Sridhar Vembu-Led Zoho’s Profit Zooms 43% To INR 2,749 Cr In FY22, Sales Rise 28%

Zoho’s Revenue Crosses INR 8,000 Cr Mark In FY23, Asia Becomes Second Biggest Market

SUMMARY

Zoho’s total revenue jumped 28.5% to INR 6,998.8 Cr in FY22 from INR 5,444.6 Cr in FY21

The unicorn’s employee benefit expenses stood at INR 1,826.8 Cr, accounting for 51% of its total expenses in FY22

Zoho’s promotional expenses more than doubled in FY22, but every INR 1 spent by it on advertising resulted in sales worth INR 9.4

Sridhar Vembu-led SaaS giant Zoho’s profit crossed the INR 2,000 mark in the financial year ending March 31, 2022. The bootstrapped unicorn posted a net profit of INR 2,749 Cr in the financial year 2021-22 (FY22), a 43% jump from INR 1,917 Cr in the previous year on the back of a strong growth in its business.

Total revenue grew 28.5% to INR 6,998.8 Cr in FY22 from INR 5,444.6 Cr in FY21. Sales, or operating revenue, zoomed 28% to INR 6,710.7 Cr from INR 5,229.6 Cr in FY21.

Zoho earns revenue by selling its software and charging subscription fees to its customers across six continents.

North America continued to be the top revenue generating market for Zoho in FY22, with the continent contributing INR 3,198.4 Cr in revenue as against INR 2,458.8 Cr in FY21. While Europe generated revenue of INR 1,504.6 Cr in FY22, Asia gave business worth INR 883.8 Cr. Latin America, Africa, and Australia generated sales worth INR 371.8 Cr, INR 501.9 Cr, INR 250 Cr, respectively, during the year under review.

Product wise, ManageEngine generated revenue of INR 3,157.8 Cr in FY22, while Zoho contributed business worth INR 3,532.7 Cr. The Zoho Group offers a plethora of solutions across multiple verticals such as sales and marketing, HR tech, finance, security and management, customer service, among others.

The startup’s cash flow from operations stood at INR 3,534.1 Cr in FY22 as compared to INR 2,457.8 Cr in FY21

On the expenses front, the unicorn’s total expenditure rose 18% to INR 3,571.7 Cr in FY22 from INR 3,026.3 Cr in FY21. Employee benefit expenses accounted for 51% of the total expenses in FY22, rising 6% to INR 1,826.8 Cr from INR 1,725 Cr in FY21.

Employee benefit expenses generally comprise salaries of employees, PF contributions, gratuity, and other employee welfare benefits. The startup spent INR 1,631.4 Cr on salaries in FY22, a rise of 3.5% from INR 1,576.7 Cr in FY21.

Advertising expenses were another major contributor to the total expenses. The startup’s spending on advertising and promotional activities shot up 113.6% to INR 715 Cr from INR 334.6 Cr in FY21.

However, unlike other loss-making startups which spend a huge amount of promotional expenses without having much revenue to show for, every INR 1 spent by Zoho on advertising resulted in sales worth INR 9.4.

The startup also paid tax of INR 585.1 Cr during the year under review as against INR 480 Cr in the previous fiscal year. Zoho’s EBITDA margin expanded to 53.05% in FY22 from 50.85% in FY21.

Founded in 1996 by Padma Shri awardee Vembu and Tony Thomas, Zoho was initially known as AdventNet INC. The SaaS giant has more than 80 Mn customers and over 9K employees globally. It has offices in the US, Singapore, the UAE, Japan, among others, and offers more than 50 integrated online applications that support multiple business operations spanning sales and marketing, finance, email and collaboration, app creator and analytics, among others.

OnePlus, Amazon, Philips, Whirlpool, and Mahindra are among its major clients.

Mihir Malhotra contributed to this piece.