Losses rose marginally to Rs 1,347 crore from Rs 1,279 crore in FY 2021-22.
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In a statement, Cred said that if employee stock option costs are excluded then it has actually managed to reduce losses to Rs 1,047 crore in FY23 from Rs 1,167 crore in the previous fiscal year.
While the company’s revenues rose significantly, expenses shot up, too. In FY23, the Bengaluru headquartered fintech reported total expenses of Rs 2,831 crore, a spike of 66% from the Rs 1,702 crore payout a year earlier. Most of this was driven by a jump in payment processing charges and employee benefit expenses. Cred has managed to rein in its marketing expenses.
Also read | Cred launches vehicle management platform Garage, makes first move into motor insurance distribution
Cred’s standalone operational revenue stood at Rs 1,297 crore, while corporate expense management platform Happay’s revenue stood at Rs 103 crore. Cred had acquired Happay in 2021, valuing the company at around $180 million then.
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Marketing and promotional expenses fell 26.8% to Rs 713 crore from Rs 975 crore in the previous year. But payment processing charges—the price it incurs in settling a payment transaction—shot up 354% to Rs 704 crore from Rs 155 crore a year prior.This was a direct result of its total payment value almost doubling to Rs 4.4 lakh crore in fiscal year 2023 from Rs 2.5 lakh crore in 2022.
“Cred is trying to do more direct integrations with banks to reduce this category of expenses and eventually the target is to make enough revenue from other business streams to balance out this major cost item,” said a senior fintech executive in the know of things.
Also read | Kunal Shah’s inhouse NBFC ends first year with a small profit
Cred gets almost 90% of its revenue from its personal loan product Cred Cash, rent payments done through Cred Max, and its insurance offerings.
“Our focus on rewarding good behaviour strengthened growth momentum in FY22-23, with new products and features contributing to higher engagement with members. Five years since launch we believe that Cred is becoming a habit for the top 1%, and (that) has resulted in a strong financial performance,” said Kunal Shah, founder of Cred.
The Peak XV and Ribbit Capital backed startup said that one third of total credit card bill payments by value now happen on the Cred platform. On average, a user has more than 20 sessions on the Cred app every month, showing increasing engagement with the platform, the company said in a statement.
Cred believes that with RuPay credit cards opening up on UPI, more and more users will start using UPI for their credit card payments. This will eventually open a large use case for credit card users. Additionally, given the rate at which credit cards are being issued, the segment should grow three times over the next three years, said the fintech executive quoted above.
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