PolicyBazaar losses jumped 23X in FY19 while revenue grew 2X

Web aggregation of insurance took time to foster confidence in the Indian consumers as we have been accustomed to buying insurance from that distant uncle who sold insurance to our parents. Things have changed rapidly in the last decade as Indians get used to getting things done real-time using an app or online services. 

Buying insurance is no exception. 

PolicyBazaar has been credited with creating its own market and a brand synonymous with insurance web aggregator and their financials reflect the same. Its revenue from operations almost doubled in the fiscal year ended in March 2019 to reach Rs 310.3 crore from Rs 158.3 crore it earned in FY18.

The expense sheet of the Gurugram-based company confirms the fact that it has been running on full steam to continue this momentum of growth and saw its net operating cash outflow increase almost 80X from Rs 2.1 crore in FY18 to Rs 167.1 crore in FY19. Losses reached Rs 213.1 crore during the same period, ballooning 22.6X from Rs 9.42  crore in FY18.

PolicyBazaar ended up spending Rs 1.7 to earn a single rupee of revenue in FY19, increasing 60% from FY18 when it was close to breaking even at Rs 1.06.

Expenditure on employee benefits was the biggest cost element for the company reaching Rs 222.6 crore during FY19 growing 2.2X from Rs 99.4 crore in FY18. Close on its heel was the expenditure on advertising and promotion as the company spent across various media platforms from print to targeted online ads to generate interest in the untapped market. 

It spent Rs 207.3 crore on advertising and promotion in FY19, growing almost 6.5X as compared to Rs 32 crores it spent on the same during previous fiscal. Further, administration and related direct costs rose 2.2X and accounted for Rs 66.7 crore in FY19 as compared to Rs 30.2 crore in FY18.

Network and internet expenses also grew 3.5X to Rs 20.4 crore in FY19 from Rs 5.8 crore in FY18 as the company spent more to manage the increased traffic of customers on its platform while depreciation and finance costs added another Rs 8.5 crore to the expense sheet.

Rapid growth always comes at a price and PolicyBazaar spent Rs 525 crore in total during FY19, growing 3.1X from Rs 168.8 crore it spent in FY19.

To fuel these increasing expenses the company raised Rs 190 crore through issue of shares and borrowed another Rs 33.5 crores during the fiscal ended in March 2019. 

PolicyBazaar’s parent was one of the companies in the race to go public. However, it changed tracks a couple of years after getting a commitment from SoftBank’s and its entry into healthcare services through a separate company DocPrime. 

If we look at financials performance of the company in FY19 and compare it to the preceding one, it’s clear that the company had prioritised growth and scale over profitability in the last fiscal. The trend will  continue for a couple of more years as it already had access to a large amount of capital. 

Besides raising $238 million from SoftBank, PolicyBazaar also raised $150 million from Tencent.

Last month, early-stage venture capital firm Inventus Capital had offloaded $25 million worth stake in the Yashish Dahiya-led company through a secondary transaction. Entrackr had exclusively reported about the deal.