Pepperfry Faces Growth Challenges: Revenue Decline in FY24

Pepperfry, an omnichannel furniture brand, is experiencing challenges in growth, marking its second year in a row with decreasing revenue. Following a 10% decline in FY23, the Mumbai-based company reported a significant 30% year-on-year decrease in operating revenue for FY24.

According to its consolidated financial statement submitted to the Registrar of Companies (RoC), Pepperfry’s revenue from operations fell to Rs 189 crore in FY24, down from Rs 272 crore in FY23.

Breakdown of Revenue Sources

Pepperfry’s income primarily comes from marketplace services and product sales. In FY24, revenue generated from services amounted to Rs 169 crore, which represents a decline of 29.9% compared to the previous year. Conversely, income derived from product sales experienced a more severe reduction of 50.7%, dropping to Rs 15 crore. Additionally, other income, including various minor sources, contributed Rs 5 crore in FY24.

The company also earned Rs 20 crore from interest income, leading to a total income of Rs 209 crore in FY24.

Expenditure and Cost Optimization

On the spending side, Pepperfry focused on cost optimisation, achieving a 31% decrease in total expenses, which reduced to Rs 327 crore in FY24. The company significantly cut costs across several categories in FY24. Employee benefit expenses saw a reduction of 29.7%, amounting to Rs 60.5 crore. Advertising costs were reduced by 44.3%, bringing them down to Rs 59 crore. Transportation expenses experienced a decline of 27.8% to Rs 28.5 crore, and the cost of materials recorded the steepest reduction, decreasing by 65.8% to Rs 6.5 crore. Additionally, depreciation and amortization expenses were cut by 17.7%, totaling Rs 51 crore for the year.

Financial Performance Indicators

Thanks to these controlled expenses, Pepperfry successfully decreased its losses by 37.5%, lowering them to Rs 117 crore in FY24 from Rs 188 crore in FY23. The company’s Return on Capital Employed (ROCE) and EBITDA Margin were noted at -57.94% and -20.79%, respectively. On a unit basis, Pepperfry spent Rs 1.73 to generate a rupee of revenue in FY24. Furthermore, the Mumbai firm held current assets worth Rs 141 crore in FY24, which included Rs 78 crore in cash and bank balances.

Funding and Leadership Insights

Various reports indicate that Pepperfry has secured a total of $1134 million in funding, with notable investors such as Norwest Venture, General Electric, Goldman Sachs, and State Street Investments leading the way. Recently, the firm elevated Madhusudan Bihani to the position of Chief Financial Officer (CFO).