Namaste, Sat Sri Akaal, and Salaam. 🫡

Happy Monday and happier Diwali folks. Hope all izz well. Dubai was absolutely glittering with lights yesterday - hope the crackers didn’t keep you up, wherever you are!

Today we’re diving into -
- Nykaa’s slight recovery but tough future,
- Coinbase’s ‘depressed’ revenues,
- And Disney’s super confusing India plans.

Our read time today is 4 minutes and 43 seconds - faster than I ran through a box of sutli bombs yesterday… 💣

Let's dive in. 👇

Market Vibe Check

Nykaa fights tough market with tougher growth. 📈

TLDR -
- Nykaa’s fashion biz saw a 28% increase in GMV and a 8% increase in net sales.
- There’s been some lovely number-massaging going on with the use of GMV over NSV (net sales) as a metric to judge the business’s growth.
- Their marketing costs are also a crazy 25%.

All the COVID-fueled bang-and-boom of online marketplaces is starting to lose it’s steam.

The latest victim is Nykaa - one of India’s biggest e-fashion retailers.

Their GMV rose 20% from a year back but their net profit stayed flat - which means crumbling unit economics.

We are sold the story that GMV = revenue. This couldn’t be further from the truth. GMV = gross merchandise value.

In other words, if I sell a Rs. 100 product at a 90% discount for Rs. 10, I will have revenues of Rs. 10, but a GMV of Rs. 100! Never mind the fact that I lost Rs. 90 on the product’s sale.

This paves the way for startups to hand out VC-subsidized lollipops while still optically saving face.

The number you NEED to focus on is NSV - net sales value.

Nykaa’s NSV is moving along at a painfully slow pace. It’s going up by single-digit-numbers while revenue grows at 20-25%. This means that

A stunning 25% of all their costs are marketing costs - an absolutely crazy number in today’s market, but somewhat understandable given how much VC money is in their pockets.

Peak losses are definitely behind us, but there’s still a lot of work to be done.

Coinbase stays committed despite crypto looking depressing. 🪙

TLDR -
- Coinbase revenues increased 18% from last year ($576m → $674m)
- This is single-handedly due to interest income - APY that they receive for locking client money into stablecoins.
- Their underlying business has been having a little trouble of late though - falling volumes AND average order sizes.

A rare win in the crypto market - Coinbase’s revenues surprisingly grew this quarter.

$576mn this time, last year → $674mn this year

Over the last 2 years, each player in the crypto scene had their profits (and hopes/dreams) heavily buoyed by zero interest rate policy.

We saw new shitcoins exploding, crypto companies raising millions, and a mass influx of “Web3 thought leaders” on Linkedin.

But ever since then, liquidity has been slowly getting sucked out of the crypto market.

Most of these trading platforms and brokers rely on one thing and one thing alone - commission. But it’s hard to continue making billions in commission when BOTH the average trade value and volume transacted are declining day-by-day.

Coinbase knew this financial armageddon was coming, and did what crypto bros do best - lock most liquid cash up into a token that’s offering crazy APY.

They take all the money that their users deposit to them and go invest it into stablecoins - a little dubious, but it seems to be working for now.

USDC interest alone earned them $172mn this quarter - and growing exponentially each day.

Interesting strategy, but time will tell if it’ll hold up. 🤔

Disney changes it’s mind on the India exit. 🤦

Ever since Disney decided to ditch the Indian market and sell their insanely large Hotstar business to Ambani, it’s been a game of back-and-forth.

Disney thinks their India business is worth close to $10-11 billion.

But Reliance isn’t ready to pay more than $7-7.5 billion, which is why there’s a lot of ongoing tussle on the price tag which Ambani will be paying.

Plus, every day that this drags on is a day of more value lost for Disney, since they’re combatting with mass subscriber loss and plunging customer value.

Disney doesn’t want this, so they’re having second thoughts.

CEO just reiterated that they want to strengthen their hand in India - super conflicting with all of the talk that they’ve had of selling the business over the last few months.

One glimmer of hope for them is that in the next quarter they are likely to report a jump in subscriber count, which currently sits at 37.6 million subscribers – and potentially have a new India distribution partner.

Maybe the payday just wasn’t as big as expected… 🤔🤔

In other news… ☕

Donald Trump’s flagship Trump Tower gets it’s loan transferred to a “special servicer” (BBG)

OpenAI lets you “build your own GPT” (TC)

Bumble gets a new CEO (Yahoo)

Power consolidates even further in the US banking sector (FT)

Xiaomi records over $3bn of sales in the last week (CNBC)

And that’s the tea the chai for today.

Thanks for reading, and we hope you enjoyed it. Have a mauj-masti filled day.

Lots of ❤️,

Team Cutting Chai