Flipkart’s contribution margin is positive and continues to expand, top Walmart executives said in an earnings call on February 21. The US retail major, which owns Flipkart, also said that the Indian e-commerce marketplace is benefitting from investments in infrastructure made in the last three years and riding on India’s strong economic prospects.
One of the highlights of Walmart in the quarter ending January (Q4) was that its international business saw operating income drop 72 percent in constant currency terms to $300 million, primarily due to the re-organisation of Flipkart and PhonePe as separate businesses.
Moneycontrol had reported earlier that PhonePe’s shareholders had to cough up $1 billion in taxes as the firm decided to domicile in India from Singapore, after being hived off from Flipkart.
Walmart International chief Judith McKenna pointed out during the earnings call that PhonePe was only a 4-month-old business with total payments value (TPV) in the tens of millions of dollars when the US retail major first invested in Flipkart.
As of the December quarter, PhonePe’s annualised TPV had crossed $950 billion and the number of monthly transactions had topped 4 billion.
“Flipkart and PhonePe announced a separation which will allow both companies to go on their own growth paths independently and unlock value for shareholders. Flipkart has continued to strengthen its market leadership position in e-commerce and is entering this year with good momentum,” said Walmart CEO Doug McMillon.
“PhonePe also announced in January the closing of an initial tranche of fundraise that values the business at $12 billion pre-money. This is double the valuation of two years ago,” he added.
In response to an analyst query on the rationale behind the split of Flipkart and PhonePe, a senior executive said that it was analogous to eBay and PayPal.
“It is analogous to eBay and PayPal, wherein each of them operating independently can pursue their own initiatives and they don’t necessarily need to be tied together. This is an opportunity for them to unlock and create more value independently,” he said.
Walmart reported revenue of $164 billion in the quarter that ended on January 27, up 7.3 percent compared to the same period last year. Profits reached $6.28 billion, up from $3.56 billion last year. Meanwhile, per-share earnings adjusted for one-time costs and benefits were $1.71.
Walmart International net sales were $27.6 billion, an increase of 2.1 percent compared to the year-ago period, and negatively affected by $0.9 billion from currency fluctuations, while constant currency sales were $28.5 billion, an increase of 5.5 percent.
Discover the latest Business News, Sensex, and Nifty updates. Obtain Personal Finance insights, tax queries, and expert opinions on Moneycontrol or download the Moneycontrol App to stay updated!
