Autotech startup Droom's revenue drops 66% to Rs 85 crore in FY24, losses at Rs 40 crore

Droom, a once-thriving unicorn in the used car marketplace, has seen its revenue from operations fall sharply by 66% in the 2023-24 fiscal year, dropping to Rs 85.3 crore from 253.3 crore in the previous year. 

The company has been trying to manage its finances by cutting costs and reducing losses, but its business performance has continued to weaken ahead of a proposed public listing.

Declining income and shrinking operations

Droom’s primary earnings come from commissions on vehicle sales, related service fees on its marketplace and pro-seller subscription charges.

However, its operating revenue of Rs 85.3 crore for FY24, coupled with Rs 4.6 crore in non-operating income, brought total revenue to Rs 90 crore for the year. This marks a steep drop from the Rs 262 crore it recorded in FY23.

The company, founded by Sandeep Aggarwal, has shifted some of its focus toward mid-premium and luxury cars, while also offering a range of services such as financing, SaaS solutions and advertising.

Cost cuts and reduced losses

Droom’s aggressive cost-cutting efforts helped bring down its total expenditure by about 60%, from Rs 325 crore in FY23 to Rs 130 crore in FY24.

Marketing promotions and incentives accounted for the biggest chunk of spending, though that figure declined by nearly 67% to Rs 85 crore.

Employee expenses also saw a significant drop of nearly 40%. As a result, net losses improved, falling by 35% to Rs 40.4 crore in FY24 from Rs 62.1 crore a year earlier.

The company’s EBITDA losses narrowed to Rs 37.2 crore from Rs 57.3 crore, suggesting some success in reducing its overall burn rate.

Despite the lower losses, Droom’s financial indicators worsened in other areas.

By the end of FY24, Droom reported total current assets of Rs 30 crore, including just Rs 3.5 crore in cash and bank balances. 

IPO plans amid market concerns

Droom is reportedly preparing to raise Rs 1,000 crore through an initial public offering at a valuation between $1.2 billion and $1.5 billion.

The company plans to file a draft red herring prospectus with the Securities and Exchange Board of India by June 2025. This comes after it previously postponed a larger Rs 3,000 crore public offering, citing unfavourable market conditions.