Razorpay announces ESOP buyback worth $10 Mn for its 750 employees

Business-focused payment gateway and neo banking platform Razorpay has announced an employee stock option or ESOP buyback worth $10 million for its 750 employees. The buyback has come at a time when the company is in talks to mop up a new financing round.

This is the third ESOP buyback program for the company in which all existing and former employees who hold vested stocks will be eligible to sell up to 33% of their vested ESOP shares, as per Razorpay. 

Its key backers Sequoia Capital India and GIC will buy employees’ shares.

Sequoia and GIC had led a $100 million Series D funding round in Razorpay in October 2020 that pushed the Bengaluru-based company’s valuation to over $1 billion and made it a unicorn.

The share sale is expected to benefit employees across roles -- from team leaders to support executives to administrative staff.

“..Our current and former employees, even as young as 23, will be eligible for this incentive, irrespective of ranks. The compensation will be rolled out to all our employees, be it software engineers, product managers, customer experience agents, or administrative staff. I believe there’s no better time than now to recognise the team for all their efforts and having trusted us in this journey,” said Harshil Mathur, CEO and co-Founder Razorpay.

The seven-year-old company provides payments solutions to more than 5 million small and large businesses such as Facebook, IRCTC, CRED, Zerodha, Indigo among others. Razorpay further claims that it has recently clocked a growth rate of 40-45% month-on-month and is geared to increase its merchant count to 10 million by next year. 

During the Covid-19 pandemic, Razorpay claimed to have registered 3X growth in payment volume through SMBs that went online for the first time.

In FY20, Razorpay turned cash flow positive and posted a loss of mere Rs 6.15 crore. During the fiscal year ending March 2020, it registered a 2.6X jump in its revenue to Rs 509 crore from Rs 193 crore in FY19.

As of now, Razorpay has awarded ESOPs to 1,000 employees. The first liquidity event through ESOP encashment occurred in November 2018 for its 140 employees followed by another ESOP buyback for 400 employees in November 2019. Backed by the likes of Tiger Global, Ribbit Capital, Matrix Partners, Y Combinator, MasterCard and 33 angel investors, Razorpay has raised over $206.5 million across four institutional rounds.