CRED revenue increases by 170X in FY21, losses exceed Rs 523 Cr
Credit card payment platform CRED has been the focus of everyone in the startup ecosystem after raising successive funding rounds and being valued at over $4 billion in three years of development. exploitation.
Although there is a lot of speculation about CRED’s business model in the ecosystem, it unveiled several revenue verticals, including its e-commerce platform, peer-to-peer lending, and home rental payments at the over the past year and more.
After recording revenues of just Rs 52 lakh in FY20, CRED had projected operating income of approximately Rs 108 crore for FY21 at the end of the previous financial year (April 2021).
The company finally released its annual financial statements and fintrackr analyzed the numbers to understand how new revenue drivers performed for the fintech unicorn in the fiscal year ending March 2021.
The Bengaluru-based company managed to increase its operating revenue by more than 170X in a single year to Rs 88.6 crore in FY21. CRED is primarily a credit card payment application, but as it charges no fees for these payments, it generates revenue from other ancillary services using its technology and distribution platform. Targeting this user base of what it claims to be the cream of the credit card customer base in India since CRED accepts every member on the basis of a high credit score.
CRED facilitates home rental transactions through credit cards and collects convenience fees for the service and also generates revenue from the sale of advertising space and collects commissions from product sellers on the platform. It also operates the peer-to-peer (P2P) vertical “CRED Mint” lending, collecting a share of loan interest and loan servicing processing fees.
The Tiger Global-backed company also generated non-operating income of Rs 7 crore from its financial assets in the financial year ending March 2021.
CRED has also flooded media channels with its series of advertisements featuring Bollywood and sports celebrities to promote its credit card payment platform and cashbacks for every payment made on the platform. As a result, advertising and trade promotion stood out as the company’s largest cost center, accounting for 52.3% of its annual spend. These expenditures increased by 85.5% to over Rs 324 crore in FY21 from Rs 174.7 crore spent on the same in FY20.
Additionally, the company has grown its employee base to capitalize on the growth in scale of operations and the launch of new revenue verticals. Personnel costs rose 85% year-on-year to Rs 134.7 crore in FY21. These account for 21.7% of the company’s annual expenditure and also include payments based on shares of Rs 44.1 crore in FY21.
Last month, the company headed by Kunal Shah had increased the size of its ESOP pool at around $500 million after announcing its third ESOP buyout event worth Rs 100 crore in November last year.
The company’s IT and communications expenditure also increased by 85.6% to Rs 56.3 crore in FY21 from Rs 30.3 crore in FY20. payment processing and other related direct costs account for only 9.3% of its annual expenditure, falling 11.4% year-on-year to Rs 57.3 million in FY21.
Professional and consultancy fees of Rs 30.6 crore pushed CRED’s annual expenditure to Rs 619.4 crore in FY21, registering a growth of 63.3% against overall expenditure of Rs 379.3 crore during FY20. CRED spent Rs 7 to earn a single rupee in revenue in FY21, improving significantly from FY20 when it spent Rs 729.3 win the same.
Due to its revenue growth, its EBITDA margins also improved significantly, from -1966.2% in FY20 to -538.3% in FY21.
As cash burn continues in search of scale, CRED’s annual losses increased by 45.1% to Rs 523.85 crore in FY21 from Rs 361.1 crore in FY20 and unpaid losses amounted to Rs 946 crore at the end of March 2021.
CRED’s collections improved significantly in FY21, but even though it missed its revenue projection by around 19% (on the Rs 108 crore projection), there is no doubt that the company did more than win investors over to his vision. The promise of deep understanding and connection with India’s largest and most valuable cohort of credit card users has clearly won over investors, and as the slowly emerging earnings chart shows, the beginning of a long revenue trail as well.
As anyone who has followed CRED’s emergence and growth will attest, the company has already converted many naysayers who could not understand the business model until 2020, to grudging admiration for the progress it has made. Based on the 2021 numbers, the momentum seems very strong for 2022 to be the year of validation and expansion.