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Kalyan Krishnamurthy, Flipkart’s group chief executive, told employees in a town hall that the Walmart-owned ecommerce major is close to hitting profitability, helped by a significant reduction in monthly cash burn, according to people present at the meeting.
While Flipkart has been working to reduce its costs for the past two years, this is the first time Krishnamurthy has spoken publicly to employees about profitability.
He also spoke about Flipkart testing its own offering on the Unified Payments Interface (UPI) with a closed user group. This will pave the way for the ecommerce firm to enter the payments business, after it separated from group company PhonePe.
Without putting out a specific timeline for its launch, Krishnamurthy said the service will likely to go live soon. People in the know said it is likely to happen by early February.
As reported by ET, the Flipkart group chief confirmed the fast-paced growth in its travel business, Cleartrip, saying that it has become the second largest player in the market.
There are no plans for an initial public offering in 2024, he clarified, and said Flipkart continued to optimise resources.
On January 8, ET first wrote about Flipkart trimming its headcount by 7%, which would amount of about 1,500 job cuts at the firm. The restructuring process is currently underway and is expected to be completed by March-April.
“Krishnamurthy has discussed with senior leaders that profitability is likely this year but there was no timeline given. Even with the new fundraise in progress, he has mandated lower cash burn across businesses,” one of the people present in the town hall said. Cleartrip — in which Adani Group holds 20% — has hit about $1.5-1.7 billion in gross merchandise value, or GMV, and is expected to be one of the key areas for Flipkart, ET had reported citing sources.
A spokesperson for Flipkart declined to comment on the town hall.
With Thursday’s town hall, it has become clear the company will invest in growth areas, but will also aim to maintain profitability.
Walmart executives have said on earnings calls that the Indian etailer has been expanding its positive contribution margin on a quarterly basis. A positive contribution margin means the product being sold at a certain price is able to make contributions or generate money after deduction of fixed costs at the firm.
Flipkart Internet, which runs the marketplace, reported 42% growth in operating revenue for financial year 2023 to Rs 14,845 crore, while its total loss narrowed by 9% to Rs 4,026 crore, according to regulatory filings.
Flipkart has already received $600 million from parent Walmart, which owns 80.5% in the firm after it bought out stakes from founder Binny Bansal, investors like Tiger Global and Accel. The commerce firm is in talks with other investors to raise another $400 million to take the round size to $1 billion.
Krishnamurthy also said grocery will continue to be in focus and will have the group’s backing. The business grew by 50% over the last one year.
Flipkart is venturing into the fintech space through Super.money, a platform set up by senior executive Prakash Sikaria, where the etailer currently holds a majority stake and has invested $15-20 million.
Smartphones, large appliances and fashion continue to be the core of Flipkart’s business in India, but Krishnamurthy focused on scaling new businesses from 2022, in a bid to widen its total user base as well as diversify offerings.
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