IPO-Bound Zaggle Profit Surges 2.2X YoY To INR 42 Cr In FY22

Zaggle Shares Jump Over 7% In Early Trading Hours On Robust Q4 Growth

SUMMARY

The profit after tax of Zaggle, which has been profitable for at least the last three fiscal years, stood at INR 19.33 Cr in FY21

The fintech’s total revenue for FY22 rose 1.5X to INR 371.66 Cr from INR 240.29 Cr in FY21

Zaggle, which filed its DRHP with SEBI earlier this week, saw its total expenses increase 1.44X to INR 320.49 Cr from INR 222.10 Cr in FY21

IPO-bound B2B fintech solutions provider Zaggle saw its profit after tax (PAT) jump 2.2X to INR 41.92 Cr in the financial year 2021-22 (FY22) from INR 19.33 Cr in FY21, as per its draft red herring prospectus (DRHP).

Earlier this week, the Mumbai-based fintech announced filing the draft documents with the Securities and Exchange Board of India (SEBI) for its initial public offering (IPO).

Zaggle’s total revenue during the year ended March 31, 2022, rose 1.5X to INR 371.66 Cr from INR 240.29 Cr in the previous fiscal. The fintech startup’s revenue from operations also rose to INR 371.25 Cr from INR 239.97 Cr in FY21.

Founded in 2011, IPO-bound Zaggle is a spend management and corporate employee benefits platform. The fintech helps businesses automate their accounts and issues prepaid cards in partnership with banking partners for businesses to reward their employees with incentives and gifts.

It has five core businesses, including:

Propel, an employee benefits SaaS platform
Save, a mobile-based expense management platform
CEMS, a customer engagement platform allowing businesses to manage customer experiences such as reward points
Zaggle Payroll Card, which is a prepaid card for businesses to pay contractors, consultants, seasonal and temporary employees and unbanked wage workers
Zoyer, a spend management platform with automation

Despite its pivot towards accounts automation, analytics and expense management, Zaggle’s core product – corporate gift and prepaid cards – amounted to the majority of its operating revenue in FY22.

The revenue from gift cards and Zaggle’s propel platform stood at INR 153.92 Cr in FY22, up 4.87X from INR 31.55 Cr in FY21. Program fees from the IPO-bound fintech’s gift card options, such as interchange fees, accounted for INR 200.7 Cr in FY22, slightly higher than INR 195.5 Cr in FY21.

The rest of its revenue – about 4% of the total revenue – came from its expense management and accounts automation platform.

On the other hand, Zaggle’s total expenses increased 1.44X to INR 320.49 Cr in FY22 from INR 222.10 Cr in the previous fiscal year. Zaggle put a majority of its expenses under ‘Other Expenses’, which stood at INR 150.69 Cr.

While other expenses saw a decline of about 11% year-on-year (YoY), expenses for heads such as employee benefits increased year-on-year. However, the biggest jump in expenses was in gift cards and points redemption associated with the said cards.

Zaggle racked up INR 143.51 Cr in costs associated with point redemption for its gift cards, a rise of 4.83X compared to INR 29.67 Cr in FY21.

It is prudent to mention that Zaggle’s customers for gift cards are businesses that gift their employees benefits and incentives in the form of prepaid debit cards. Therefore, it can be inferred that the users of those prepaid cards are redeeming far more points than before.

Speaking of unit economics, Zaggle spent around INR 0.86 to earn every INR 1. The IPO-bound startup has been profitable for at least the past three fiscal years.

Heading into the IPO, the fintech’s shareholders are selling 10.5 Mn shares as part of the offer for sale (OFS), while it will issue fresh shares worth INR 490 Cr.