Walmart-owned financial services firm PhonePe, last valued at about $12 billion, continued to derive around 95% of its operating revenue from its payments, its primary offering, even as it has been gradually diversifying its revenue streams over the years.
The company, which raised about $1 billion in capital in multiple tranches from investors including General Atlantic, Ribbit Capital, Tiger Global and other investors, generated about Rs 4,789 crore in revenue from payments and allied services in the last financial year (FY), according to its annual report.
This is a growth of about 77% over FY23, when it reported Rs 2,707 crore as revenue from payments.
The company through its app offers services including bill payments, travel bookings, peer to peer transfers. However, further diversification into insurance, credit, and wealth products has been a key focus for the company.
In August 2023, the company launched Share.market, foraying into stock and mutual fund investment. Previously, it also expanded into e-commerce through Pincode that leverages the government's zero commission platform Open Network for Digital Commerce (ONDC). The startup also entered insurance broking and credit, intending to leverage its over 570 million registered users, by offering them value-added services.
“Since 2020, we have also started distributing various financial services, including mutual funds, gold SIPs, insurance and most recently personal loans to PhonePe app customers,” the company said in the report.
However, in FY24, the company generated about Rs 202 crore, less than 4% of its total Rs 5,064 crore of revenue, from financial services that include wealth management, insurance broking among others. While this is about a 4.8x jump from FY23, the number is significantly lower for PhonePe that has infused a large amount into the businesses.
Its insurance broking subsidiary PhonePe Insurance Broking Services contributed the maximum among its verticals. It reported about Rs 108 crore of revenue in FY24, but bore a loss of Rs 247 crore.
Its lending unit PhonePe Lending Services generated Rs 66 crore in revenue during the year, but recorded a loss of Rs 128 crore. Its stock broking subsidiary PhonePe Wealth Broking reported Rs 24 crore of revenue and a loss of Rs 134 crore during the year. Pincode drew revenue of Rs 3 crore, but reported a loss of Rs 107 crore.
“Discipline matters in these sectors and we remain committed to growing these businesses in a measured and sustainable manner. This is critical to ensuring our partners and our regulators are comfortable with the pace, quality, and nature of growth,” the company said in the report.
“While payments and financial services remain the more mature parts of PhonePe, we have also made next-gen investments in emerging business lines that we believe are critical to solving for India’s long-term success,” it added.
While these subsidiaries are contributing to losses, the company on a consolidated level managed to cut its loss by more than a fourth to Rs 1,996 crore in FY24. It had reported Rs 2,795 crore in net losses in FY23, the highest in its history.
VCCircle previously reported the company grew its revenue about 74% to Rs 5,064 crore in FY24. Adjusting for ESOP costs, it turned profitable, posting a consolidated net profit of Rs 197 crore in FY24, compared to a loss of Rs 738 crore in the previous year.
