The financial numbers reported by India’s newly listed unicorns confirm one thing: after a drop during the pandemic, customer acquisition costs are soaring again. This has left public-market investors, who saw improving bottom lines in the run-up to the IPOs, confused and wondering if there is a path to profitability. 

Look back: Most unicorns brought down their losses in FY21, i.e. before their public offerings, mainly by slashing marketing and customer acquisition budgets. The pandemic shock in 2020 had pushed them into a survival mode, which meant maximising revenues and minimising costs. 

For instance, PB Fintech (Policybazaar) increased operating revenues by 15% to Rs 887 crore in FY21. At the same time, its marketing and advertising expenses fell 15% to Rs 378 crore. Nykaa’s figures were even better: operating revenues rose 48% to Rs 2,441 crore and the said expenses went down 17% to Rs 169 crore.

Zomato and Paytm’s marketing expenses also decreased. 

By March 2021, the unicorns were sitting pretty. Then, the IPO window opened and led by Zomato, they rushed to make their market debuts.