Noise was founded by Gaurav Khatri and Amit Khatri, who also work as the CEO and Co-Founder, respectively. The company operates under the legal entity name Nexxbase Marketing Private Limited, founded on September 24, 2009. With a focus on smartwatches, wireless earphones, and speakers, Noise has experienced significant growth, positioning itself as a strong contender in the industry.
Founded in 2014 and located in Gurgaon, India, Noise has emerged as a remarkable player in the gadget and wearables industry. As of December 27, 2023, the company reached a valuation of $460 million after securing $10 million in its latest funding round, a Series A investment from global audio giant Bose. With a total funding of $10 million over one round, Noise has been making giant waves in the market, holding its own against competitors and achieving significant market share.
Financial Overview:
In the fiscal year ending March 2023, Noise demonstrated remarkable growth, achieving an 80% YoY increase in revenue. The company’s revenue from operations soared to Rs 1,426 crore from Rs 793 crore in FY22. However, profits took a hit, declining by 97.25% to around Rs 1 crore due to strategic investments in local manufacturing and R&D.
| Fiscal Year | Operating Revenue (in Rs Crore) | Total Expenses (in Rs Crore) | Profit/Loss (in Rs Crore) | EBITDA Margin (%) | Expense/₹ of Op Revenue | ROCE (%) |
|---|---|---|---|---|---|---|
| FY22 | 793 | 801 | 35.5 | 87 | ₹0.95 | 63 |
| FY23 | 1,426 | 1,432 | 1 | 9 | ₹1 | 21.8 |
Funding Rounds:
Noise has undergone one funding round, securing $10 million in its latest Series A round on December 18, 2023. This investment was from Bose, a significant player in the audio industry. The post-money valuation after this round stands at $460 million.
Market Position:
Noise controls a notable 27.6% market share in the smartwatch category, as reported by the International Data Corporation (IDC) in the first half of 2023. The company competes with established brands like boAt, Fire-Boltt, and MI, standing out with its unique product offerings.
Investment Landscape:
Latest Funding Round with Bose:
In its latest funding round, Noise issued 2,400 Series A compulsory convertible preference shares at an issue price of Rs 3,45,833 per share. This strategic investment amounted to Rs 83 crore, valuing the company at around $460 million. Notably, Bose Corporation acquired a 2.17% stake in Noise through this investment.
Investor and Founder Positions:
Post-investment, Amit Khatri’s stake in the company diluted to 53.44%, while Gaurav Khatri retained a 36.23% stake. The firm also reserved a 7.25% ESOP Pool, reflecting its commitment to retaining and incentivizing talent.
Noise Operational Highlights:
Revenue Streams:
Noise primarily generates revenue from the sale of smartwatches, wireless earphones, and speakers through various e-commerce platforms and its official website. Wearables contribute significantly, forming 82% of total collections, amounting to Rs 1,169 crore in FY23.
Expenses and Profit Analysis:
Procurement of products accounts for 71% of overall expenditure, with costs increasing by 70.8% to Rs 1,013 crore in FY23. Other expenses, including employee benefits, advertising, marketing, warranty, freight, and forwarding, collectively rose by 90.2% to Rs 1,432 crore. Despite the surge in expenses, Noise experienced a decline in profits, showcasing the challenges of balancing growth and profitability.
Market Share and Competition:
According to IDC, Noise is the second top wearables brand with a 13.5% market share. The company regained its first position in the smartwatch space with a 27.6% share in the first half of 2023. The market, however, remains competitive, with boAt leading in terms of revenue but experiencing its first loss in FY23.
Noise Strategic Decisions and Challenges:
Strategic Investments:
Noise’s strategy of heavy investment in local manufacturing and R&D has fueled its rapid growth. However, these investments have impacted short-term profits, emphasizing the company’s long-term vision.
Competition and Market Dynamics:
The wearables market, while lucrative, is intensely competitive. The success of both boAt and Noise is commendable in a market characterized by thin profit margins and competition from lower-priced players. The need for design differentiation and brand building is highlighted as crucial for sustained success.
Future Funding and Growth:
Reports suggest that Noise is exploring external funding opportunities in the range of $40-$50 million. This potential influx of funds could be instrumental in scaling operations, expanding product lines, and solidifying its position in the market.
Noise’s journey from a bootstrap start-up to a key player in the wearables market is marked by strategic decisions, significant investments, and remarkable market share gains. The recent funding from Bose further positions the company for future growth, and while short-term profits have been impacted, Noise’s focus on long-term sustainability and innovation bodes well for its future in the competitive wearables landscape. As the company navigates the waves of competition and changing market dynamics, it remains to be seen how Noise will leverage its funding, market share, and strategic investments to stay ahead in this rapidly evolving industry.
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