What The Financials
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In a year of significant changes in the digital payments ecosystem of the country, payment gateway Billdesk has continued to demonstrate growth. The company reported 53% growth in consolidated profits from INR 138 Cr in the previous fiscal to INR 211.2 Cr in FY20.
The company reported 30% consolidated growth in total income to INR 1906 Cr from INR 1407 Cr in FY19. Expenses for the year stood at INR 1619 Cr, shooting up from INR 1236 Cr in the previous year, up 30.9%.
The consolidated financials of the company include four subsidiaries – Loylty Rewards Management Pvt LTD, Hatio Innovations Pvt Ltd, Jocata Financial Advisory and Jocata Corporation respectively.
Billdesk is one of the oldest payment gateways and powers close to 60% of the country’s online bill payment. Bank fees and service charges paid on transactions remained the largest cost factor for the payments firm, constituting 84.6% of the total expenses incurred during the last fiscal.
On a standalone basis, Billdesk reported INR 231 Cr profit after tax for FY2020, a 52% growth from FY19 when it reported profit of INR 151 Cr. In FY20, it reported total income of INR 1438 Cr, while incurring expenses of INR 1132 Cr.
Loyalty Services Gains Traction
For consolidated revenue, the bulk of the income came from income from operations at INR 1804 Cr up from INR 1406 Cr in FY19, while ‘other income’ grew 98% from INR 51 Cr to INR 101 Cr during the fiscal year.
As for the income distribution, INR 1194 Cr came in as revenue from “Billdesk and other technology related services” i.e the company’s core payment gateway operations. INR 418 Cr, or 23% of revenue came from the loyalty business offering. In comparison to FY19, these revenue sources grew by 19.8% and 33% respectively.
Founded in 2000 by three former Arthur Andersen executives — M N Srinivasu, Ajay Kaushal and Karthik Ganapathy. BillDesk is one of the rare profitable internet companies in India. BillDesk has the largest roster of business clients in India and handles 50-60% of billing transactions.
Legal Bills Climb Up
In FY20, the company’s expenses were led by ‘other expenses’ which comprised 90% of the total spending. While a marginal component of total expenses, finance costs increased 35x to INR 3 Cr while depreciation and amortization costs increased 61% to INR 27 Cr.
Legal and professional charges during the year increased 58% to INR 15.26 Cr. With massive growth in usage of digital payment services, the company also witnessed 34% jump in bank fees and charges to INR 1369 Cr.
Billdesk’s attempts to find prospective investors for the business have been in reports for some time now. The company was said to be in talks with multiple investment bankers and its existing investors. It was earlier believed to be close to raising funds from PayU, American Express and PayPal at a reported valuation of $2 Bn.
Payments giant Visa bought a minority stake in Billdesk, valuing the company at an estimated $1.8 billion in February last year, giving it an entry into the unicorn club. The deal involved an investment of INR 537.06 Cr for 2.46 lakhs equity share at a price of INR 21,832.04 each. On the other hand, Billdesk received INR 65.5 Cr in lieu of 30,000 equity shares at the same rate from Claymore Investments.
Billdesk is backed by Visa, TA Associates, General Atlantic, venture capital firm Clearstone Venture, and Singapore’s state-held investor Temasek Holdings. American financial service Visa had invested in BillDesk at a $1.8 Bn valuation in February 2018. General Atlantic holds around 35% in BillDesk.
BillDesk’s competitors include TechProcess Payment Services, Razorpay, Airpay, Oxigen, PayUbiz, Paytm, Instamojo, CCAvenue, PhonePe and Payworld.
Covid Threat & Billdesk’s NUE Plans
“Due to the increased spread and the lockdown imposed by the government, the volume is increased for online shopping and payments. Accordingly, there has been no material impact on volumes of transactions as reduced spending capacity has been compensated with increased use of online payments which were previously made through other means,” said the company in a statement to investors.
That said, FY20 numbers do not reflect any changes in the business since the pandemic hit India. Apart from its efforts to find buyers, the company has been in the news recently for being a possible contender to the new umbrella entity (NUE) applications floated by the central bank.
Billdesk was also one of the multiple companies that became minority shareholders of the National Payments Corporation of India this week. Given its deep engagement in the digital payments ecosystem of the country, it will be interesting to see how FY21 turns out for the business.