Cr Cr in Q3 FY23, while the fashion segment saw a 50% YoY increase in GMV to INR 724.4 Cr.

In a statement, Nykaa said that its BPC orders grew 26% YoY to 9.5 Mn in Q3, while order conversion also improved to 3.8%, a substantial improvement over the same quarter last year.

BPC contribution margin as a percentage of operating revenue expanded 186 basis points (bps) YoY in the quarter led by efficiency in fulfilment and marketing expenses, it said. Nykaa attributed the growth in the segment to the rise in discretionary spend among millennials and Gen Z, evolving consumer needs and preferences, and its upgradation to more premium products. 

Meanwhile, with monthly average unique visitors growing 18% YoY to 19.4 Mn, the orders of Nykaa’s fashion vertical rose 31% YoY to 1.7 Mn during the quarter under review.

The company’s other GMV, which includes its new businesses NykaaMan, eB2B platform SuperStore by Nykaa, among others, grew 254% YoY to INR 170.7 Cr and contributed 6.1% to the consolidated GMV in the quarter.

“Nykaa Pink Friday Sale 2022 achieved a 40% YoY GMV growth from previous year Pink Friday sale event, with highest single day visits on day 1 of the sale. The event was extended to Fashion & Man, with 1,800+ brands participating,” the statement said. 

B2B platform SuperStore by Nykaa scaled to 92,415 transacting retailers across more than 650 cities with 185 brands listed as on December 31, 2022, the company said.

On the other hand, Nykaa increased its own physical store count to 141, including three new owned fashion stores, across 56 cities, as on December 31, 2022. Its physical store count stood at 124 at the end of September 2022 quarter. 

Total expenditure during the quarter under review rose 36.4% to INR 1,455.8 Cr from INR 1,067.3 Cr in the corresponding quarter last year. In that, the company spent INR 918.9 Cr towards the purchase of traded goods, which rose 33.1% YoY.

Meanwhile, employee benefits expenses rose 36.7% YoY to INR 127.9 Cr during the quarter under review.

Nykaa spent INR 128.8 Cr on fulfilment expenses during Q3 FY23, which stood at INR 116.2 Cr in the corresponding quarter last year. Marketing and advertising expenses rose 9.6% YoY to INR 164.4 Cr during the quarter.

“There’s been a structural improvement in fulfilment expense as we move to regional warehouses. Our marketing efforts are focussed on order-conversion ratio, rather than chasing visits alone, which is reflective of the highest ever conversions of 3.8% in BPC, and 1.2% for Fashion in Q3 FY23,” said Falguni Nayar, executive chairperson, MD, and CEO of Nykaa. 

She also highlighted that the December quarter of 2022 had eight less festive days compared to the corresponding quarter of the previous year.

Shares of Nykaa shares ended Monday’s session 3.3% lower at INR 149.65 on the BSE. The company released the quarterly results after market hours.