SUMMARY
ZestMoney’s total revenue rose 1.6X to INR 145 Cr in FY22 from INR 89.3 Cr in FY21
The BNPL startup’s total expenses grew 2.5X to INR 543.8 Cr in FY22 from INR 89.3 Cr in FY21
The fintech startup spent INR 3.9 to earn INR 1 during the year under review
Buy now pay later (BNPL) startup ZestMoney, backed by Australian fintech Zip, saw its loss widen 3X year-on-year (YoY) to INR 398.8 Cr in the financial year ending March 31, 2022 due to a sharp rise in its expenses.
The fintech startup’s loss surged 216% from INR 125.8 Cr reported in the financial year 2020-21 (FY21).
Total revenue grew 1.6X to INR 145 Cr in FY22 from INR 89.3 Cr in FY21, while revenue from operations rose 68.6% to INR 138.4 Cr from INR 82 Cr in the previous fiscal year.
ZestMoney partners with non-banking finance companies (NBFCs) to provide its services to retail customers and merchants. A majority of its revenue comes from integrating with merchants in both offline and online channels. The startup acts as a payment partner to them and also as an affiliate partner.
It also generates revenue in the form of direct selling agency fees (DSA) from lenders (NBFCs) for bringing them business.
Meanwhile, the fintech startup’s expenses grew 2.5X to INR 543.8 Cr in FY22 from INR 89.3 Cr in FY21. This means, the startup spent INR 3.9 to earn INR 1 during the year under review.
The rise in total expenses was led by a surge in service deficiency charges. The startup’s service deficiency charges jumped 3X to INR 233.4 Cr from INR 63.3 Cr in FY21. Service deficiency charges denote the cost of bad loans.
ZestMoney’s employee benefit expenses climbed 89% to INR 93.3 Cr INR 49.1 Cr in the previous fiscal.
Employee benefit expenses usually comprise employee salaries, PF contributions, gratuity, and other employee welfare benefits. An increase in employee benefit expenses is an indication that the startup has hired more employees in the given year as compared to the previous year.
ZestMoney’s advertising and promotional expenses increased 2.3X to INR 97.8 Cr during the year under review from INR 41.3 Cr in FY21. Its EBITDA margin further worsened to -278.98% from -143.86% in FY21.
Founded by Lizzie Chapman, Priya Sharma and Ashish Anantharaman in 2015, Bengaluru-based ZestMoney offers BNPL services, allowing its users to pay their shopping bills in three instalments at 0% interest rate.
ZestMoney claims that its services are accepted by over 100K offline and 15K online stores across the country.
Last year, it raised $50 Mn in its Series C round led by Zip Co Limited, a fintech firm listed in Australia. ZestMoney said then that the fundraise was a part of a larger Series C round which would see participation from existing investors.
The startup is also backed by Quona Capital, Reinventure Ribbit Capital, Omidyar Network, PayU, and Xiaomi.
ZestMoney competes against the likes of Simpl, Lazypay, and ePayLater in the BNPL space in the country. As per an Inc42 report, the lendingtech segment in the country is estimated to clock a CAGR of 32% in the next three years to have a market opportunity of $616 Bn by 2025.
