While homegrown payment gateway Billdesk has reportedly been in the market to sell off its business in $2.5 billion, the twenty-year-old company has demonstrated solid financial performance during FY20. Its operating revenue increased by 28.5% to Rs 1,804.7 crore during FY20 from Rs 1,405 crore earned in FY19.
Billdesk generated 65.5% of the topline through electronic transaction processing fees, which grew by 19.8% from Rs 993.5 crore in FY19 to Rs 1,190.3 crore in FY20. Importantly, earning from its loyalty points management platform stood out as the second-largest source of revenue, making up 23% of the collections.
Such earnings grew by 33% to nearly Rs 319 crore in FY20 from Rs 315.13 crore. Further, sale of products (i.e Sale of PINS, e -Top up Subscriptions) rose 2.5X to Rs 158.5 crore in FY20, constituting 8.8% of the earnings while other related earnings through commission and advisory services made up the rest 2.7%.
Billdesk is one of the oldest payment gateways and powers close to 60% of the country’s online bill payment. The company has been looking to sell off and according to a Mint report, it deputed eight investment bankers for finding buyers.
The fact that Billdesk has a no-frills marketing policy is quite evident from its sparse website and its marketing expenses. The company actually lowered these expenditures by more than 28% to only Rs 2.7 crore in the fiscal ended in March 2020. On the similar lines, the Mumbai based company curbed its rent payouts by 62.2% to Rs 4.5 crore in FY10 from nearly Rs 12 crore in FY19 as the company gave up its lease holdings and favoured remote working teams.
While Billdesk registered a less than 30% growth in its topline during FY20, Billdesk has managed to significantly increase its profits on account of operational efficiencies and strategic changes made by the management. Profits for the year rose by 53% to Rs 211.22 crore in FY20 from Rs 138 crore in FY19 while EBITDA margin improved to 16.61% during the same period.
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. As Billdesk’s scale grew, these costs grew by 35% from Rs 1,015 crore in FY19 to Rs 1,370 crore in FY20.
Major infrastructure costs such as information technology (IT), data and server management expenses grew marginally to Rs 36.7 crore in FY20 while tax expenditure added another Rs 79.1 crore to the expenses sheet for the FY20.
Total expenditure incurred during FY20 grew by 31.5% to Rs 1,619.8 crore from Rs 1236.8 crore in FY19. Billdesk spent less than Rs 0.9 to earn a single rupee of operating revenues in FY20 and Net Cash Flow from operations improved by Rs 44.5 crore from negative Rs 17.7 crore in FY19 to inflows of 26.8 crore in FY20.
Billdesk remains bullish on its growth perspectives and is actively incurring capital expenditure to increase its viability amongst its competitors including PayU and Razorpay. During FY20, Billdesk invested Rs 47 crore in its subsidiaries focussing on ancillary services and another Rs 48 crore on IT and software infrastructure.
The company earns a sizable income on its investments which stood around Rs 101.5 crore in FY20. It invested another Rs 216.3 crore on such income bearing assets, and the total assets held by Billdesk grew by 10.8% to Rs 2,727.7 crore at the end of March 2020.
Billdesk last raised funds towards the end of FY19 and around 66.5% of the shareholding is controlled by foreign players. Multinational payments firm VISA international also holds a sizeable chunk of the business, having over 13.12% stake while Singapore based General Atlantic is the single largest stakeholder controlling 14.81% stake. Founders Ajay Kaushal, Karthik Ganapathy and MN Srinivasu collectively hold around 33.82% stake in the twenty-year-old company.