Flipkart's FY19 group revenue up 42% at $6 bn; losses decline 63%

The e-commerce company managed to achieve a 63% reduction in losses from Rs 46,895 crore ($6.6 billion) in 2018 to Rs 17,231 crore ($2.42 billion) for the financial year ending March 31, 2019.

E-commerce major Flipkart witnessed a 63 per cent decline in losses and a 42 per cent jump in consolidated revenue in the 2018-19 financial year (FY19), according to a regulatory filing by the Singapore holding company that was accessed by business intelligence platform Paper.vc. The Bengaluru-headquartered company has reported revenue of Rs 43,615 crore ($6.14 billion) in FY19.
 
FY19 numbers assume significance because, baring the first four months of the financial year, Flipkart was owned by American retail major Walmart.
 
The company’s losses fell from Rs 46,895 crore ($6.6 billion) in FY18 to Rs 17,231 crore ($2.42 billion) for the financial year ended March 2019, owing to a sharp decline in expenditure.
 
Expenses came down to Rs 60,897 crore ($8.55 billion), as against Rs 77,539 crore ($10.89 billion) in the previous year, though it was mainly because of reduction in financing cost after the company got acquired by Walmart, said Vivek Durai, founder of Paper.vc.
 
“The decline in expenditure is attributable to a steep decline in finance costs, rather than any overall optimisation in operating expenses. Financing cost comprised a large part of Flipkart’s FY18 expenditure, largely attributed to the accounting treatment of convertible securities. If one were to exclude the finance costs, overall group expenditure actually went up by 118 per cent,” said Durai.
 
For example, just the employee benefit expenses of Flipkart have shot up by 58 per cent to Rs 4,254 crore ($600 million) since Walmart took over the company.
 
According to Satish Meena, a senior forecast analyst at Forrester Research, excluding the finance costs, Flipkart’s losses were increasing because the company was spending more on employee benefits, marketing, and brand promotions.
 

“Last year, its (Flipkart’s) growth in revenue was 50 per cent. This time, it is 42 per cent. It is healthy growth and not something one should not be happy with. But, its losses are still a cause of concern,” said Meena.
 
The filings also reveal details such as those relating to Flipkart's new, more aggressive acquisition strategy since Group Chief Executive Officer Kalyan Krishnamurthy took over the helm.
The group spent $46.8 million on acquisition in FY19, including $21.4 million for buying Israel-based Upstream Commerce in September 2018, and $10.5 million for Bengaluru-based artificial intelligence company Liv.ai.
 
E-commerce companies are facing huge losses in their pursuit to dominate the country’s growing online commerce market, which is expected to touch $200 billion by 2028, from about $30 billion last year. They are working hard to reduce losses.
 
Paytm E-commerce (Paytm Mall) has narrowed the losses in FY19, even as it expanded revenue by 25 per cent to Rs 968 crore. In the period under review, the e-commerce firm owned by Paytm Group reported a net loss of Rs 1,171 crore, which is 34 per cent lower than the financial year, by bringing tighter control into expenses.
 
Amazon Seller Services, online marketplace arm of the e-commerce giant in India, has narrowed its loss to Rs 5,685 crore for 2018-19, according to the data accessed by business intelligence platform Tofler. This is a 9.5 per cent decrease from last financial year, even as revenue has jumped 55 per cent during the period to Rs 7,778 crore.