With most startups struggling during and after the Covid-19 lockdown, Instamojo said that it hit profitability in June. The Bengaluru-based platform, that allows merchants and businesses to sell products through the web and accept digital payments, claimed that it became cash flow positive.
“We generated free cash and became cash flow positive in June. During the months, we also hit our all-time high gross margin value or GMV run rate of Rs 2000 crore,” said Sampad Swain in a conversation with Entrackr.
The profitability has come on the back of Instamojo’s revenue growth during the Covid-19 lockdown period. For context, the company recorded a 20% growth in gross profit and reduced its net spent by 50% in April.
During the month of April, the digital enabler’s gross margin was recorded at 57%. “In pre-Covid period, our gross margin was somewhere around 35% and it is now doubled to 65% in June,” added Swain.
For the uninitiated, gross margin is net revenue upon gross revenue or net revenue after deducting the cost of goods sold.
The pandemic has forced merchants and MSMEs to move online that created a huge demand for lending, payments, ecommerce, and Instamojo has been able to leverage the opportunities. In the last three months, the company has seen significant growth in categories such as food retail, edtech, financial services, B2B and events.
Instamojo has acquired 1.3 million merchants and its pricing is said to be friendly for premium businesses. “We don’t call our pricing the best in the market but looking at the number of services and features we provide such as domain, payments, logistics, store, sachet loan and others, the pricing is not beyond customers’ pocket.”
During the same period, Instamojo has also launched over half a dozen products such as sachet loan via WhatsApp, loyalty and rewards programs Mojoplus, InstaCash and Marketplace API.
With the ongoing momentum, the digital commerce enabler for micro merchants will target to double the business in FY21 while remaining profitable and without any fresh capital raise.
“All you can say is that we hit profitability, generated free cash, grew 2X in terms of gross margin and 30% month-on-month as far as our revenue and GMV is concerned in the last three months,” Swain said.