Warburg Pincus-backed Perfios’ revenue stalls in FY21 as losses climb 20%

Fintech startup Perfios got a shot in the arm earlier this year after raising its largest institutional round i.e $70 million in its Series C round led by existing investor Warburg Pincus. While the impact of this round on its growth will be known when the company files its financial results for the ongoing fiscal, the Bengaluru based company’s scale has contracted at a time when SaaS fintech, especially the ones helping with loans processing saw revenues climb.

Perfios’ revenue from operations dropped nearly 2% to Rs 72.55 crore in FY21 as compared to a little over Rs 74 crore it earned during FY20, as per its annual statements filed with the Registrar of Companies (RoC).

The fourteen-year-old company offers a host of services to financial institutions including income analysis, fraud checks, verification and automated customer onboarding. The company uses its AI technology to provide data-driven risk and pricing decisions to its clients. The company claims to have a presence in over 18 counties, working with around 735 financial institutions.

Providing software support to financial institutions remains the mainstay of its earnings, generating 83.3% of the company’s annual revenues. These collections dropped by 7.4% to Rs 60.41 crore during FY21 from Rs 65.24 crore collected in FY20.

Provision of software coding and maintenance services is the second-largest revenue vertical for the company, accounting for around 16.5% of revenue from operations. Earnings from this vertical actually grew by around 40% to Rs 12 crore during FY21 from Rs 8.55 crore earned in FY20.

The company also generated a non-operating income of Rs 2.06 crore from its financial assets during the fiscal ended in March 2021. 

Moving over to the expenses sheet, as behooves a services firm, employee benefits is the single largest expense for the data analytics company, accounting for nearly 59% of annual expenditure. These payments actually dropped by 13.12% to Rs 63.92 crore during FY21 from Rs 73.58 crore paid out in FY20.

Importantly, the company has not made a significant change in its team size or salaries. It had actually handed out bonuses in lieu of ESOPs amounting to Rs 29.51 crore during FY20. There were no such bonus payments during the fiscal ended in March 2021.

Legal and professional costs is the second-largest expenditure for the Bengaluru based fintech, accounting for 18.6 % of annual expenditure. These payments grew by 60.3% to Rs 20.2 crore during FY21 from Rs 12.6 crore paid in FY20.

Expenditure incurred on cloud hosting and software subscriptions ballooned 3.3x to Rs 11.91 crore in FY21 from only RS 3.56 crore spent on the same during FY20.

Another Rs 5.3 crore was spent on rent, pushing the total annual expenditure to Rs 108.6 crore during FY21 registering a 3.9% growth as compared to Rs104.5 crore spent in total during FY20. At a unit level, Perfios spent Rs1.5 to earn a single rupee of revenue during FY21.

While the collections from its primary revenue vertical contracted by 7.4% its annual expenditure has actually grown albeit the change is small. As a result, the company’s  EBITDA margins have worsened from 31.94% in FY20 to -38.33% in FY21. On account of reduced revenue from operations as well as financial income, annual losses have surged by 19.5% to Rs 32.65 crore during FY21 from Rs 27.32 crore lost in FY20. 

While the final loss number for Perfios is matched almost completely by its bonus numbers, it also indicates the battle it faces in the market to retain top talent hopefully. In that context, the slowdown in growth is not necessarily a good sign as employee costs will trend down only with greater scale. With a strong funding round behind it, the firm is well placed to capitalise now.