Dunzo loss widens to Rs 1,802 crore in FY23 on higher advertising spending

Food delivery platform Dunzo reported staggering loss of Rs 1,802 crore for financial year 2023. The loss was 288 per cent higher from the previous year, where the company recorded losses of Rs 464 crore. The primary contributor to this ballooning deficit was the nearly quadrupled expenses incurred during the period.

Total expenses for Dunzo surged to Rs 2,054 crore in FY23, marking a fourfold increase from the previous financial year when expenses stood at Rs 532 crore. A significant portion of this rise was attributed to a substantial surge in advertising expenditures.

Dunzo's advertising spending saw an uptick, with a whopping Rs 310 crore allocated for promotional activities in FY23. This averaged close to Rs 1 crore each day throughout the year, in stark contrast to the Rs 64 crore spent on advertising in the entirety of FY22.

The company strategically leveraged marketing campaigns during the Indian Premier League, resulting in escalated expenses, yet the return on investment in terms of increased revenues was relatively modest. Despite a noteworthy 319 percent year-on-year surge in revenue, climbing from Rs 54 crore in FY22 to Rs 227 crore in FY23, the growth was from a notably low base, as per filings obtained via TheKredible.

Furthermore, Dunzo embarked on an aggressive hiring spree in FY23, leading to a considerable elevation in employee benefit expenses. Expenditure on employee benefits rose to Rs 338 crore during the fiscal year, marking a substantial 144 percent increase from the Rs 138 crore disbursed for staff in FY22. There's an expectation, however, that this cost might normalize in the current fiscal year.

Overall, the company faced a challenging fiscal period marked by substantial increases in expenses across various operational aspects, especially in advertising and personnel costs, leading to significant financial losses despite some growth in revenues.