Cleartrip, the online travel agency owned by Flipkart, reported significant financial challenges for the fiscal year ending March 2024. According to its annual financial statements, the company spent a staggering ₹988 crore to generate net revenue of just ₹97 crore, even as it achieved a notable year-on-year revenue growth of 98% from ₹49 crore in FY23.
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At least, that is what happens considering the impressive growth rate during last fiscal year. Cleartrip’s losses have increased even faster, with the company filing an estimated over- ₹800 crore loss account for the fiscal year under review. This is different, of course, from fellow OTAs such as MakeMyTrip, Ixigo, Yatra and EaseMyTrip, the latter four reporting profitability through several quarters. Cleartrip’s acquisition by Flipkart in April 2021 for $40 million hardly gives any turnaround that many awaited:.
Detailing its sources of revenue, Cleartrip disclosed it had collected service charges of ₹369 crore from customers and ₹240 crore in commissions and incentives for FY24. However, it had given significant discounts totaling ₹525 crore on its services, which greatly impacted the company’s net operating revenue to just ₹97 crore.
Analysis of the expense side of the balance sheet reveals a concerning trend. Cleartrip spent 40% of its total costs on employee benefits, which rose by 61.3% to ₹400 crore. The amount includes ₹180 crore of non-cash Employee Stock Ownership Plan (ESOP) expenses. Without this non-cash item, the company’s actual salary and wage expenditures were ₹220 crore.
Marketing and advertisement also form significant cost heads for Cleartrip. Here, the company spent ₹128 crore on marketing and advertisements. Besides, commissions and brokerage expenses also rose to ₹70 crore. The payment gateway charges increased to ₹91 crore. Altogether, this cost hike contributed to an increase of 26.7%, raising total costs from ₹780 crore in FY23 to ₹988 crore in FY24.
This disparity in cost inflation versus revenue growth has caused massive loss increases for Cleartrip. The company’s total losses surged by 18.4% to ₹810 crore in FY24 compared to ₹684 crore in the previous year. It reported an alarming EBITDA margin of -399%. The company’s expense-to-earning ratio worsened, standing at ₹10.1 for FY24 against ₹15.9 in the previous fiscal year.
While the OTAs are going neck to neck with MakeMyTrip in terms of revenue and profitability, the case is different for Cleartrip. MakeMyTrip saw revenues of $792 million (₹6,650 crore) and profits of $216.7 million (₹1,820 crore) in FY24. Other OTAs such as Ixigo, EaseMyTrip, and Yatra were also at ₹656 crore, ₹590 crore, and ₹448 crore, respectively.
As Cleartrip continues to face these financial issues, the company hasn’t really made any public statements on future strategy or plans that will try to reverse the course it’s on. Growing difference in expenditure and revenue along with increasing competition are making some question whether the company has a long-term future with sustainable growth within the online travel market.
In a nutshell, Cleartrip’s fiscal year 2024 results are that of a company which has been facing significant financial distress despite the impressive revenue growth. With increasing losses and higher costs, Cleartrip stands at a crossroads as it tries to redefine its business model and regain competitiveness in the fast-changing travel sector.
