Source: Times of India
Bengaluru: Online classifieds platform Quikr has registered its maiden profit in FY24. Good news it would seem, but the company is still faced with grave financial problems, such as low revenues and a big cash outflow.
Revenue Drops But the Little Company Makes a Tiny Profit
In terms of the annual financials, Quikr’s operating revenue fell by 12% to ₹45 crore in FY24, down from ₹51 crore in FY23. However, The Tiger Global-back firm took home a small profit of ₹2 crore. So, it’s a big change from the loss it recorded the year before of ₹8 crore. Still, the company recorded this profit mostly because of aggressive cost-cutting measures rather than realizing high growth in business activities.
Lead referral fees of ₹22 crore and advertising revenue of ₹17 crore constitute the bulk of Quikr’s revenue, about 86%. On the other hand, commissions and other services earn about ₹3 crore each. Provision write-backs and gains on financial assets, however, gave it another ₹11 crore, taking the total income to ₹56 crore.
Cost were At Stake to Stay in the Green
In order to gain a profit, Quikr reduced its total expenses by 11.5%, from ₹61 crore in FY23 to ₹54 crore in FY24. Of all the expenses, employee remuneration was the biggest cost. It was cut down by 10% to ₹37 crore. Advertisement expenses, on the contrary, are said to have grown from ₹1 crore to ₹3 crore.
Depreciation fell sharply from ₹5 crore to just ₹15 lakh, cutting down overall expenditure further. Cutting down on costs was what improved the operating margins of the company, but it had to spend ₹1.20 to earn ₹1 of revenue.
Past Glory, Present Struggles
Quikr was at one point one of India’s most promising startups, According to the data intelligence platform TheKredible, Quikr has raised about $380 million from marquee investors including Tiger Global, Warburg Pincus, Kinnevik and Z47 formerly known as Matrix Partners India. But with its revenue now shrinking and most investors having written off their investment, the company is a shadow of its former self.
The company will survive only if it adapts well to the current reality. It might continue to operate in its current form, albeit on a much smaller and more profitable scale, having learned from past mistakes. However, with reserves this low and revenue under pressure, a full recovery doesn’t appear particularly promising at the moment.
Conclusion: Quikr’s first-ever profit is a tiny step in the right direction, it does not mean the company is back. Quikr must now concentrate on remaining lean and making wise decisions in order to compete in a competitive industry due to declining revenue and limited funds.
