PhonePe Narrows Net Loss To INR 1,996 Cr In FY24

Fintech major PhonePe narrowed its consolidated net loss by 28% to INR 1,996 Cr in the financial year 2023-24 (FY24) from the INR 2,795 Cr loss it posted a year ago, helped by a boost in its topline and cost efficiency.

Its operating revenue zoomed almost 74% to INR 5,064 Cr in FY24 from INR 2,914 Cr a year ago. The company said that the improvement in its topline came on the back of its focus on automation and cross-selling of a diverse product portfolio.

“Despite significant external challenges over the past five years, including the ‘Zero MDR’ law and the COVID-19 pandemic, our relentless focus on process automation and unit economics has driven a clear path to profitability,” PhonePe said in its annual report.

From FY18-19 to FY23-24, PhonePe saw a 40X jump in transactions while its customer service team shrank by 60% to 400 from 1,100 earlier.

PhonePe said it turned adjusted PAT positive during FY24. The company reported an adjusted profit after tax (excluding ESOP costs) of INR 197 Cr during the year under review as against INR 738 Cr loss in FY23. Share based payment expenses jumped 6.6% to INR 2,193 Cr during the year under review from INR 2,057 Cr in FY23.

PhonePe’s standalone payments business clocked an adjusted profit of INR 710 Cr in FY24.

Breakdown Of PhonePe’s Revenue

Payments and allied services contributed INR 4,789 Cr to PhonePe’s operating revenue during the year under review, up 77% from INR 2,707 Cr in FY23.

Meanwhile, its financial services business generated revenues to the tune of INR 202 Cr in FY24, a more than 4X jump from INR 42 Cr a year ago. PhonePe earned INR 544 Cr from trade receivables in the fiscal year ended March 2024. 

Including finance and other income of INR 661 Cr, PhonePe’s total income surged over 85% to INR 5,725 Cr from INR 3,085 Cr in the previous year.

The finance and other income included interest on deposits, gain on sale of investments, gain on sale of property, plant and equipment, among others.

Where Did PhonePe Spend In FY24?

While PhonePe managed to improve its bottomline and topline, its expenses surged over 31%  to INR 7,756 Cr during the year under review from INR 5,907 Cr in FY23, primarily due to an increase in employee costs and payment processing charges.

Payment Processing Charges: The company’s spending in this bucket almost doubled to INR 1,116 Cr in FY24 from INR 667 Cr in the previous fiscal year. 

Employee Benefit Expense: PhonePe spent INR 3,603 Cr towards employee benefits during the year under review, up more than 16% from INR 3,096 Cr in FY23. Of the total employee costs, INR 2,913 Cr came from share based payments.

Ad and Sales Promotion Expense: The fintech major incurred expenses of INR 693 Cr towards advertising and sales promotion during the year under review, almost 2% higher than INR 680 Cr it spent under this head in FY23.

IT Infrastructure Cost: The company’s spending in this bracket surged a staggering 77% to INR 383 Cr in FY24 from INR 216 Cr a year ago.

This comes at a time when PhonePe is gearing up for its initial public offering (IPO). As part of the plan, the payments major shifted its base back to India from Singapore in 2022.

However, the National Payment Corporation of India’s (NPCI) plan to cap the UPI market share of third-party app providers (TPAPs) is preventing the startup from going ahead with its IPO plans, founder and CEO Sameer Nigam had said in August. His comments came after a Walmart executive said that the company might prioritise PhonePe’s IPO over Flipkart’s.