toothsi Parent makeO Posts INR 220 Cr Loss In FY23; Revenue Jumps Over 2X

Rising Smile, Pinching Bottom Line

Healthtech startup makeO, the company behind the popular toothsi clear aligner brand, saw its net loss widen in FY23 despite experiencing impressive revenue growth. While this might seem like a contradiction, a closer look reveals a story of aggressive expansion fueled by rising expenses.

Revenue Rockets, But Expenses Take Flight Too

makeO, which also owns the skin treatment platform skinnsi, reported a net loss of INR 220.2 Cr in FY23, a 19.5% jump from the previous year. However, on the brighter side, operating revenue more than doubled to INR 168.4 Cr during the same period. This growth can be attributed to the success of toothsi's clear aligner business, which witnessed a staggering 77% YoY surge in revenue to INR 116 Cr. Overall, makeO's product sales grew by over 78%, reaching INR 119 Cr.

Skinnsi Shines in Services

While toothsi dominated product sales, skinnsi played a crucial role in propelling service revenue. Offerings like laser hair reduction, acne treatment, and dermafacials saw a massive 313% YoY jump, contributing INR 48.6 Cr in FY23. This highlights the growing demand for convenient and effective skin care solutions.

Investment Fuels Growth

makeO's impressive revenue growth wasn't purely organic. In FY23, toothsi secured $40 Mn in Series C funding to expand geographically and explore new product categories. This fresh capital allowed them to establish partnerships with over 2,000 dental clinics across India, with a specific focus on Tier-II cities. As of today, makeO boasts a presence in over 17 Indian cities and five cities within the Gulf Cooperation Council (GCC), with over 22 experience centers catering to customers in India.

The Other Side of the Coin: Rising Expenses

makeO's growth spurt came at a cost. Total expenses surged by 50% to INR 394.8 Cr in FY23, compared to INR 263.4 Cr the previous year. This rise can be attributed to several factors:

• Employee Expenses: The startup witnessed a significant hike in employee benefit expenses, which jumped over 76% to INR 127.4 Cr. This increase reflects investments in talent acquisition and retention, crucial for scaling operations.

• Marketing Blitz: makeO's marketing spend rose by nearly 36% to INR 91 Cr, likely due to strategic campaigns featuring celebrity power couple Virat Kohli and Anushka Sharma. This strategy aimed to boost brand awareness and attract new customers.

• Material Matters: The cost of materials consumed also saw a significant rise, jumping almost 60% to INR 28.7 Cr. This increase could be due to factors like higher production volumes and potentially rising costs of raw materials.

• Consultant Support: makeO also saw a 16% YoY increase in consultant fees, including scanning charges and therapist costs, reaching INR 60.4 Cr in FY23. This indicates the company's reliance on external expertise to support its growing operations.

Looking Ahead: Balancing Growth and Profitability

makeO's recent funding round in January 2024, which secured an additional $16 Mn, further emphasizes their commitment to expansion. With marquee investors like Eight Roads Ventures, South Korea-based Paramark, IIFL, and 360 ONE Asset backing them, the future looks promising. However, the challenge lies in achieving sustainable growth. makeO will need to find ways to optimize expenses while maintaining their aggressive marketing and expansion strategies. Striking a balance between top-line growth and profitability will be key to their long-term success in the competitive healthtech landscape.