01 March 2024 – Razorpay, a leading payments entity, has disclosed its financial performance for the fiscal year 2022-2023, showcasing an impressive 54% increase in revenue from operations. While the revenue growth is notable, the company reported a flat net profit of Rs 7.3 crore. This financial snapshot comes amid Razorpay’s ongoing efforts to shift its domicile back to India before the end of FY25, a move that could entail a substantial tax bill in the US.
Financial Highlights of Razorpay:
- Razorpay Software Pvt Ltd’s revenue from operations surged to Rs 2,279 crore in FY23, marking a significant 54% increase from Rs 1,481 crore in FY22.
- Despite the robust revenue growth, the net profit for the fiscal year remained flat at Rs 7.3 crore.
- Total expenses for Razorpay increased by 55% year-on-year, reaching Rs 2,283 crore in FY23.
- Employee benefits and salaries emerged as a major cost center, constituting 28% of the total expenses. Employee benefit expenses rose to Rs 638 crore in FY23, compared to Rs 372 crore in FY22.
Razorpay’s financial results coincide with its strategic decision to shift its domicile back to India by the end of FY25. This move is anticipated to result in a substantial tax liability of $250-$300 million in the US. Razorpay’s Co-founder and CEO, Harshil Mathur, has expressed the company’s aim to achieve profitability across all business lines in the next two years, paving the way for potential listing on Indian bourses.
Business Lines and Profitability:
- Razorpay’s payments business has already achieved profitability.
- The fintech’s business lines extend beyond payments to include lending, offline payments, and other value-added services.
- Harshil Mathur emphasizes the goal of achieving profitability in all business lines before considering an IPO, which is estimated to be at least two years away.
- The Reserve Bank of India (RBI) lifted a year-long ban on Razorpay in December, allowing the company to onboard new merchants for its payment gateway business.
- Razorpay’s rival, Cashfree, also received regulatory approval for onboarding new businesses.
Conclusion:
Razorpay’s robust revenue growth in FY23 underscores its position as a key player in the payments sector. Despite reporting a flat net profit, the company’s strategic initiatives, focus on profitability, and favorable market dynamics position it for continued growth. The planned shift of domicile and the aspiration to achieve profitability across all business lines signal Razorpay’s commitment to long-term sustainability and resilience in a dynamic financial landscape. As Razorpay navigates the evolving regulatory environment and capitalizes on its diverse business lines, the company’s financial trajectory will be closely watched by industry stakeholders and investors alike.
