[What The Financials] Lenskart Turns Profitable In FY20, Revenue Nears INR 1000 Cr

After widening its losses by 78% in the previous year, Delhi NCR-based eyewear company Lenskart has turned profitable in the financial year 2020 that ended in March last year. The company’s primary India business — Lenskart Solutions Private Limited — has reported a profit of INR 17.7 Cr, with revenue almost doubling to INR 963.7 Cr in the same time period.

Lenskart’s expenses also grew a good 88%, from INR 515.2 Cr in FY2019 to INR 945.9 Cr in FY2020. The company’s revenue had grown 56% to INR 485.5 Cr in FY2019, with losses booming 78% to INR 30.1 Cr. Its revenue was at INR 310.9 Cr in FY2018 with expenses worth INR 429 Cr, leading to a loss of INR 27.89 Cr.

Lenskart was founded by Peyush Bansal, Amit Chaudhary and Sumeet Kapahi in 2010. The company manufactures, assembles, distributes and supplies its products across 700 stores across India. It is operated under parent company Valyoo Technologies and has other subsidiaries in India including Lenskart Eyetech. The current filings represent the financial performance of  Lenskart Solutions Private Limited, one such subsidiary.

The eyewear retailer has grown to serve more than 400K customers on a monthly basis and claims to account for nearly 30% of India’s organised eyewear market. It’s no surprise then that the majority of Lenskart Solutions’ revenue comes from its operations, which includes sales of eyewear products like spectacles, sunglasses and lens. The company continued this momentum in FY2020, with about 92% or INR 893.7 Cr of the overall income coming through the operations.

The Delhi-based unicorn earned about INR 884.3 Cr (99% of the total operating revenue) from sales in India and the rest INR 9.3 Cr through sales in the US and Singapore.

Lenskart Ready To Add Alternate Revenue Streams To Its Pipeline

The growing number of sales has been the backbone behind Lenskart’s strong performance in FY2020, therefore there was a massive increase in the costs associated with it. The eyewear brand spent about 50% of its total expenses in three areas — employee benefits expenses, commission paid to other selling agents and advertising expenses.

The company’s employee benefit expenses doubled, from INR 83.3 Cr to INR 167.4 Cr in a year’s span. Its advertising expenses grew 71%, from INR 64.5 Cr to INR 111 Cr in FY2020. The biggest jump was seen by the company’s spending on commission paid to other selling agents’ boomed about 248.2% or 3.4x, from INR 56.4 Cr in FY2019 to INR 196.4 Cr.

In FY2019, it earned about INR 473.7 Cr from India and the remaining INR 50 Lakh came from US and Singapore markets. It is important to note that Lenskart Solutions was only running two stores in the Singapore market in FY2019, but it now expects to lead the market by the end of 2021 and earn about $30 Mn (INR 217 Cr) in revenue.

As the company plans to expand further internally, it is important to see whether it will manage to keep the spending as low as it managed to do in FY2020, especially after the pandemic hit the retail sector deeply in FY2021. On a more operational level, Lenskart may have been impacted by the Covid-induced lockdown and restrictions, but it did not note a complete full stop as the spectacles and eyewear fell under the essential category.

In order to get prominence in the US market, Lenskart would have to fend off competition from global eyewear major Warby Parker, Luxxotica and others. Warby Parker, in particular, has marked its presence across 125 retail locations across the US and in parts of Canada. The company had raised $245 Mn in August 2020 at a valuation of $3 Bn. The company primarily gained market share in the US through its ecommerce operations and then added features such as online prescriptions, and virtual reality-based trials.

Besides this, Lenskart will be adding another stream of revenue by entering the Middle East market. The company has committed to invest about $50 Mn (INR 362 Cr) to expand into UAE, and open its first retail store in Dubai soon. The eyewear brand has already launched its online store with free delivery across Dubai, Abu Dhabi and Sharjah.

The company entered the unicorn club in 2020, after raising INR 1,645 Cr ($231 Mn) from SoftBank Vision Fund II, Lightbulb Ltd as part of its Series G funding round. The company has raised $459.6 Mn to date from investors like Chiratae Ventures, TPG, PremjiInvest, Unilazer Ventures and others.