Kutumb, a social community platform that is supported by Peak XV Partners, has recorded a milestone in terms of financial metrics by becoming profitable during the 2024 fiscal year. The company has reached the level of financial sustainability and is now officially considered an Indicorn, which is the club of Indian startups that have successfully graduated out of the loss-making phase and are now profitable businesses.
This success is especially remarkable in the context of the overall economic climate in which most tech-oriented startups remain uncertain about their ability to find a viable way to the bottom line. According to the recent financial reporting of the company, there is a tale of good increase in revenues as well as a penny-wise and aggressive strategy on cost.
Revenue growth and operational efficiency
The core of the financial success of Kutumb is its growth in revenues through an impressive trend in the previous year. As recorded in the 2021-2024 fiscal year financial reports, the company recorded an increase in revenue generated in its operations by 73.4%, reaching ₹43.7 crore. This is quite a significant growth compared to the prior fiscal year of 2023 that had registered ₹25.2 crore.
Advertising services offered by the platform have been the major catalyst for this growth. Kutumb has been able to make a decent amount of money effectively by using its niche user base through advertisements, which now represent the enormous majority of its operational revenue.
In addition to its operating business, the company experienced an increase in its Non-operating income as well. Considering the interest earned on bank deposits and other financial investments, the total income of Kutumb has increased to ₹56.5 crore in FY24. This diversified source of income has also given the company extra financial stability as it expanded its operations. Growing top-line revenue by such a considerable percentage and at the same time the ability to turn into profitability points to the success of the company in its ability to focus on its core business model and extract value out of its community-centered platform.
Although the increase in revenue was an essential part of the success of Kutumb, the actual reason for the success of the company was the highly aggressive and strategic cost reduction. In FY 24, the company was able to reduce its total spending by 42.4%. General expenditure reduced to ₹41.6 crore in the current fiscal year compared to ₹72.3 crore in FY23.
The most significant decrease was observed in the marketing and promotional costs, reduced by an impressive 88%, down to ₹1.48 crore out of ₹12.35 crore. This indicates that the platform has achieved a stage of organic growth and retention of its users such that it no longer needs to inject massive capital into the customer acquisition process.
Besides marketing reductions, the company also concentrated on internal efficiencies. The cost of employee benefits, which is the largest expenditure of technology startups, dropped by 35.6% to ₹32.7 crore in FY24, compared to ₹50.8 crore in FY23.
This disciplined method towards overhead and operational expenditure is a strategic change of the growth-at-all-cost mentality to sustainability-based operations and financial accountability. Kutumb has been able to exhibit a high level of operational maturity through streamlining its workforce and minimizing its use of paid promotions.
Analyzing profitability and market position
The outcome of such financial maneuvers is a phenomenal turnaround of the bottom line of the company. Kutumb has a net profit of ₹14.9 crore for the fiscal year ending in March 2024. This is in complete contrast to the last fiscal period, during which the firm incurred a net loss of ₹44.8 crore.
The company also has a favorable Return on Capital Employed (ROCE), which was at 10.95% in FY24, further indicating its financial well-being. The EBITDA margin of the company was quite strong, as it was 26.37%. These figures demonstrate that this company is not merely profitable on paper, but it is making healthy returns on the funds that the company has invested.
Unit economics is one of the most indicative indicators of Kutumb’s enhanced efficiency. The company incurred 95 paise in FY24 to make each rupee of operating revenue. It is an enormous improvement over FY23, when the company was incurring ₹2.87 to earn a single rupee. Its ROCE and EBITDA margin were also positive and improved to -3.77% and -5.54%, respectively. At the unit level, Kutumb incurred an expenditure of ₹1.06 to generate a unit of operating revenue in FY25.
Kutumb has, since its dawn, received immense attention from some of the leading venture capital companies throughout the world. So far, the company has collected about 28 million dollars in different funding rounds. Peak XV Partners, which was previously called Sequoia Capital India, is the largest external stakeholder of the company with a 21.36% share.
There are also other prominent investors, such as Tiger Global, holding a 12.44% stake, Quiet Capital, and Rocketship VC. The last valuation of the company was about $170 million after its Series A financing in May 2021. The founders, including Abhishek Kejriwal, Naveen Dewangan, Mohit Sharma, and Vipul Allawadhi, still have a considerable collective interest of more than 45% in the company.
Conclusion
The shift of Kutumb into a viable business and its further introduction into the Indicorn club is a turning point for the startup and the Indian tech ecosystem, in general. It is an effective roadmap of how the community-based platforms can reconcile growth and fiscal prudence. Kutumb has established that with a focus on advertising as a main revenue engine and a radical reduction in operational and marketing expenses, a way to profitability is possible even in the most competitive segments.
Similarly, the company may be perceived as a successful case study of startups that seek to become financially independent in the long-term when it continues to grow and expand its operations and refine its community features.
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