Covid-19 had a severe impact on the scale of most startups irrespective of their growth stage: early, growth or late ones during FY21. While behemoths such as Ola, Oyo and Droom saw a massive loss of scale in the fiscal year ending March 2021, so is the case for point of sales (PoS) company MSwipe, in many ways at the forefront of impact due to its offline focus.
MSwipe’s operating revenue shrank 40% to Rs 209.6 crore in FY21 from Rs 348 crore in the preceding fiscal year. Transaction processing and support service fees were two major sources of income for the firm. Collections from both verticals declined significantly during FY21.
In FY21, transaction processing and support service fees decreased by 42.2% and 35.3% to Rs 112.12 and Rs 75.63 crore respectively. These two verticals had contributed Rs 193.83 and 116.84 crore respectively in FY20.
About 85% of the total operating revenue came through retail customers (MDR on plastic cards) and the balance 15% from corporate customers.
With the reduction in scale, MSwipe’s saw expenses also fall at a similar pace ~ 40% to Rs 310.77 crore in FY21 from Rs 520.22 crore in the preceding fiscal year. Information technology (IT) expenses alone constitute 37% of total cost. This cost was reduced 45% to Rs 114.96 crore in FY21 from Rs 210.38 crore in FY20.
MSwipe has spent Rs 77.93 crore ~ 25% of expenses in FY21 ~ on employee benefits. This cost shrank to the tune of 27% in the last fiscal. Importantly, Rs 11.23 crore of this expense accounted for employee stock options (ESOPs) which is a non-cash expenditure.
Finance costs increased 36% to Rs 6.75 crore in FY21 from Rs 4.96 crore in FY20. On the lines of scale and expenses, MSwipe managed to reduce losses 39% to Rs 90 crore in FY21 from Rs 148 crore in FY20.
Its cash outflow decreased by 90.6% to Rs 12.91 crore in FY21 from Rs 136.96 crore in FY20. On a unit level, the company has spent Rs 1.48 to make a single unit of operating revenue in FY21.
The negative growth of MSwipe in FY21 is not surprising as the fiscal was disrupted by the pandemic. However, the company has been facing intense competition for marketshare from Pine Labs, Paytm and HDFC, ceding marketshare in the process.
While the company is eyeing expansion of its PoS devices to over 100K customers, and has partnered with KreditBee and OneCard to enable their products on its terminal, the future remains a challenge for the decade-old MSwipe as competition is likely to heat up further with the potential entry of Tiger Global-backed Razorpay into offline swiping.
