Fintech unicorn Slice has managed to grow its revenue over four-fold in FY22 on the back of a strong lending play and a massive $220 million worth funding round. Its operating scale spiked 4.18X to Rs 283.08 crore during FY22 from Rs 67.7 crore in FY21, according to the firm’s consolidated financial statement.
Internet handling fees and commission income from loans & services formed 52.6% of the company’s total operating revenue. This income grew 253.2% to Rs 148.97 crore during FY22 from Rs 42.14 crore in FY21.
Slice also runs a non-banking financial corporation (NBFC) named Quadrillion Finance Pvt Ltd to provide unsecured loans of up to Rs 50,000 to its customers. Interest received on loans made up 45.45% of the collection which grew 5.64X to Rs 128.67 crore in the previous fiscal year.
The Rajan Bajaj-led company’s collection from defaults on EMIs (read as penalties) jumped 97.5% to Rs 5.45 crore in FY22. The fintech company stopped its card operations in November 2022 following the Reserve Bank of India’s new guidelines on digital lending. Now, the unsecured loans business will be the primary source for the company in the ongoing fiscal and FY24.
Slice also had miscellaneous other non-operating income which shot up 8.54X to Rs 9.83 crore in the last fiscal year.
On the cost side, advertising and promotion were the largest cost centers for the company accounting for 38.67% of the overall expenditure. This cost jumped 33.6X to Rs 209.79 crore in FY22 from Rs 6.23 crore in FY21.
Employee benefit cost was another significant cost that accounted for 18.2% of the total cost and grew 3X to Rs 98.93 crore in FY22 from Rs 32.84 crore in FY21. It includes Rs 8.3 crore as ESOP expenses which were settled in cash.
Slice has total current liabilities of Rs 1,255 crore during the last fiscal year on which the company paid finance costs of Rs 65.09 crore during FY22. Legal, professional fees and subscription membership accounted for Rs 8 crore and Rs 20.24 crore during the same period.
Importantly, the company incurred Rs 58.21 crore on the loss of impairment of financial assets (non-cash) which took its overall expenditure 3.22X to Rs 542.49 crore in FY22 from Rs 167.98 crore in FY21.
Slice’s cash outflows from operations saw multifold jump to Rs 2,024 crore during FY22. Its worth noting that, the increase in cash outflows was mainly due to the loans sanctioned by Slice’s NBFC subsidiary QFPL (Quadrillion Finance Pvt Ltd).
In the end, Slice’s losses spiked 2.52X to Rs 253.67 crore in FY22 from Rs 100.37 crore in FY21. Its ROCE and EBITDA margin stood at -16.52% and -62.14%. On a unit level, Slice spent Rs 1.92 to earn a single rupee in FY22.
While the rate of growth in losses has trailed revenue growth, the fact remains that the forced pivot for Slice has extracted a toll. The move to loans also takes away its basic premise of targeting the young with a credit card disguised as a BNPL offering. A formal loan based proposition is a very different kettle of fish, and expect the firm to attempt quite a few marketing stunts to ensure it makes headway.
Whether those stunts build an enduring reputation for smart planning and spectacular results, or high risk and disastrous flame outs, we should know as early as this year’s end perhaps.