Investment Tech Unicorn Groww Reports 34X Rise In Loss As Operational Revenue Growth Remains Tepid

Bengaluru-based investment tech platform Groww posted revenue of INR 76.16 lakh (0.76 Cr) in the fiscal year ended March 2020 (FY20), an 823% year-on-year (YoY) growth from revenue of INR 8.25 lakh (0.08 Cr) in FY19 according to the company’s filing with the Ministry of Corporate Affairs. 

Notably, of the total revenue, a little over INR 29 lakh is income from operations, while the rest i.e. INR 47.12 lakh is other income, which includes profit from the sale of investments and interest on deposits from banks. 

During the same period, the company’s expenses grew by 2,703%, from INR 31.76 lakh (0.31 Cr) in FY19 to INR 8.69 Cr in FY20. Thus, the company’s net loss for FY20 stood at INR 7.93 Cr, a 3,348% increase from a loss of INR 23 lakh (0.23 Cr) in FY19. 

“As this is the fourth year of operation, due to various operational setups, the company is unable to earn profits,” read the filing. 

As for the breakup of the company’s expenses, employee benefit expenses grew from INR 4 lakh to INR 4.9 Cr. Depreciation, amortization and impairment expenses fell by 78% from INR 13.87 lakh in FY19 to INR 3 lakh in FY20. Other expenses, which include the company’s spending on rent, fuel, legal, transportation, advertising and other miscellaneous expenses, increased by 2,792%, from INR 13 lakh in FY19 to INR 3.76 Cr in FY20. 

Five-year-old Groww was founded by ex-Flipkart employees Lalit Keshre, Harsh Jain, Neeraj Singh, and Ishan Bansal. It offers direct plans for mutual funds and investing via mobile application and web platform. It also allows users to invest in stocks, mutual funds, ETFs, IPOs, and Gold.

Last month, Groww entered the unicorn club when it raised $83 Mn in its Series D funding led by Tiger Global at a $1 Bn valuation. The round saw participation from existing backers Sequoia India, Ribbit Capital, YC Continuity and Propel Venture Partners also participated in the round. 

The Covid-19 pandemic has accelerated the platform’s growth as millennials started exploring investment options backed by social media trends. The company plans to launch a slew of financial education initiatives aimed at millennials and expand the market for financial services, in the next two years. In June 2020, the company launched stocks with an easy-to-use interface for do-it-yourself (DIY) investors. The startup so far boasts over 8 Mn registered users.

Groww said it plans to expand its product suite with the new fundraise and invest heavily in financial education and awareness.

The startup competes with a handful of firms including Zerodha, Paytm Money, Upstox, ETMONEY, smallcase, and traditional brokerage and investment firms.