The electronics company boAt holds one of the top spots when it comes to wearables and audio accessories. Recently, this electronics startup created a buzz among folks when it revealed its financial news. boAt revenue doubled to INR 2,873 crore while its profits shrank to INR 68.7 crore in the current fiscal year. Does it mean that its dominance in the electronics segment is fading away? Why did boAt revenue shrink to 20.6% despite earning a humongous revenue? You will find it in this article.
boAt Revenue Breakdown
First of all, let’s peek into boAt’s earnings! In FY22, it earned a revenue of Rs.2,873 crore. Do you have any idea about how much it earned in the last fiscal year? Rs.1,314 crores. It is an enormous increase of 2.2X in the operating revenue.
Let’s compare the boAt revenue of the last two financial years.
|boAt Revenue Sources||FY 22 (Financial Year 2022)||FY 21 (Financial Year 2022)|
|Total Revenue Earned||Rs.2,873 crores (2.2X)||Rs.1,314 crore|
|Sale of audio devices||Rs.2,276 crore||Rs.1,228.6 crore|
|Sale of wearables||Rs.515.5 crore (9.4X)||Rs.54.8 crore|
|Other Income||Rs.30.6 crore||Rs.81.5 crore|
As you can see, the sale of audio devices contributed 79.2% (Rs.2,276 crore) of the total revenue. The audio devices manufactured by boAt include-
- Earphones (Wired & Non-wired)
- Headphones (Wired & Non-wired)
The wearables sales also contributed 18% (515.5 crores) of the total revenue. boAt manufactures the following revenue-
- Men grooming kits
- Gaming equipment
The section of “other income” includes finance income too. It means that boAt earned Rs.13.5 crore through interest on fixed deposits.
Looks like boAt performed quite well in the market! Isn’t it? But the scenario is quite dark on the other side of the fence. Decrease in profits! We have explained it in the next section.
Reduced Profits Due To High Expenses
In spite of earning a grand revenue, boAt couldn’t celebrate it. Reason? Because its profits fell 20%. The prime reason for this is its whopping expenses! In FY22, boAt witnessed a 132% increase in total expenses i.e., Rs2,787 crore.
Below is the comparison of the boAt’s expenses for the last two fiscal years.
|boAt’s Expenses||FY 22 (Financial Year 2022)||FY 21(Financial Year 2021)|
|Total Expenses||Rs.2,787 crore (2.3X)||Rs.1,202 crore|
|Cost of materials consumed||Rs.2,346.6 crore (2.3X)||Rs.1,020.84 crore|
|Warranty claim expenses||Rs.136.60 crores (2.6X)||Rs.52.7 crore|
|Advertising & promotional expenses||Rs.99 crores||Rs.47.86 crore|
|Employee benefit expenses||Rs.56.12 crore (3.8X)||Rs.14.92 crore|
|Freight and transportation charges||Rs.43.32 crore||Rs.21.75 crore|
|Other expenses||Rs.105.36 crore||Rs.43.93 crore|
A notable factor in the expenses is, unlike other unicorns/startups, boAt spent only 3.6% i.e., Rs.99 crore of its overall cost on marketing its products.
The largest chunk of total expenditure is the “Cost of materials consumed.” It includes the raw materials used for manufacturing the devices. Do you know, nearly 85% of the materials are imported from China? This cost increased 2.3X i.e. Rs.2,346.6 crore.
Due to all these expenses, boAt’s profits reduced to 20% i.e. Rs.68.7 crores. Whereas, in FY21 it earned a profit of Rs.86.5 crores.
Thus, you can say that, boAt spent 97 paise to earn a rupee in the fiscal year 2022. But still, it is a profitable D2C company with a market valuation of Rs.9,840 crore.
Future Plans of boAt: What’s Next?
Image source: Entrackr
Although, the brand with an “affordable cool” image is one of the successful D2C startups in the segment of electronics. Its journey was quite smooth as well as profitable. But now, it is facing tough competition from Noise, which is operating in the same segment. Noise earned 9% profit growth in profit in FY22 i.e., Rs.36 crore.
The boAt was looking for an IPO in 2022. It filed its DRHP with SEBI to launch its IPO worth over Rs.2,000 crore. But due to numerous roadblocks of Indian startup IPOs, it withdrew its listing plans. In 2023, Imagine Marketing (parent company of boAt) will offer the sale of shares worth Rs.1100 for its IPO.
Let’s see what happens next!