Brainbees Solutions Q1 FY27 earnings call

Brainbees Solutions Limited delivered a robust Q1 FY27, with overall business revenue growing 13% year-on-year, marking its strongest growth in the last five years. This performance was accompanied by a significant 34% year-on-year improvement in consolidated loss reduction after tax. The company's strategic initiatives, RocketBees and FC Qwik, have shown strong traction, with RocketBees now covering approximately 50% of total online shipment volumes across 72 cities and FC Qwik doubling its shipments to 125,000 in 12 cities, reducing delivery turnaround time to two hours in many areas.

The India multi-channel business, a core segment, reported a 17.7% year-on-year revenue growth rate, its highest in the last seven quarters, and remained PAT positive. This growth was supported by a 15% GMV growth in the offline business, attributed to a successful product portfolio realignment from a 'width to depth' strategy. Management expects this elevated growth trajectory to continue in subsequent quarters, bolstered by ongoing improvements in customer experience and product availability.

The international business demonstrated sustainable growth with a 12% year-on-year revenue increase in Q1 FY27. More importantly, adjusted EBITDA losses were reduced by 22.3% year-on-year, with margins improving by 320 basis points from 10% to 7% of revenue, despite geopolitical tensions in the Middle East. GlobalBees experienced flattish revenue growth for the quarter but achieved a significant 308% year-on-year growth in adjusted EBITDA, reaching a 4.3% margin. This flat revenue was temporary, caused by a planned warehouse and inventory transition, with growth expected to bounce back in Q3 FY27.

The pre-school business segment recorded strong performance, with net revenue surging 47% from ₹13 crores to ₹19 crores in Q1 FY27. Adjusted EBITDA for this segment also saw a substantial 65% jump, increasing from ₹3 crores to ₹5 crores. The company aims to expand its pre-school network to over 1,000 centers in the next couple of years, leveraging its established brand and franchisee model.

Consolidated gross margin stood at 36.5% in Q1 FY27, down from 38.5% in the prior year. The India multi-channel business experienced gross margin moderation due to heightened competitive intensity in the diapering category (15% of business) and the impact of rupee depreciation and crude-linked raw material prices. While 20 basis points of the Q4 FY26 gross margin loss were recovered in Q1 FY27, management anticipates a faster recovery in subsequent quarters, with full recovery from raw material price impacts expected by the end of Q2 FY27.