Sridhar Vembu-Led SaaS Unicorn Zoho Crossed $1 Bn Revenue Mark In 2021

Enterprisetech unicorn Zoho saw its annual revenue surge beyond the $1 Bn mark in calendar year 2021 (CY21), its CEO and cofounder Sridhar Vembu said. 

“We have also crossed an important milestone of $1 Bn in annual revenue. While growth has slowed down quite a bit in 2022 over 2021, our diversified product portfolio and the fact that we save money for customers has helped us so far,” said Vembu.

Vembu made the comments while speaking at the sidelines of the company’s annual user conference, Zoholics India. 

India emerged as the fastest growing market for Zoho Corp as its products saw an uptick in adoption in the country. The company said that its offerings were witnessing ‘increased adoption’ among mid and large-sized businesses, especially in India. This growth was largely fueled by a surge in migration of users from its competitors and other vendors. 

“India might continue to be the fastest growing region, since we’re the most affordable business software & technology platform,” added the company.

This was visible in the fact that Zoho was able to grow its India-specific revenue at a compound annual growth rate (CAGR) of 65% over the past five years. In addition, Zoho also said that its India revenue grew 77% in 2021.

As per its filings, the Sridhar Vembu-led company had posted a record total profit after tax of INR 1,917.7 Cr in the financial year 2020-21 (FY21), more than double of the INR 800.8 Cr profit it recorded in FY20. 

FY21 also saw Zoho breach the INR 5,000 Cr revenue mark, growing 24% to INR 5,442.4 Cr from INR 4,385.9 Cr reported in FY20.

It must be noted that $1 Bn revenue claim pertained to CY21 while its INR 5,442.4 Cr revenue number was for fiscal year 2020-21.

Meanwhile, the company is yet to file its financial statements for the fiscal year ending March 2022. However, Zoho intends to remain bootstrapped and a private company for the foreseeable future.

In comparison, its competitor Freshworks reported a total revenue of $371 Mn in CY21, against a loss of $204.8 Mn. While Zoho has been unit economics positive, Frehworks has been in the red for a while now.

While Zoho has stayed bootstrapped till date, Freshworks had raised $484 Mn in funding prior to its listing last year. Subsequently, Freshworks listed on Nasdaq in September 2021 in what was perceived as a major moment for the Indian SaaS ecosystem. This saw the startup raise $1.03 Bn via the IPO at a market capitalisation of $10.3 Bn. From there, Freshworks has plummeted in value and currently stands at a market cap of $3.9 Bn.

However, fortunes changed in the intervening period as Zoho reached $1 Bn in revenues while Freshworks now is mired in legal troubles. 

The R&D Push

Founded in 1996 by Vembu and Tony Thomas as AdventNet, Zoho was rebranded to its current name in 2010. Its products and services have users in 150+ countries. With offices in the US, Singapore, the UAE and Japan, Zoho has more than 80 Mn users and 11,000+ employees. Its 55 integrated online applications support multiple business verticals from sales and marketing to finance and analytics. 

Zoho largely competes with homegrown players such as Freshworks as well as global giants including SAP, Zendesk, and Salesforce.

Amidst all the churn, Zoho plans to ramp up its investment in new-age technologies such as blockchain and AI. R&D continues to be the top focus of the Chennai-based unicorn as Zoho spent nearly three times as much on R&D than on marketing in 2021. 

Vembu also said that the Chennai-based unicorn was focussing on data localisation with two servers spread across India and 12 around the world. Zoho plans to add 100 more servers in India and other regions over the next five years. 

The Indian SaaS startups have witnessed healthy growth both in India and abroad over the last few years. While North American and European markets offer attractive margins, the rise of the Indian SaaS ecosystem has seen many startups build global products from the country.

This appears to have caught the eye of investors. A report found that first-generation Indian enterprisetech startups could potentially capture 8-9% share of the global SaaS market and could reach the $30 Bn revenue mark by 2025.

While Zoho has seen healthy growth in India, the country still contributes very little to its total revenues. Vembu intends to make India the biggest market for Zoho’s products.