Urban Ladder's flagship store to open on Saturday in Bengaluru, Karnataka. (Photo courtesy: Twitter)
In a major feat, online furniture retailer Urban Ladder
has turned out profitable apart from posting healthy revenue growth. In the financial year ended March 31, 2019, eight-year old firm has posted Rs 49.4 crore in net profits, its first positive bottom-line since starting out. In FY18, the company had reported a loss of Rs 118.6 crore and a year before that Rs 458 crore.
With this, Urban Ladder
joins the league of select Indian startups such as Byju’s, PolicyBazaar, and OLX that are profitable on net basis. With investors now cautious of funding loss-making businesses, start-ups have also turned to focus on profitability and unit economics.
The Bengaluru based firm that was started by IIM-B alumni Ashish Goel and Rajiv Srivatsa in 2012 had been on a major business realignment on its way to profitability which also resulted in staff layoff and bringing down focus to specific cities and states instead of going expansion spree with its offline stores. Most recently, cofounder Srivatsa who was also the chief product and technology officer of the company also announced his exit from executive roles.
In the year under review, Urban Ladder’s revenue jumped 187 per cent to Rs 434 crore, according to the company’s regulatory filing accessed by business intelligence platform, Tofler. However, the revenue in this period was primarily aided by the rise in 'other income' that went up to Rs 135.5 crore from Rs 54 crore in FY18. It could not be immediately ascertained what are the key components that were part of the ‘other income’.
Total expenditure at the company went up 41 per cent to Rs 382 crore even though employee related expenses marginally dropped by 3 per cent to Rs 51.98 crore when compared with the previous fiscal. In July this year, Urban Ladder has let go around 90 employees which is expected to further lower its employee benefits costs in the current fiscal as well.
The online furniture market in the country is mostly a duopoly between PepperFry and Urban Ladder, where the latter trails the former. Even though PepperyFry has not released its financial numbers for FY19, it has reported Rs 308 crore in revenues in FY18 though its losses for the period stood at Rs 258 crore.
The much desired profitability now puts Urban Ladder in a unique position as the company can now fund business growth from internal accruals, if it is able to maintain the profitability.
It also comes at a time when Urban Ladder is witnessing a dry spell of funding with the company failing to attract new investors. Its last two funding rounds in 2017 and 2018 were supported only by existing investors Sequoia, SAIF, and Steadview Capital. In total, the firm has raised Rs 745 crore, almost half of what PepperFry has raised, to date.