PhonePe In 2024: On The IPO Trail With INR 5,000 Cr Revenue

PhonePe is already acting like a public limited company.

In 2024, PhonePe released its annual report sharing its consolidated, standalone financial numbers, publicly announcing the valuation at which it raised the last funding round and most importantly its profitability figures excluding ESOP costs. 

This is unusual for any privately held company, but the Walmart-backed fintech major is clearly changing its tune. And it’s about time too.

After raising more than $1 Bn in 2023 and continuing to retain the UPI market share lead, PhonePe was able to cross the INR 5,000 Cr revenue milestone in FY24, eclipsed only by Paytm in the fintech space.

And while Paytm had its own shares of troubles in 2024, PhonePe ended up going from strength to strength — not only adding to its fintech super app, but adding the Indus App Store and making key changes to the Pincode app. 

The core payments business drove 90% of its revenues in FY24, but it’s also becoming evident that PhonePe is diversifying quickly and hedging itself against potential disruptions to its UPI-centric payments empire. 

To be sure, PhonePe is wary of the changing regulatory environment when it comes to the booming digital payments market in India especially the UPI where it now has nearly 50% market share.

Some of the new verticals PhonePe entered into like digital commerce or the app store are not exactly fintech businesses or PhonePe’s strengths, however, these could become a key to growing both topline, improving the bottomline, by leveraging the fintech platform’s extant 530 Mn users.

For venture capital backed companies these days, an IPO is the next big target, and after redomiciling to India in late 2022, PhonePe has been on the IPO course as well.

“PhonePe has two things going in its favour in the run up to the IPO. Unlike Paytm where the leadership board was restructured several times before and after listing, PhonePe has had a stable board and its leadership. Secondly they have smartly avoided the regulatory axe until now by not going aggressive on lending or other businesses and increased their dominance in UPI,” a fintech unicorn CXO turned investor told us. 

And while PhonePe CEO Sameer Nigam recently ruled out rushing to an IPO due to underlying regulatory concerns on UPI transaction share, every development in 2024 took PhonePe closer to this. 

PhonePe’s Payments Lead: Going Beyond UPI 

PhonePe’s efforts in securing payment aggregator, account aggregator licenses as well as the wallet and bill payments licenses earlier continued to bear fruit in 2024, with the standalone payments business reaching INR 4,910 Cr in FY24.

Despite the zero merchant discount rate or MDR in UPI payments, PhonePe has navigated this challenge by being able to cross sell products that have an attached MDR, including bill and credit card payments, mobile recharges, travel bookings, in-transit payments on its core payments app. This cross-selling forms the lynchpin of the company’s super app play. 

Within bill payments, for instance, PhonePe has a 50% market share by value and volume terms far ahead of rivals like Google Pay, CRED, Paytm and Amazon Pay. This enabled PhonePe to collect commissions from service providers while utilising its current monthly active user base of 200 Mn as of FY24.

PhonePe has also tied up with various online ticketing platforms like Goibibo, EaseMyTrip, Redbus,ixigo to enable its existing users to book air, train and bus tickets directly from the app under which it charges a commission from the ticketing platforms. 

PhonePe’s move to sell insurance products in health, travel, motor insurance within the app. PhonePe has reportedly directed a bulk of its investments (nearly INR 1000 Cr) towards insurance distribution services. 

Industry analysts have been bullish on the underpenetrated insurance sector for a while now, however, PhonePe’s insurance products in partnership with insurers are micro offerings with small value premiums and therefore low revenue upside.

PhonePe claims to have sold over 9 Mn insurance policies since 2021, yet most of the income it earns is a percentage of the premiums paid by consumers to insurance companies. For long the company has looked to expand this play and add to this distribution revenue, but competing with existing aggregators is not easy, especially because insurance is not the only focus area for PhonePe.

“In a way this resonates with PhonePe’s existent user base with 80% UPI users coming from tier 2, 3 towns If they are able to crack insurance business in these markets where the niche insurtech players are finding it difficult to reach, this would significantly shore up revenues unless no stifling regulations come into play,” a founder of an early stage insurtech platform told Inc42.

Within the payments business, PhonePe’s move to tap the overseas markets like Singapore, UAE, Sri Lanka has come at a time when these geographies are increasingly looking to digitise payments with the support of Indian fintech startups. Notably fintech companies  like Razorpay, Pine Labs and others are already present in some of these geographies.

In 2024, PhonePe entered these markets, tying up with local financial service institutions to add to the international payments on UPI. Now, the fintech firm is also reportedly eyeing a payments license in a few countries to set up retail payments operations there. 

“PhonePe is already offering solutions to the Indian users and travellers in these geographies and could possibly be looking at providing payment gateway services to local merchants and payments apps. However, this also depends on passing the regulatory hurdles in each of these geographies,” source close to the PhonePe management told us. 

Digital lending is a big cross-selling point for PhonePe. The fintech giant launched secured lending products in May 2024 and put a halt on small ticket loans disbursal.

“It only made sense for Nigam and team to capitalise on Paytm’s lost trust factor and losing merchant base by launching these products. They have so far not gone aggressive on lending and cautiously navigated all regulatory hurdles,” commented the investor quoted above.

The products launched under secured loans offering included gold loans, mutual funds, auto loans, home and education loans. In October 2024, PhonePe also launched credit on UPI offering in partnership with ICICI Bank which offered ICICI’s pre-approved customers to avail loan of up to INR 2 Lakh instantly on PhonePe app.

On the merchants lending side, PhonePe is reportedly disbursing INR 300 Cr worth of merchant loans every month, with annual disbursals now close to INR 4,000 Cr, for a total merchant base of 40 Mn.

The Wealthtech Bet: Share.Market

Wealthtech has perhaps been one of the brightest spots in the Indian fintech story so far catalysing the success of the likes of Zerodha, Groww, Upstox and others. PhonePe forayed into wealthtech with the launch of standalone Share.Market app in 2023. The app has clocked 2.5 Mn registered users and 200,000 active investors since its launch in August 2023.

In 2024, the company invested over INR 287 Cr into Share.Market, introducing features such as futures and options trading, and AI-powered intelligence.

“PhonePe decided to go for a separate wealth tech app because the target market here is much more niche, which also relies heavily on in-app intelligence tools. However the market here is different from the payments market and it is almost difficult to onboard users from a rival platform unless PhonePe offers a unique consumer experience. Remember the Zerodha glitches and simpler UI/UX of Groww which helped the latter attract new-to-market consumers. Now PhonePe has to find a sweet spot between offering a superior experience and charging consumers at the same time,” a wealth tech consultant told Inc42.

During Share.Market’s launch in 2023, Nigam and team did not outline any targets or metrics for this app, but this seems to have changed. This is naturally because leaders like Zerodha and Groww that have overachieved in terms of revenue, profit, user base milestones for the past two years 

Wealthtech is becoming a crowded space. Only few rivals have been able to onboard more new active investors like Share.Market, which does give an early edge. But analysts say that without being able to scale up the investor base especially in F&O, intra-day trading, PhonePe will find it difficult to compete for the same set of investors who now have multiple options to choose from. 

Aiming To Be India’s App Store 

PhonePe also managed to do something that Paytm had tried and failed. An app store to challenge Google’s Play Store dominance. The launch of the Indus Appstore in 2024 represents a major transition for PhonePe, from a fintech company to a tech company. 

This is a big bet for PhonePe, especially after some of the oldest apps in India found themselves delisted from the Google Play Store in 2024. Soon afterwards, PhonePe looked to sign deals with OEMs to get Indus Appstore preinstalled on devices. 

The store’s big USP is zero commission from developers for the first few years, allowing real money gaming apps, and the option to implement any billing system the developer chooses, unlike Google Play. Starting from January 2025, Xiaomi will be replacing its own app store with Indus Appstore, which today hosts more than 2 Lakh apps across 45 categories and 12 languages.

The fintech giant has already entered into strategic agreements with OEMs like Nokia and Lava, and the company expects to have more than 150 Mn active users on its app store by 2025. 

According to Counterpoint Research, smartphone brands like Xiaomi, Samsung, Vivo, Oppo, Realme constituted 90% of the market in India, but most of them are reliant on Google Play Store. PhonePe’s entry does disrupt this space, but whether PhonePe has the scale to compete with Google is still open for debate. 

The year 2025 will test PhonePe’s network prowess, as well as the experience app developers and users will have with Indus Appstore which started off on a positive note. And a lot 

PhonePe’s Spin On Quick Commerce And Pincode 

One of the most surprising announcements that came from the PhonePe group in the last few years was  its foray into digital commerce via a separate app. More so because Walmart already had ecommerce  giant Flipkart under its belt. But PhonePe took on the bet for localised ecommerce through ONDC. 

Pincode was originally conceived for ONDC food and non-food deliveries, but in 2024, it looked to move away from the open network. Pincode eventually stopped delivering non-food products via ONDC due to weak demand, hassles with third-party logistics players, and overall subpar customer experience. 

According to our sources within PhonePe, the company is pumping in investments  into Pincode especially for its quick commerce offering in late 2024. Through this, it will branch out into non-grocery items from local kirana stores with the help of logistics partners Shadowfax and Loadshare .

This model is different from asset heavy, dark store models of Zepto, Swiggy Instamart or Blinkit, and could reduce the overall costs for PhonePe. Whether this model can be scaled up enough is another question, as this is not the first startup to attempt to aggregate retailers for digital commerce. Read: Dunzo

However partnership with third party logistics players for 10 minute deliveries which is a fairly new concept might be challenging especially since capital heavy players have in-house logistics.

Given PhonePe’s success with many existing businesses in the past, one cannot write off CEO Nigam’s team entirely, especially because quick commerce has started to make a real dent in India’s ecommerce market and is growing aggressively across the country. 

Looking at 2025, one cannot help but feel that PhonePe’s next big growth phase will come from outside fintech — whether it is the app store or the digital commerce play is yet unclear, but both of these have deep links to the fintech product as well. 

In this regard, 2024 was all about PhonePe making sure that its super app play gets more fleshed out and diversified than any of the competition. We have written about the great fintech convergence in the past, but no one is pushing the boundaries of what a super app is more than PhonePe. And a lot of that was evident in the year gone by. 

[Edited By Nikhil Subramaniam]