Udaan flies high with 67% rise in revenue but losses widen

The Hindi word udaan means flying, which stands true for the India-based B2B ecommerce player with the same name. Udaan witnessed stellar growth in its revenue for the financial year ended (FYE) March 2022.

Photo credit: Udaan

The unicorn’s total revenue shot up to 98.8 billion rupees (US$1.2 billion), a sharp rise of 67% from FYE 2021.

However, the figures did not meet the company’s expectations as in June last year, it had said that it was aiming for 100% revenue growth in FYE 2022.

The first phase of Udaan’s journey, which took place between 2017 and mid-2021, was largely about accelerating market adoption and scaling up, the company tells Tech in Asia. In the second phase, which spanned the last four quarters, the startup dedicated more of its energy in improving its unit economics at scale. It said that it has achieved its positive unit economics goal in June 2022.

“Phase 3 of our journey is about driving and delivering steady and accretive 10% quarter-on-quarter growth on the back of same-store growth,” a company spokesperson says.

Revenue analysis

Udaan makes money by enabling merchants to market and sell their products across India at low cost and with payment security. While doing so, it lets buyers – which include small businesses such as shopkeepers, restaurants, and street vendors – source from a large selection of products at best prices, according to the company.

In FYE 2022, sale of traded goods was the biggest revenue driver for Udaan, amounting to almost 97% of the figure. It stood at US$1.2 billion during the period as compared to US$686 million the previous year. This is a nearly 72% rise in revenue from this stream, which was almost non-existent back in FYE 2019, data shows.

According to Udaan, revenue from sale of traded goods is recognized at the point when control of the asset is transferred to the customer, which is when the company dispatches the products to them.

Udaan’s second biggest revenue stream, which is negligible compared to sale of traded goods, is selling and distribution revenue, which represents the earnings from sellers who list their products on the platform.

The firm also has a logistics arm, Udaan Express, which takes care of deliveries of orders by retailers. Delivery services is still the third biggest revenue driver for the company at US$6.4 million. However, its share continues to decline.

The company added two new revenue streams during FYE 2022 – business support service fee and platform fee. Both of these are derived from Udaan Capital, which was established four years ago to enable businesses to manage their accounting and get credit using the same platform.

Expenses analysis

Cash balance