PhonePe, a prominent fintech company, has announced an impressive 77% increase in its consolidated revenue for the fiscal year 2023, reaching Rs 2,914 crore compared to the Rs 1,646 crore it earned in FY22. The company’s UPI market share, representing 50.54% of the total payments value as of March, is a testament to its significant presence in the Indian payments landscape.
PhonePe’s payments subsidiary, PhonePe India Pvt Ltd, reported an operating loss of Rs 1,755 crore in FY23, compared to Rs 1,612 crore in the previous year. However, it’s important to note that the payment subsidiary achieved EBITDA positivity on an adjusted basis, excluding the ESOP cost. In FY23, the adjusted EBITDA reached Rs 159 crore, a substantial improvement from the operating loss of Rs 455 crore in FY22.
The company explained, “Substantial ESOPs were granted in FY23 towards the corporate restructuring and as one-time rewards for setting up and incentivizing new business.”
A recent valuation report prepared by KPMG, the auditing firm, and filed by PhonePe projects an EBITDA profit of Rs 1,797 crore for the calendar year 2025, with an EBITDA margin of 19.7%. The company’s management is optimistic about achieving revenue of Rs 9,139 crore in 2025.
In contrast, rival Paytm reported a positive adjusted EBITDA of Rs 31 crore in the third quarter of FY23, a significant improvement from a loss of Rs 393 crore in the previous year. Paytm also reported a 61% year-on-year increase in consolidated revenue, reaching Rs 7,990 crore in FY23.
On a consolidated level, both PhonePe and Paytm continue to operate at a loss.
PhonePe derives nearly 99% of its operating income from processing payment transactions, including revenue from various use cases like money transfers, mobile recharges, and bill payments. The company achieved significant milestones, including processing five billion transactions in a single month during the May-July quarter and logging an annualized Total Payments Volume (TPV) of $1.15 trillion.
PhonePe attributes its growth to diversified revenue streams from non-payment businesses and new products. These include smart speakers, rent payments, and insurance distribution, with 4.1 million smart speakers deployed as of August 2023.
The company celebrated its full spin-off from the Flipkart Group and its transition of domicile to India from Singapore. It also successfully raised equity funding of Rs 7,021 crore at a pre-money valuation of $12 billion. These strategic moves provide PhonePe with the capital needed to invest in new businesses, diversify its revenue, and create shareholder value.
Looking ahead, PhonePe is determined to expand its various new businesses, aiming for a well-diversified revenue portfolio and group-level profitability in the coming years. The company has recently ventured into e-commerce and stockbroking with apps like Pincode and Share Market. It has also introduced an online payment gateway, merchant loan services in collaboration with NBFCs and banks, a Point of Sale (PoS) device, and account aggregator services, all contributing to its growth and diversification.
In Conclusion: PhonePe’s Remarkable Growth
PhonePe’s substantial growth and innovative strategies continue to shape India’s fintech landscape. Its approach to diversifying revenue streams and expanding into new sectors exemplifies the dynamism and competitiveness in the Indian fintech industry. With ambitious plans and positive financial projections, PhonePe aims to maintain its position as a significant player in India’s digital payment ecosystem.
