One of India’s oldest B2B fintech companies, Billdesk was acquired by global transaction processing company PayU at a valuation of $4.7 billion in August last year. The deal was deemed the largest for any company in the burgeoning fintech space.
The Mumbai-based company had been a pioneering, silent player in the Indian bill payments space and grew multi-folds along with the rise of online transactions and credit card payments in the last decade.
Billdesk’s revenue from operations grew by 17.7% to Rs 2,124.2 crore during FY21 as compared to Rs 1,804.7 crore in FY20, the company’s annual financial statements with RoC show. This seems a shade under the Rs 2,300 crore it was projected to close 2021 with when it was acquired.
The company charges fees on the processing of electronic transactions on its network which comprises around 75% of its annual revenue. Such income grew by 33.8% to Rs 1,593.12 crore during FY21 from Rs 1,190.3 crore collected in FY20.
Billdesk also provides prepaid accounts for recurring settlements (PINS and eTop up subscriptions) and these sales accounted for 11.7% of its revenues. This income grew by 56.8% to Rs 248.5 crore during FY21 from Rs 158.5 crore in FY20.
Further, the company also provides a loyalty reward point management service which accounted for 11.21% of Billdesk’s operating revenue. This is the only operating segment that shrunk in scale during the last fiscal, making up 11.21% of operating revenues. This collection was reduced by 43.1% to Rs 238.2 crore in FY21 from Rs 418.8 crore during FY20.
The twenty-two-year-old company also earns revenue in the form of commission, advisory fees and other ancillary services which collectively amounted to Rs 44.4 crore during the last fiscal.
Moving over to the expenses sheet, bank fees and service charge is the largest cost center for the transaction processing company, making up 85.8% of the annual costs. These payments grew by 17.8% to Rs 1,613.03 crore during FY21 from Rs 1,369.86 crore in FY20.
Employee benefit payments also grew marginally during the fiscal affected by the pandemic, amounting to Rs 152.5 crore during FY21, 19.7% more as compared to Rs 127.5 crore paid out in FY20.
Legal and professional fees and infrastructure cost which includes (data, communication, IT and server hosting charges) surged by 14.80% and 7.80% respectively to Rs 17.52 crore and Rs 30.81 crore during FY21 from Rs 15.26 crore and Rs 28.58 crore in FY20.
In total, the company’s annual expenditure grew by 16.06% to nearly Rs 1,880 crore during FY20 from Rs 1620 crore spent in total in FY20. Billdesk spent Rs 0.88 to earn a single rupee of operating revenue on a unit level during the fiscal ended in March 2021.
Billdesk’s operating margin remained flat at 16.8% with an 18% increase in the scale of operations and its costs grew at the same rate. In line with revenues, annual profits also grew by 16.3% to Rs 245.6 crore during FY21 from Rs 211.2 crore generated in FY20. During the same period, net cash flow from operations ballooned over 4X to Rs 108.6 crore from only Rs 26.7 crore in FY20.
While these numbers look very impressive vis a vis the slew of fintechs jousting to grab market share, vis a vis its valuation, perhaps we are yet to see just how PayU’s plans will play out.
The billing business, while huge, has changed massively in recent years, even months. If established players like Billdesk have thrived, it is also because of the inherent stickiness of older, existing users. That, and Billdesk’s conservative, tight costs strengths are expected to play out as PayU aims higher through it.
New entrants counted on cashback to lure in first time users but quickly realised that cashback shopping was rampant. As those die off gradually, ease of transactions will be back at centre stage, where the newest BNPL firms or even credit limits for regular users have worked relentlessly to deliver more convenience.
The next stage of the challenge really is for PayU to leverage the tremendous stability and momentum a giant like Billdesk brings, before even those start fraying with the competition.