[What The Financials] Bounce Stumbles On Losses As It Revs Up Growth

In the decade from 2010-2019, cab-hailing grew from being a luxury choice to everyday experience. In the 2020 decade, it seems like the same trajectory awaits bike-rentals.

The solutions in the mobility space have tackled distance issues one-by-one. While cab-hailing solved for larger distances, many industry observers believe upcoming mobility disruption is in the last-mile connectivity space. In the space, though we have seen a lack of market adoption and the exit of several international players, there are also players who have taken the slow walk and now are sprinting towards expansion and adoption.

One such player in last-mile mobility space is Bengaluru-based bike rental company Bounce. Founded as Wicked Rides in 2014 by Vivekananda HR, Varun Agni and Anil G, the company offers premium motorcycles for rent under the Wicked Rides banner and commuter bikes under the Bounce brand.

The company aims to solve the last-mile connectivity problem in India’s biggest cities. It allows users to pick up scooters from locations closest to them and drop them at end-trip spots, priced by the hour and distance. In the second quarter of FY20, Bounce recorded over 2 Mn rides and planned to introduce over 50K vehicles to its fleet.

The company has become a favourite among investors as well, having raised over $100 Mn in 2020 itself. Till date, the company has raised $207.7Mn from investors such as B Capital Group, Falcon Edge Capital, Accel Partners India, Accel Partners USA, Chiratae Ventures, Maverick Ventures, Omidyar Network India, Sequoia Capital India and Qualcomm Ventures among others.

But this sudden interest was not there in FY19. The company had a mere $20 Mn in funding in FY19 and the financial performance of the time is astounding. The filings accessed by Inc42 for the financial year ending March 31, 2019, show that Wicked Ride, the parent company of Bounce, increased its operational revenue by 1.85X.

On a consolidated level, the company’s results include the performance of its electric vehicle subsidiary but since it had marginal performance, we are considering the results here on a standalone basis.

The company on a standalone basis has reported revenue growth of 2X reaching INR 16.31 Cr with a 5.97X increase in expenses reaching INR 86.9 Cr for FY19. This has led to a 9.05X increase in Bounce’s losses reaching INR 70.6 Cr for the year.

Parking And Bikes: Primary Sources Of Income

Wicked Ride was one of the early entrants in the bike mobility space and have transitioned to other categories. It was first launched as a premium motorcycle rental but then shifted to a bike rental model under Metro Bikes.

So, in terms of revenues, bike rentals have worked out well for Bounce. The filings show that rentals of motor vehicles have grown in revenue from INR 4 Cr in FY17 to INR 12.31 Cr in FY19. Further, in FY19, the company earned INR 23.7 Lakh from rentals of bicycles and INR 1.52 Cr from parking revenues.

In its methodology, the company explained its revenue recognition saying that revenue from renting bikes and bicycles are recognised on completion of trips. While the income from services like parking is recognised as per the terms of agreement with its customers on completion of the duration of the parking services.

Bounce Bleeds Cash On Rentals

In the face of capital-intensive businesses, the successful mobility companies today have identified how to reduce capital expenditure yet provide better services. While cab-hailing companies have made cabs the onus of their driver-partners, Bounce leases its bikes and helmets to riders. Hence, the company’s leasing and rental costs are fairly high.

The filings show that Bounce’s rental costs which include lease rentals were INR 11.6 Cr in FY19, as against INR 2.12 Cr in FY18. Further, its cost of helmets increased to INR 1.7 Cr in FY19 from INR 6.89 Lakh in FY18.

Further, Bounce saw 5.68X increase in its advertising and promotional expenses with employee benefit expenses jumping 7X in FY19.

Overall, Bounce saw a good performance in FY19. But a lot has changed since then. The company has raised capital, strengthened its team, identified focus areas and hence, FY20 would be the real show when the heavily-funded Bounce shares its financial performance.

Bounce is yet to respond to Inc42 queries on its FY19 performance.