Software as a Service or SaaS companies have come a long way in India with the growing dominance of Freshworks, Postman, Icertis, Druva among several others. While Icertis and Druva turned unicorns in 2019, Postman joined the coveted club with a $2 billion valuation in its $150 million Series C fundraise last year.
Unlike consumer-facing companies, SaaS firms prefer to stay away from the media limelight. One such company is BrowserStack. The app testing platform is headquartered in the USA with its Indian subsidiary Browserstack Software Private Limited providing technical support and software development services.
Let’s have a look at the financial performance of BrowserStack’s Indian entity in FY20. The entity collects all of its revenue from the US-based holding entity and saw its revenue from operations grow by 70% from Rs 88.7 crore in FY19 to Rs 150.5 crore in FY20.
It earned another Rs 44 lakh from interest on the deposit and Rs 77 lakh from foreign currency fluctuations during the same period.
BrowserStack had been set up for the sole purpose of providing IT services to Browserstack Inc and spent 72% of its total expenses on employee benefit expenses. These expenses swelled by 57% from Rs 52.35 crore in FY19 to Rs 82.2 crore in FY20.
Rent & maintenance expenditure also ballooned by 161% to Rs 10.5 crore in FY20 from Rs 4.02 crore in FY19. Going further south in the expenses sheet, we see that the company paid out Rs 4.3 crore in legal and professional charges during FY20, 130% more as compared to Rs 1.9 crore spent on the same during FY19.
The software development company spent Rs 8 crore on IT expenses during FY20, 90.05% more as compared to Rs 4.2 crore spent in FY19 while hosting charges surged 9500% to Rs 96 lakh during the same period.
Travelling costs of Rs 2.4 crore pushed the total expenditure to Rs 114.13 crore during FY20, 57.9% more as compared to Rs 72.3 crore spent in total during FY19. BrowserStack India spent Rs 0.76 to earn a single rupee of operating revenue during FY20.
Founded by Ritesh Arora and Nakul Aggarwal, the company’s cash flow from operations swelled 661% to Rs 45.83 crore in FY20 from Rs 6.02 crore in FY19 and it purchased tangible assets worth Rs 14.1 crore during the fiscal ended in March 2020. The company paid out Rs 9.7 crore in taxes during the same period.
While both costs and revenues increased significantly for Browserstck during the previous fiscal, it managed to improve its EBITDA margin from 21.65% in FY19 to 27.69% in FY20. As a result profit for the year grew by 118% to Rs 27.82 crore in FY20 from Rs 12.72 crore earned in FY19.
The financial performance of BrowserStack’s Indian entity in FY20 has been impressive. Its almost two-fold growth in operating revenue with a nearly 120% surge in profit is a testament to the company’s growth.
BrowserStack chose to remain bootstrapped until 2018. In March 2018, it raised $50 million in its maiden financing round led by Accel Partners. In the ongoing fiscal, the company had opened three data centres in Mumbai, Frankfurt and Sydney. In July, last year, it also acquired a visual testing and review platform Percy for an undisclosed sum.
Leveraging the strength of Percy, it also launched the 2.O version for testing visual correctness. Early this year, BrowserStack also bought back ESOPs from employees. While the size of the buyback was undisclosed, the company said that it plans to do it on a regular basis. The company is also not looking for external capital as profit and revenue both grew in the range of 100%.