PhonePe's revenue grew 85% to Rs 690 cr in FY21, losses drop by 44%

The 85% YoY revenue growth was due to a rise in transactions. PhonePe has a lion's share of the volumes on United Payment Interface and Bharat Bill Payment System

Walmart-owned digital payments firm PhonePe reported a drop of 44 per cent in losses for the financial year 2021 (FY21) on a standalone basis as compared to the previous fiscal. The operational losses, excluding the Employee Stock Ownership Plan (ESOP), costs stood at Rs 888 crore in FY21 versus Rs 1,570 crore in FY20, according to regulatory filings by the company.

The drop in losses is due to higher revenues and a reduction in operating costs. The Bengaluru-based company’s revenue increased from Rs 372 crore in FY20 to Rs 690 crore in FY21.

The 85 per cent year-on-year growth in revenue was due to a rise in transactions on the platform. PhonePe, which competes with players such as Google Pay, Paytm and Amazon Pay, has a lion’s share of the volumes on United Payment Interface (UPI) and Bharat Bill Payment System (BBPS).

The company’s gross margins grew from 60 per cent to 84 per cent year-over-year. The firm also issued its highest ever ESOP to employees at Rs 843 crore in FY21 compared to Rs 206 crore in FY20.

PhonePe was started in 2015, to solve payments at scale and enable digital inclusion for over 100 crore Indians. Over 22.4 billion transactions have happened to date on the platform. The firm now has over 314 million registered users and has coverage across 19,098 pin codes in the country. The company which competes with players such as Google Pay, Paytm and Amazon Pay said it has 46 per cent UPI (unified payments interface) market share. It has an annualised total payment volume of over $473 billion.

PhonePe is rapidly expanding across the country. Last December, it signed a deal to raise $700 million in primary capital at a post-money valuation of $5.5 billion from existing Flipkart investors, including Tiger Global, led by Walmart, the world’s largest retailer. E-commerce firm Flipkart has done a partial spin-off of PhonePe, which will help it to access dedicated, long-term capital to fund its growth ambitions, including going public by 2023.

The company’s entry into financial services is going to play a key role in the firm becoming profitable and going public. In August this year, PhonePe said it received a broking licence from the insurance regulator, which will enable it to distribute insurance products from all insurance companies in the country. The company had said the new broking licence will allow it to start offering personalised product recommendations to its more than 300 million users, and offer a much more diverse portfolio of insurance products for Indian consumers.