Digital payments and fintech services startup Cashfree Payments crossed the milestone of $200 million valuation after raising funds from the State Bank of India in June last year. The company has claimed to register over 150% increase in its user base during 2020-2021.
While the company is controlled by its US-based holding entity Cashfree Inc, its Indian operations are handled by its subsidiary Cashfree Payments India and we have analysed its annual numbers to understand its growth during the pandemic hit year.
Cashfree Payments saw its revenue from operations grow 2.3X to Rs 227.33 crore during FY21 as compared to Rs 99.6 crore in FY20. The company generated most of its revenue via commission charged from vendors using its payments gateway services which amounted to Rs 227.29 crore while setup fees collected from users was a negligible Rs 3.71 lakhs.
The Bengaluru-based firm offers a bouquet of payment services to vendors such as payment collection services, auto collect, recurring payments and verification services to banks. Payment Gateway cost is the primary expenditure incurred by the company, accounting for a little over 70% of its annual costs. The growth in scale of operations is evident from the surge in payment gateway costs which increased by 126.3% from Rs 60.1 crore in FY20 to nearly Rs 136 crore in FY21.
Employee benefit expenditure came in as the second-largest cost centre of the fintech firm, making up around 22% of annual costs. Cashfree Payments’ employee base grew in line with the growth in its scale and costs surged 3.15X to Rs 42.62 crore during FY21 from Rs 13.5 crore in the preceding fiscal year.
Communication and Domain charges paid by the company ballooned over seven times to Rs 4.3 crore during FY21 as compared to Rs 61 lakhs during FY20 while business promotion costs grew 2.5X to Rs 2.3 crore in the same fiscal. Interestingly, bad debts incurred by Cashfree Payments during the year marred by Covid-19 disruptions grew to Rs 3.11 crore in FY21, 155.5X more than Rs 2.5 lakhs booked during FY20.
Overall, the company’s annual expenditure grew by 148% to Rs 194.07 crore during FY21 from Rs 78.3 crore in FY20. On a unit level, Cashfree Payments spent Rs 0.85 to earn a single rupee of revenue during FY21. While the company’s EBITDA margin dropped from 22.63% in FY20 to 15.51% in FY21, annual profits have grown by 47.6% year on year to Rs 25.22 crore during FY21.
Cashfree Payments has benefited from the consumer shift to higher online ordering during the pandemic leading to an over 47% jump in profits in FY21.
In November, Cashfree Payments also picked up a majority stake in the UAE and Saudi Arabia-based payment service provider Telr for $15 million. The deal provides a strong foothold to Cashfree Payments in MENA region. With the extra global presence along with growth in its domestic market: India, the company looks set to grow its scale substantially in the ongoing fiscal (FY22) as well.