B2B e-commerce platform Udaan has hit a turbulent patch, facing difficulties in scaling as revenue growth remained flat for the fiscal year 2024. The Bengaluru-based company, once valued at $3.2 billion, also struggled to raise new equity capital, leading to a sharp valuation cut of over 59% to $1.3 billion. Despite stagnant revenues, Udaan managed to trim its losses by more than 19%, marking a mixed financial performance for the year.
Revenue Stagnation and Marginal GMV Growth
Udaan’s gross revenue, or gross merchandise value (GMV), saw minimal growth, increasing by just 1.7% to ₹5,706.6 crore in FY24 from ₹5,609.3 crore in FY23, according to consolidated financials filed by Trustroot Internet, Udaan’s Singapore-based group company. For context, Udaan’s GMV had been much higher at ₹9,900 crore in FY22, underscoring the company’s slowing momentum.
The platform, which earns revenue through the sale of traded goods, platform fees, logistics, credit services, and advertising, generated the bulk of its GMV (98.5%) from traded goods. Interest on loans and service fees were other significant revenue sources. However, the slowdown in GMV reflects challenges in scaling as market competition intensifies.
Rising Material Costs Amid Flat Revenue
A concerning trend for Udaan was the 4.2% rise in material costs, even as revenue growth remained flat. This expense constituted 75.3% of Udaan’s total outlays, squeezing the company’s margins. Despite these pressures, Udaan achieved cost reductions in other areas:
- Employee benefits were slashed by 35.4%.
- Logistics and packaging costs dropped 16.8%.
- Outsourced manpower expenses were cut by 39.3%.
- Legal and professional expenses fell by 18.8%.
These cuts helped Udaan rein in expenses, leading to a 4.4% reduction in overall costs, which stood at ₹7,407.6 crore in FY24 compared to ₹7,750.8 crore the previous year.
Share-Based Payments and Improved EBITDA Margin
As part of its compensation strategy, Udaan made share-based payments totaling ₹307.1 crore in FY24. Despite the pressures of flat revenue and rising material costs, these cost-saving measures helped Udaan improve its EBITDA margin by 576 basis points to -37.13%.
In another positive sign, Udaan’s operating cash flows saw a significant boost, improving by 28.8% to ₹-920.5 crore, signaling a more robust cash position despite continued challenges.
Narrowing Losses Amid Financial Hurdles
In the end, Udaan successfully trimmed its losses by 19.4% to ₹1,674.1 crore in FY24 from ₹2,075.9 crore in FY23, reflecting a tighter focus on cost efficiency. On a unit economics basis, the company spent ₹1.3 to generate ₹1 in revenue during FY24, highlighting the operational strain.
While Udaan’s growth has clearly slowed, the company’s focus on cost management and strategic cuts has allowed it to stabilize, albeit at a reduced valuation. The road ahead will likely require renewed strategies for growth, funding, and market positioning as it navigates the competitive landscape in India’s B2B e-commerce space.
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