Open Financial Technologies Pvt. Ltd saw its losses rise by 155% to ₹167.6 crore in the last fiscal year from a loss of ₹65.6 crore in FY21, due to higher spending on new products as it added more revenue streams to its neobanking platform.
The Temasek-backed unicorn is aiming to turn profitable by FY25. “With the current revenue growth we achieved for Open Money and securing high-ticket sized contracts for our new divisions, Zwitch and Bankingstack, and our lending products scaling up well, Open aims to attain net profitability in 18-20 months,” Deena Jacob, cofounder and chief financial officer, Open, said.
Bankingstack enables financial institutions to launch SME neobanking offerings for their customers, while Zwitch is an embedded finance platform.
Open’s operating revenue jumped over 7x to ₹ 40.9 crore in FY22, against ₹5.7 crore in FY21, as a result of its efforts to monetize its neobanking platform and launch of new revenue-generating products, it said in its FY22 filings with the Registrar of Companies (RoC) on Monday.
Open, which offers banking, payments, accounting, compliance and growth services, to small and medium businesses, offered its neobanking platform for free till last year.
“In 2021, we experimented with about 20% of our user base on a freemium SaaS (subscription-as-a-software) model for higher usage, which grew well adding strongly to the topline as adoption increased rapidly. Open started monetizing from SaaS, transaction revenues and third-party tools since mid-2021,” said Jacob.
The Temasek-backed company, which became India’s 100th unicorn, launched new products such as revenue-based financing platform Open Flo, payment gateway instant settlement solution Open Settl and lending platform for businesses Open Capital. “The newly launched platforms added to our revenue streams,” said Jacob.
“Open launched and is in the process of coming up with new revenue-generating business verticals and product variants. We have invested in scaling up the team to help build new features and will continue to invest heavily in building our neobanking platform,” said Jacob.
Open was set up in 2017 by Anish Achuthan, Mabel Chacko, and ex-TaxiForSure’s chief financial officer Jacob. The company also provides application programming interface (API) tools to help integrate banking processes with SME (small and medium-sized enterprises) workflows. In the APIs business, it competes with the likes of Setu, Decentro, and Yap among others.
The company last raised $50 million in its Series D funding round led by IIFL Finance in May. Tiger Global, Temasek and 3one4 Capital also invested in the round. It also counts Visa, Beenext, Recruit Strategic Partners, Speedinvest, Tanglin Venture Partner Advisors, Angellist, and Unicorn India Ventures as its investors.
In FY22, Open’s total expense jumped to Rs 223.9 crore from Rs 81.3 crore in the fiscal before. The company’s employee cost surged more than two-fold to Rs 107.1 crore, including a Rs 22.4 crore non-cash expense in the form of an employee stock option plan (Esops) and Esop purchase plan.
“We have invested in scaling up the team to help build new features. Our engineering and product teams have grown 2x adding to the resource and infrastructure cost, including non-cash expenses like Esops,” Jacob said.
The firm spent Rs 68.7 crore on promotions and advertisements while the cost of its technical services stood at Rs 14.7 crore. “We also invested in distribution and marketing along with monetisation experiments which yielded a 7x growth in topline as compared to a 1.5x increase in the cost base,” she added.
