The four numbers I read in any D2C quarterly

The largest listed D2C brand in India reported last quarter at all-time-high revenue and nearly doubled profit. Both true. Neither tells you whether the business is actually working.

I run finance for a D2C brand. Here are the four numbers I look at in any D2C quarterly, in order.

1. Gross margin tells you the category, not the brand.

Premium beauty sits above 75%. Masstige (mass-premium) sits 60–70%. True mass sits below 50%. If a brand markets itself as premium but reports 68% gross margin, it's masstige with premium aspirations. That's not a flaw — it's a fact about who they're really selling to. Look at gross margin first, then re-read the brand positioning. They should agree. When they don't, the brand is telling investors a different story than its P&L is.

2. A&P spend as % of revenue tells you whether the brand exists yet.

Mature FMCG brands run 7–12% on advertising & promotion. Scaling D2C runs 20–30%. Growth-buying D2C runs 30%+. Why this matters: brand equity is what lets a business spend less on marketing over time and still grow. If a D2C company is past ₹2,000 Cr in annual revenue and still spending 30%+ on A&P, the brand is not yet compounding — they're renting attention every quarter. Same logic at the unit level: every customer has a lifetime value (LTV — what they'll spend with you over time) and an acquisition cost (CAC — what you paid in marketing to get them). If you're still paying close to LTV to acquire each customer, the brand isn't doing the work. Watch the trajectory more than the level. Falling A&P-to-revenue alongside flat growth = brand starting to work. Falling A&P-to-revenue alongside falling growth = brand was the growth.

3. Employee cost + EBITDA together tell you about operating leverage.

Healthy maturing businesses show employee cost as % of revenue flat or falling while EBITDA margin is rising. If both are rising, the EBITDA expansion is coming from elsewhere — usually marketing efficiency or cost of goods — and the operating side is still scaling people-heavy. Fine for a growth phase. Not what mature looks like.

4. Cash conversion cycle tells you who's funding the growth.

Positive cycle: you're funding growth from working capital. Bad. Means vendors are paid before customers pay you, and every additional ₹100 of revenue locks up cash you don't have. Negative cycle: vendors and customers are funding the growth. Excellent. The bigger the business gets, the more cash it generates from operations, not less. D2C brands selling through online marketplaces and offline modern trade chains often run negative cycles — marketplaces clear in T+7, payables run 30+ days. The mix of where they sell is doing structural work the P&L doesn't show.

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The headline tells you what happened. These four tell you whether it's repeatable.