CRED Expenses Surge 492% In FY20; Revenue Barely Crosses INR 50 Lakh

Bengaluru-headquartered fintech startup CRED posted operating revenue of just 52 lakh in the fiscal year ended March 31, 2020. The saving grace was the income from interest on fixed deposits and current investments, which stood at INR 17.56 Cr. Hence, the company’s total income for the year was a little over INR 18 Cr, a 497% year-on-year (YoY) increase from FY19, when its total income stood at INR 3.03 Cr. That year, the company had zero income from operations.

During FY20, CRED’s expenses increased across the board. Direct costs increased by 450% to INR 59.14 Cr, while employee benefit expenses increased by 327% to INR 72.51 Cr; finance costs increased from zero to INR 1.24 Cr; and, other expenses, which includes the company’s spending on rent, fuel, conveyance, legal and advertising expenses, among others, increased by 597% to INR 244.45 Cr. 

The company’s total expenses stood at INR 378.39 Cr, an increase of 492% from FY19 when it recorded expenses worth INR 63.90 Cr. Hence, the company’s after-tax loss stood at INR 360.31 Cr, an increase of 492% from the FY19 loss of INR 60.86 Cr. On a unit level, it spent over INR 770 for every rupee in revenue. 

While CRED was incorporated in April 2018, the product, a members-only app that rewards users with exclusive rewards for paying credit card bills, wasn’t launched until November that year. 

Hence, the company’s financial filings note that the financial performance for FY20 isn’t comparable with that of FY19 when the company was just starting out towards the end of the fiscal calendar. 

Founded in 2018 by Kunal Shah, CRED offers rewards and benefits for paying credit card bills. Members are only allowed once their credit score has been screened, so CRED does have the data to back its lending play. CRED has added over 10 lakh users on the mobile application in the last two years and new products as well.

The app has also launched a CRED Store marketplace where consumers can buy products from Indian and international D2C brands as well as FMCG companies.

In December 2020, CRED launched CRED Pay, which will allow users to use their CRED reward coins across ecommerce sites and unlock discounts.

Earlier that year, it had launched CRED Rent Pay, which enables users to pay their monthly rent through credit card. 

According to data on Crunchbase, the two-year-old startup has raised $256.5 Mn in five funding rounds from 24 investors. CRED’s last funding round was a Series C round in November last year when it raised $81 Mn. The round was led by DST Global.