Modern banking tech platform Zeta turned unicorn with a $250 million round led by SoftBank in May last year. The company’s unicorn round saw an over four-fold jump in its valuation as it was valued at around $300 million in its maiden financing round in 2019. The spike in valuation came on the back of Zeta India’s two-fold growth in revenue during FY21.
Zeta provides services like credit and debit card processing, APIs designed to operate natively within cloud-native applications, besides tech infrastructure to banks such as RBL Bank, IDFC First Bank, and Kotak Mahindra Bank among others. Revenue from operation grew over 2X to Rs 297 crore during FY21 from Rs 121.6 crore in FY20, as per its standalone annual financial statement filed with the Registrar of Companies (RoC) recently.
It’s worth noting that these numbers are of Zeta’s Indian entity only. Its parent entity is based out of Singapore and it enables banks and financial institutions to launch modern retail and corporate fintech products in several geographies especially Asia and Latin America.
On the expense front, employee benefit expense emerged as the largest contributor to the company’s annual cost, forming 83.6% of the total cost. This cost jumped 3.5X to Rs 290 crore in FY21 from Rs 83 crore in FY20.
Legal, professional and subscriptions/membership fees surged nearly 13% and 47% to Rs 8.05 crore and Rs 1.5 crore respectively during FY21.
The Mumbai-based company also booked Rs 2.9 crore in FY21 as training and recruitment expenses which shrank 43.6% from Rs 5.14 crore during the fiscal year ending March 2020. Rent and utility costs increased 7.3% to Rs 7.9 crore in FY21.
Zeta booked another Rs 28.62 crore expense during FY21 towards software expenses, card network and issuance charges, payment gateways fees and other business support services.
On the lines of its income, total annual expenditure of the company surged by 142.7% to Rs 347 crore during FY21 as compared to Rs 143 crore in FY20.
During FY21, Zeta booked annual losses of Rs 43 crore which ballooned over 2X against Rs 20.3 crore in FY20. On a unit level, the company spent Rs 1.17 to earn a rupee of operating revenue in the fiscal year ending March 2021.
Zeta’s EBITDA margin worsened by 66 BPS to -12.03% during FY21 which could be attributed to nearly 250% hike in employee benefit expense.
With the BFSI category shifting to many revenue models for software providers, be it flat payments or even transaction led payouts, Zeta’s future growth will depend on the mix it arrives at, besides new clients of course .