PhonePe Revenue Surged 77% YoY in FY23, But the Struggle for Profitability Continues

PhonePe has positioned itself as a key player in India's fintech sector with impressive FY23 financial results and a continuous stream of innovative initiatives that are actively shaping the landscape for future growth and transformative developments.

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PhonePe has unveiled its financial performance for fiscal 2023, ending on March 31, 2023. The fintech unicorn reported a whopping 77% YoY increase in its consolidated revenue, amounting to Rs 2,914 crore in FY23. PhonePe’s revenue growth can be primarily attributed to its strategic market expansion and dominant position in the digital payments sector, particularly in key revenue-generating segments like Money Transfers, Mobile Recharges, and Bill Payments.

For context, PhonePe’s fierce competitor, Paytm, recorded an impressive 61% YoY growth in operating revenue, amounting to Rs 7,990 crore in FY23. The battle for supremacy in India’s fintech arena is fierce, and PhonePe is firmly in the ring.

It is important to note that PhonePe claimed a commanding market share of 50.54% in India’s Unified Payments Interface (UPI) Total Payments Value (TPV) as of March 2023.

Navigating Financial Challenges

PhonePe, despite boasting more than 49 crore registered users and more than 22.5 crore MAUs, has faced its share of financial challenges during FY23. In particular, when examining the EBITDA (Earnings Before Interest, Taxes, Depreciation, and Amortization) of its standalone entity, PhonePe India Pvt Ltd, there was an 8.87% YoY increase in losses. These losses rose from Rs 1,612 crore in FY22 to Rs 1,755 crore in FY23.

However, when taking an adjusted perspective into account, specifically one that excludes expenses related to Employee Stock Ownership Plans (ESOPs), PhonePe’s financial outlook for the fiscal year 2023 becomes more favourable.

During fiscal 2023, a significant number of ESOPs were issued, serving two primary purposes: firstly, as a strategic element of corporate restructuring, and secondly, as special incentives to acknowledge and motivate the establishment of new business ventures. Consequently, on this adjusted basis, PhonePe achieved a noteworthy profit of Rs 159 crore as EBITDA (excluding ESOP expenses) in FY23, marking a significant improvement from the Rs 455 crore loss it reported in FY22. This represents a significant milestone for the Indian entity that houses its Payments business.

PhonePe’s Strategic Achievements

PhonePe’s journey was not limited to financial prowess. In fiscal 2023, the fintech startup accomplished three pivotal actions that have laid a robust foundation for the company’s future growth in India’s financial tech sector.

First and foremost, the company successfully completed the full spinoff from the Flipkart Group, establishing its independence. It’s like a young bird leaving the nest to explore new horizons.

Secondly, PhonePe shifted its official domicile from Singapore to India. This shift was not merely geographical but symbolized an unwavering commitment to its home market and a closer alignment with the regulatory framework in the country.

Lastly, PhonePe secured a substantial equity fundraising of Rs 7,021 Crores from esteemed long-term investors such as General Atlantic, Walmart, Ribbit Capital, TVS Capital Funds, and Tiger Global. This fundraising effort pegged PhonePe’s pre-money valuation at a remarkable $12 billion, positioning the company for exciting opportunities in the times to come.

PhonePe’s Game-Changing Launches

In an era where the financial landscape is undergoing rapid transformation, PhonePe, the fintech powerhouse under Walmart’s wing, is making headlines with a slew of game-changing innovations. With the onset of the new fiscal year in 2024, the company has embarked on a journey of redefining the way businesses and consumers interact with financial services.

On June 14, 2023, PhonePe opened the doors to its Online Payment Gateway, specifically designed to cater to the needs of Micro, Small, and Medium Enterprises (MSMEs) across India. With the rise of the digital economy, providing MSMEs with seamless access to online payments is more critical than ever.

Just nine days later, on June 23, PhonePe took another bold step with the launch of its Merchant Lending Platform. This launch aimed to bridge the credit gap for businesses by allowing banks and Non-Banking Financial Companies (NBFCs) to extend credit digitally and seamlessly to PhonePe’s vast network of over 35 million merchants.

On July 6, 2023, PhonePe brought a revolution to offline payments with its Point-of-Sale (POS) device. This handheld device enabled merchants to accept payments not only via Debit Cards but also Credit Cards and UPI (Unified Payments Interface).

On August 30, 2023, PhonePe made a significant move into the stock broking industry by launching its app named “Share.Market.” This strategic move has placed PhonePe in direct competition with established players in the market, such as Zerodha and Groww.

PhonePe has positioned itself as a key player in India’s fintech sector with impressive FY23 financial results and a continuous stream of innovative initiatives that are actively shaping the landscape for future growth and transformative developments.



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