ToneTag’s turnaround in FY21: Revenue jumps 5.9X while losses shrink 99%

Sound-based contactless financial transactions are set to be reality as a few companies concluded successful pilots in August. Amazon-backed ToneTag and Ubona Technologies’s BHIM Voice were part of the first cohort of the Reserve Bank of India (RBI) sandbox for retail payments. The two conducted under Rs 1,000 transactions in the urban and rural pockets of Karnataka and Bihar.

BHIM Voice is one of the early entrants in sound-based payments, but ToneTag has scaled up at a scorching pace in the financial year ending March 2021. 

ToneTag has recorded a 5.9X jump in operating revenue, reaching Rs 12.35 crore in FY21 from Rs 2.09 crore in the preceding fiscal. The Bengaluru-based firm has made 75.70% of total collection from smart stores.

Majorly used by retailers and restaurants, smart stores offer sound-centred order management and payments options. This income grew by 389% year on year to Rs 9.35 crore in FY21. 

The remaining 24.30% of the operating revenue came from licence fees which it charges to large merchants and partners. The company claims to work with 1.5 million merchants and has partnerships with NPCI, Mastercard, Amazon and Yes Bank. 

According to its website, it has 11 and 7 products in payments and engagement verticals, respectively. It also claims 13 patents under its belt which covers various kinds of audio and sound interactions between devices. Backed by Reliance VAMPL and Mastercard, the company allegedly received favourable treatment from NPCI while bidding ‘proximity payment solutions’ for UPI in 2018.

Even with the bumper growth in revenue, ToneTag has managed to control expenses by 46.56% to Rs 13.29 crore during FY21 from 24.87 crore in FY20. Salaries and other benefits to employees have turned out to be the largest cost for the company, making up 71.4% of annual expenses. This cost has been reduced by 18.8%year on year to Rs 9.5 crore in FY21.

On the back of stellar financial performance in FY21, ToneTag has recovered from a hefty loss of Rs 20.76 crore in FY20 to a mere Rs 20 lakh in the last fiscal year (FY21).

ToneTag has made a turnaround in terms of financial performance in FY21 and this is reflected from its positive operating cash flow of Rs 2.15 crore in FY21 as compared to an operating cash outflow of Rs 26.8 crore during FY20.

On a unit level, the company spent Rs 1.07 to earn a rupee in FY21 which was Rs. 11.95 during FY20.

The company’s 494% year on year growth in revenue and a 99% reduction of annual losses shows a stupendous financial performance in FY21. It looks like ToneTag’s revenue is also slated to grow at a fast pace in the ongoing fiscal. The company has claimed around 100x to 250X growth this calendar year. However, this growth is subjective as it didn’t disclose the ‘growth parameters.’