2.
Earth Rhythm
Key Financials Highlights
June 2023 highlights
Net Revenue at Rs. 2.7 cr, EBITDA at Rs. -1.2 cr, while it continues to trend in the red, there’s focus on restricting the bleed
Several interventions taken
Q1FY22 highlights
All values in INR Cr
Jun 23 Q1'24
Particulars Jun-22 Apr-23 May-23 Jun-23 % Ach % YoY Q1'23 Q4'23 Q1'24 % Ach % YoY
AOP AOP
GMV (MRP Sales) 3.7 5.4 5.5 4.9 5.7 86.1% 32.3% 10.9 14.4 15.8 18.0 87.8% 45.5%
Net Revenue 1.5 2.5 2.4 2.7 3.0 88.2% 80.9% 4.7 6.6 7.6 9.7 78.5% 59.9%
EBITDA -1.8 -1.2 -1.5 -1.2 -0.8 -4.4 -6.0 -3.9 -2.4
EBITDA Margins -121.5% -47.7% -61.4% -44.8% -25.6% -93.8% -90.0% -51.0% -24.4%
2
Performance Analysis – June 2023/ Q1FY24
All values in INR Cr
June 23 Q1'24
S. no Particulars Jun-22 Apr-23 May-23 Jun-23 % Ach % YoY Q1'23 Q4'23 Q1'24 % Ach % YoY
AOP AOP
Q1FY24 performance miss vs AOP
1 GMV (MRP Sales) 3.69 5.42 5.54 4.88 5.68 90% 50% 10.89 14.39 15.84 18.04 88% 46% across GMV/Net Revenue/ EBITDA
2 Product Level Discount 1.71 2.27 2.69 1.69 1.54 162% 57% 4.82 6.25 6.65 4.87 136% 38%
3 % to GMV 46% 42% 48% 35% 27% 44% 43% 42% 27% While Q1 GMV grew 46% YoY by D2C
4 Returns 0.17 0.18 0.15 0.19 0.10 141% -10% 0.38 0.40 0.52 0.33 157% 38% declined 9% YoY while Nykaa down 14%
5 % to GMV 5% 3% 3% 4% 2% 3% 3% 3% 2% YoY. Other 3Ps have witnessed healthy
6 Taxes 0.35 0.48 0.39 0.36 1.05 34% 12% 0.99 1.25 1.22 3.31 37% 23%
traction.
7 % to GMV 9% 9% 7% 7% 19% 9% 9% 8% 18%
8 Net Revenue 1.48 2.54 2.38 2.67 3.02 72% 61% 4.74 6.64 7.58 9.66 79% 60% Gross Profit continues to improve on
9 NR to GMV Ratio 0.40 0.47 0.43 0.55 0.53 0.44 0.46 0.48 0.54 account of some recent investments in
10 COGS 0.78 0.95 0.90 0.86 0.96 87% 15% 2.62 2.68 2.71 3.06 88% 3%
11 Gross Profit 0.69 1.59 1.48 1.81 2.06 66% 113% 2.12 3.95 4.88 6.59 74% 130%
packing/filling machines
12 % to NR 47% 63% 62% 68% 68% 45% 60% 64% 68% EBITDA – Reduction in burn rate QoQ
13 Fulfilment Cost 0.23 0.31 0.27 0.25 0.27 91% 17% 0.69 1.02 0.83 0.87 96% 21% as well as YoY. Focus on reducing the
14 % to NR 16% 12% 11% 9% 9% 14% 15% 11% 9%
15 Commission 0.06 0.14 0.13 0.10 0.34 37% 129% 0.14 0.33 0.36 1.02 36% 153%
burn rate
16 % to NR 4% 5% 5% 4% 11% 3% 5% 5% 11%
17 Marketing Cost 1.46 1.38 1.59 1.59 1.32 105% 9% 3.60 5.27 4.56 4.39 104% 27%
18 % to NR 99% 55% 67% 60% 44% 76% 79% 60% 45%
19 Employee cost 0.39 0.49 0.51 0.53 0.52 102% 31% 1.00 1.70 1.54 1.52 101% 53%
20 % to NR 26% 19% 21% 20% 17% 21% 26% 20% 16%
21 Other Expenses 0.35 0.47 0.45 0.53 0.38 116% 28% 1.14 1.61 1.45 1.16 125% 27%
22 % to NR 24% 19% 19% 20% 13% 24% 24% 19% 12%
23 EBITDA -1.79 -1.21 -1.46 -1.19 -0.77 -18% -4.45 -5.98 -3.87 -2.36
24 % to NR -121% -48% -61% -45% -26% -94% -90% -51% -24%
Note: Sampling sales-expenses part of exceptional costs
3
Channel Mix
All values in INR Cr
FY22 FY23 Q1 FY24 D2C, Nykaa GMV contribution at ~49% in
Q1FY24 vs 60% in FY23 and 88% in FY22
Channel GMV as % GMV as % % YoY GMV as %
GMV GMV GMV
of total of total of total Nykaa Channel growth muted as limited POs were
released in Q1FY24 with focus on liquidating
D2C 25.1 67.3% 23.7 42.8% -5.4% 5.3 33.7% existing old price inventory, New price POs were
Nykaa 7.9 21.2% 9.7 17.6% 23.3% 2.4 14.9% released in July which will positively impact
Amazon 2.4 6.4% 9.3 16.9% 290.9% 2.8 17.4% Q2FY24 nos
Myntra 0.1 0.2% 1.4 2.5% 1816.5% 0.5 2.9%
Flipkart 0.1 0.3% 3.4 6.1% 3485.2% 0.9 5.5% Major Marketplaces include Amazon, Myntra,
Purplle 0.1 0.3% 1.3 2.4% 1155.7% 0.3 1.7% Flipkart and Purplle – contribution at ~27% in
Others 1.7 4.4% 6.5 11.7% 291.1% 3.8 24.0% Q1FY24 vs ~28% in FY23
Total 37.3 100.0% 55.4 100.0% 48.6% 15.8 100.0%
Note: Others primarily include bulk orders, kiosks and marketplaces like Firstcry
Others primarily include domestic and bulk
orders :~24% of GMV in Q1FY24 vs ~12% in FY23
aided by one bulk export order
4
Channel-wise Performance – Q1FY24
All values in INR Cr
# Particulars Overall D2C Nykaa Amazon Myntra Flipkart Purplle Blinkit Others Unallocable
Several interventions on
1 GMV (MRP Sales) 15.84 5.32 2.36 2.78 0.46 0.87 0.27 0.38 3.43 - pricing have been taken
2 Product Level Discount 6.65 2.62 1.24 0.78 0.16 0.32 0.19 0.19 1.14 - – reducing MRP and
3 % to GMV 42% 49% 53% 28% 36% 37% 70% 51% 33% discounts effective July
4 Returns 0.52 0.12 0.05 0.10 0.03 0.06 0.07 0.02 0.06 - 2024
5 % to GMV 3% 2% 2% 4% 7% 7% 27% 7% 2%
6 Taxes 1.22 0.42 0.24 0.29 0.04 0.08 0.03 0.04 0.08 - Focus in June to liquidate
7 % to GMV 8% 8% 10% 10% 9% 9% 11% 10% 2% stock at old MRP – new
8 Net Revenue 7.58 2.25 0.82 1.63 0.22 0.43 -0.02 0.12 2.14 - POs of Nykaa were halted
9 NR to GMV Ratio 0.48 0.42 0.35 0.59 0.48 0.50 -0.08 0.32 0.62
Brand marketing is
10 COGS 2.71 0.90 0.41 0.47 0.08 0.15 0.05 0.06 0.59 -
11 Gross Profit 4.88 1.35 0.42 1.15 0.14 0.28 -0.07 0.06 1.54 -
proportionately allocated
12 % to NR 64% 60% 50% 71% 64% 66% 315% 48% 72%
across the channels
13 Fulfilment Cost 0.83 0.21 0.06 0.31 0.06 0.07 0.01 0.01 0.09 - Nykaa, Blinkit and
14 % to NR 11% 9% 7% 19% 26% 17% -32% 8% 4% Purplle discount includes
15 Commission 0.36 0.00 0.00 0.23 0.05 0.06 0.00 0.00 0.02 - commission
16 % to NR 5% 0% 0% 14% 22% 15% 0% 0% 1%
17 Marketing Cost 4.56 3.08 0.26 0.65 0.09 0.15 0.04 0.07 0.22 - Myntra – fulfilment costs
18 % to NR 60% 137% 31% 40% 39% 35% -188% 60% 10% require deep dive
19 Employee cost 1.54 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 1.54
Purplle – includes prior
20 % to NR 20% 0% 0% 0% 0% 0% 0% 0% 0%
21 Other Expenses 1.45 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 1.45
period returns
22 % to NR 19% 0% 0% 0% 0% 0% 0% 0% 0%
23 EBITDA -3.87 -1.95 0.10 -0.05 -0.05 -0.01 -0.11 -0.02 1.22 -2.99
24 % to NR -51% -87% 12% -3% -23% -2% - -21% 57%
5
Nykaa Initiatives
Earth Rhythm manufacturing Facility visit by Dr. Mhaskar – shared insights to improve quality and incorporate GMP
Detailed product assessment shared by Dr. Mhaskar – Regular calls to share product feedback
Detailed workshops arranged
2 Sessions done on innovation process with R&D team by Dr. Mhaskar
Nykaa Fashion team shared insights to grow 3P channels like Amazon
Performance marketing with Nykaa’s private label teams
Weekly discussions with Nykaa category team, Earth Rhythm and PMI team on way forward
50% Discounted rate card unlocked
Help with Analytics, Category/Brand Insights to improve conversions
Working on comprehensive marketing strategy – offline events like Beauty Bar, influencer marketing through Nappers, sampling to Prive
customers
Evaluating expansion in Nykaa stores : Currently present in 10 stores with focus on increasing presence across all Nykaa on-trend stores
Several new marketing initiatives taken on improvement of traction on Nykaa.com
6
Nykaa Initiatives
Improvement Areas Actions Result
Lack of price parity across platforms led to a dip in Ensured competitive pricing across all platforms The conversions increased from 2.84% in April to
overall conversions of the brand. 3.55% in June.
Decline in AOV due to decline in skin contribution Top line increment in overall visits by providing 50% on Increment in visits. Skin category by 11% and overall
marketing rate card. brand by 16% led to increment in conversions May
onwards. This increased the AOV from 585 in April
to 596 in June FY”24. Top funnel increment also led
to overall increase in conversion by 710 bps from
April to June FY”24. Share of brand to overall Nykaa
visits also increased to 3%
Competitive Pricing . It was observed that ASP of Revision in pricing/ liquidation discounts An uptake in overall DRR has been observed across
Earth Rhythm was higher than most competitors all categories. From an average DRR of 2.44 in April,
we observed uptake in DRR to 3.19 in June FY”24
Hygiene like adding A+ content and keyword Addition of A+ content & right keyword tagging Overall product views increased by 11% and clicks
mapping increased by 7% post interventions
7
Key Focus Areas - Summary
Key Focus Area Description
Collaborating with Nykaa team extensively to improve channel performance
Focus on Driving growth in core Focus on driving growth in hero products
Pricing interventions to align with competition and reduction in discounts
LeafMonk – Launched Ayurvedic skincare line in June 2023 in US
New Category Development MANER – Men’s line of beauty brand – currently postponed with focus shift to drive growth on existing
portfolio
Outsourced performance marketing to improve conversions
Marketing/Brand Position
Focus on strengthening content
