Razorpay entered the payment gateway business when the space was overcrowded, but it has managed to scale and make a mark. The company that recently entered the coveted unicorn club with a $100 million Series D round, has also demonstrated exceptional financial performance during the financial year 2019- 2020.
The seven-year-old fintech platform registered a 2.6X jump in its revenues which grew from Rs 193 crore in FY19 to Rs 509 crore during FY20.
At Rs 383.8 crore, domestic collections made up 75.4% of the operating revenues while the rest 24.6% were generated through export of software development services to Razorpay Inc USA.
Non-operating income which includes interest on deposits and mutual fund income also increased 2.4X to Rs 10.5 crore in FY20. While Razorpay’s scale of operation has grown significantly, the company has managed to improve its EBITDA margin from -1.68% in FY19 to -0.48% in FY20.
With improved efficiency, it is now cash flow positive at the operational level. Net cash flow from operations has witnessed a complete turnaround from the negative cash flow of Rs 57.4 Lakhs in FY19 to positive cash inflows of a little over Rs 192 crore during FY20.
Moving over to the expense sheet, expenditure on banking and card networks was the biggest burn for the payment gateway firm. Such expenses grew 2.6X to Rs 358.08 crore in FY20 from Rs 135.4 crore in FY19 and accounted for 68.15% of the total expenses.
Employee benefits also grew 2.3X to Rs 120.55 crore in FY20 from Rs 51.4 crore in FY19 as the company increased its talent pool to accommodate the jump in scale of operations.
Further, advertisement and promotional expenditure jumped 4.5X to Rs 16.6 crore during FY20 from Rs 3.7 crore in FY19 and rental expenditure also grew 2.5X to 7.3 crore during the same period.
Interestingly, expense on bad debt ballooned 190X to Rs 3.8 crore in FY20 from only Rs 2 lakh in FY19. Overall, total expenditure grew 2.6X in line with collections to Rs 525.4 crore in FY20 from Rs 202.15 crore in FY19. Unlike last year, loss during the year has increased by 86.4% to Rs 6.15 Crore during FY20 from Rs 3.3 crore in FY19.
Razorpay became the fifth unicorn in the payments space in India after Paytm, Billdesk, PhonePe and Pine Labs. Besides payment gateway, the company had also launched a neo banking platform, Razorpay X. The neo-banking platform was positioned as an anchor in the recent fundraise.
Razorpay also launched a collateral-free credit line ‘Cash Advance’ for businesses through third-party lenders. The company’s financial performance appears to be exceptional in FY20 and the company is moving towards profitability as evident by the improvement in all of its profitability and efficiency ratios. Asset turnover ratio has increased by 15.2% while RoCE has improved by 135 BPS to -2.33% in FY20 as the company moves towards profitability.