PhonePe’s Loss Breaches INR 2,500 Cr In FY23
By MYBRANDBOOK
PhonePe's net loss crossing the INR 2,500 crore mark is indeed a significant development in the financial year ended March 31, 2023. Founded in December 2015 by Sameer Nigam, Rahul Chari, and Burzin Engineer, PhonePe offers financial services to users. It offers digital payments service, mutual funds and insurance products.
The Bengaluru-based decacorn's consolidated net loss rose 39% to INR 2,795.3 Cr in the financial year 2022-23 (FY23) from INR 2,013.7 Cr in the previous fiscal year due to a sharp increase in its ESOP expenses.
When we saw the revenue growth, despite the rising net loss, PhonePe's operating revenue saw a substantial surge of 77% to INR 2,913.7 crore in FY23 from INR 1,646.2 crore in FY22. This indicates continued growth in transaction volume and user base.
Reasons for Rising Loss is due to ESOP Expenses, the primary reason for the increased net loss is attributed to a sharp rise in Employee Stock Ownership Plan (ESOP) expenses. These expenses rose by 73% to INR 2,057 crore in FY23, significantly impacting the bottom line.
Secondly, PhonePe faces stiff competition from other fintech players like Paytm, Google Pay, and Amazon Pay. While PhonePe remains the leader in terms of transaction volume, the competitive landscape might put pressure on its profit margins.
By see the current situation, PhonePe's financial performance in FY23 presents a mixed picture. While the revenue growth is encouraging, the rising net loss due to increasing ESOP expenses raises concerns. It will be interesting to see how PhonePe navigates the competitive landscape and addresses profitability concerns in the coming years.
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