SUMMARY
The Walmart-backed startup’s total revenue rose 133% to INR 1,692.7 Cr in FY22
Led by an over 40% jump in ESOP costs, PhonePe’s total expenses jumped 1.5X to INR 3,705.6 Cr in FY22
PhonePe also spent INR 866.2 Cr on advertising and promotional activities as against INR 534.9 Cr in FY21
Fintech major phonepe
witnessed a 133% year-on-year (YoY) jump in its total revenue in the financial year ending March 31, 2022. The Walmart-backed startup posted a total consolidated revenue of INR 1,692.7 Cr in FY22 as against INR 725.3 Cr in FY21.
However, a 1.5X jump in total expenses to INR 3,705.6 Cr in FY22 from INR 2,456.8 Cr in FY21, led by an over 40% increase in ESOP expenses, resulted in widening of its net loss. PhonePe’s net loss rose 16.4% to INR 2,013.7 Cr from INR 1,728.7 Cr in FY21, as per its consolidated financial statements uploaded on the website of the Ministry of Corporate Affairs.
It must be noted that the startup’s loss would stand at INR 827 Cr on excluding “shares based payment to employees”, or ESOP costs, from its employee benefit expenses. PhonePe’s loss, excluding ESOP costs, was 6.9% higher at INR 888.8 Cr in FY21.
ESOP costs jumped 40.7% to INR 1,185.8 Cr in FY22 from INR 842.6 Cr in FY21.
The startup’s revenue from operations jumped 2.3X to INR 1,646.2 Cr in FY22 from INR 689.6 Cr in FY21.
As per the financial statements, the startup recognises revenue from processing payment transactions by charging a fixed percentage cost to the value of the transactions. Apart from this, it also recognises revenue from allied services, which primarily include advertising services that involve exhibition of advertisements on its platform or on impressions.
PhonePe, which received an insurance broking licence from the Insurance Regulatory and Development Authority of India (IRDAI) last year, also earns revenue from the commission it earns from insurance companies on placement of insurance policies. PhonePe also earns commissions from distribution of mutual funds.
In a statement last month on its FY22 financials, PhonePe said, “The increase in revenue is primarily driven by the robust growth PhonePe has seen across all its lines of businesses. PhonePe’s contribution margin grew to 88% vs 84% the previous year, on account of improved cost optimization, process automation and a favourable product mix.”
Employee Benefit, Promotional Expenses Surge
In FY22, the startup’s employee benefit expenses constituted 49% of its total expenses. Led by the jump in ESOP costs, Flipkart-owned PhonePe’s employee benefit expenses surged 41% to INR 1,741 Cr in FY22 from INR 1,235.3 Cr in FY21.
Employee benefit expenses mostly comprise employee wages, PF contributions, gratuity, and shares based payment to employees, among others. The startup conducted ESOP buyback worth INR 135 Cr in November last year.
PhonePe’s advertising and promotional expenses also registered a sharp jump, increasing 1.6X to INR 866.2 Cr from INR 534.9 Cr in FY21. The Bengaluru-based startup also spent INR 199 Cr as payment processing charges, an increase of 84.4% from INR 108 Cr in FY21.
The fintech startup spent INR 139.8 Cr on information technology in FY22 as against INR 89.9 Cr in FY21.
Founded in December 2015 by Sameer Nigam, Rahul Chari, and Burzin Engineer, PhonePe claims to have over 400 Mn registered users. Its UPI payments solutions have digitised more than 30 Mn offline merchants spread across Tier-2, 3, 4 cities and beyond, covering 99% pin codes in the country.
The startup forayed into the financial services business in 2017, providing users with the option to buy 24-karat gold sitting at home. Recently, it also started selling silver on its platform. It has also introduced several mutual fund and insurance products like tax-saving funds, liquid funds, international travel insurance, life insurance, COVID-19 insurance, amongst others.
PhonePe competes with the likes of Paytm, Google Pay, and Amazon Pay in the fintech space.
