SUMMARY
Snapdeal’s FY22 loss jumped 306.8% from INR 125.4 Cr in FY21 as revenue registered a small growth while expenses surged
The startup’s expenses rose 68% to INR 1,070.7 Cr in FY22, with advertising expenses growing 82%
Snapdeal spent almost INR 2 to earn every INR 1 from its operations in FY22
Kunal Bahl-led ecommerce major Snapdeal reported an over 4X jump in its net loss to INR 510.3 Cr in the financial year 2021-22 (FY22) from INR 125.4 Cr in FY21 as its revenue saw marginal growth while expenses surged.
The startup, which recently shelved its plans to go for an initial public offering (IPO), saw its total revenue rise 10.5% to INR 563.5 Cr in FY22 from INR 510 Cr in FY21. Meanwhile, revenue from operations rose only 14% to INR 539.5 Cr from INR 471.7 Cr in the previous year.
The ecommerce website earns revenue by rendering services and delivering products. The startup earns majority of its revenue from ancillary activities, which includes providing services for collection, fulfilment centre, packaging facilitation, courier facilitation, RTO/RPR fees, closing fees and freight charges. Apart from this, it also earns revenue by providing warehousing software solutions to the merchant.
In FY22, Snapdeal’s ‘other operating revenue’ stood at INR 456.8 Cr, while it earned INR 82.6 Cr from sale of services. Snapdeal clubs ancillary activities under other operating revenue.
Meanwhile, Snapdeal’s total expenses rose 68% to INR 1,070.7 Cr in FY22 from INR 636.3 Cr in FY21. This means, the startup spent almost INR 2 to earn every INR 1 from its operations in FY22.Advertising expenses, which surged 82% to INR 321.8 Cr from INR 176.6 Cr in FY21, constituted 30% of the total expenses.
Besides, Snapdeal spent INR 284.5 Cr on employee benefit expenses, a jump of 77% from INR 161.1 Cr in FY21. Employee benefit expenses generally comprise employee salaries, PF contributions, gratuity, and other employee welfare benefits.
Amid the funding boom and bumper listing of Indian startups on the stock exchanges in 2021, Snapdeal, like many other startups, filed its draft red herring prospectus (DRHP) for IPO. As per the DRHP, Snapdeal planned to issue fresh shares worth INR 1,250 Cr. The IPO was also to comprise an offer for sale of up to 30,769,600 equity shares. However, the startup dropped its IPO plans in December 2022 due to the prevailing negative market sentiment.
Founded by Kunal Bahl and Rohit Bansal in 2010, Snapdeal has raised over $1.5 Bn till date from investors such as Masayoshi Son-led SoftBank, Foxconn Technology Group, Alibaba Group, and Canada’s Ontario Teachers’ Pension Plan.
Snapdeal competes with Walmart-owned Flipkart and the US-based ecommerce giant Amazon amongst others in the Indian ecommerce market.
In 2017, Snapdeal was in talks with Flipkart for a merger, however, the deal fell through after the company’s shareholders expressed reservations. Snapdeal later went on to launch Snapdeal 2.0 by laying off multiple employees and selling FreeCharge to Axis Bank for $60 Mn in 2017.
