The exact number of employees affected by the layoffs could not be ascertained, but one of the sources told ET that 10-15% of the workforce is likely to be forced out. A news website, however, indicated that the number could be far higher.
Happay had a headcount of about 450-500 before the layoffs.
“Over the last four to five months, Cred has been cutting costs while actively looking to reduce its overall cash burn… Now this exercise has reached people centres, with the focus first on the headcount of acquired entities,” said one of the people quoted above.
Cred and Varun Rathi, cofounder of Happay, did not comment on ET’s emailed queries.
Founded in 2012, Happay had raised close to $21.6 million from investors such as Sequoia Capital, an early backer of Cred and Prime Venture Partners. It provides travel and expense management software to corporates and a corporate credit card stack to businesses.
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The startup also provides a card issuing stack to consumers and recently shifted focus to a vendor payment module that allows businesses to make direct B2B transfers to suppliers. Happay was acquired by Cred in 2021 for $180 million.
News website Inc42 reported that Cred had laid off 35% of Happay’s staff on Monday morning.
“Cred has been focused on improving its talent density or the average performance levels of employees across its own and group companies. Hence it has led to Happay offboarding low-performing employees,” said a third person in the know of the matter.
One of the persons cited above added that Cred and Happay are integrating their offerings closely, leading to redundancies in roles and overlap of resources between both the entities. “Some of the layoffs were because of performance issues, but overall there is an integration happening with Cred, which means that multiple roles at Happay are becoming redundant,” he added.
Focus on revenues
While keeping costs in check has been a big focus within the company, five-year-old Cred is currently focussing on sustainable revenue lines, the sources added.
In FY2021, before the acquisition, Happay had reported modest revenues of Rs 50 crore, with a loss of Rs 21 crore.
Cred itself had reported that its net loss widened to Rs 1,279 crore in FY22, from Rs 524 crore in the previous fiscal year. This was even as its revenue grew four-fold to Rs 422 crore, from Rs 95 crore the year before.
In recent months, Cred has taken aggressive bets on the unified payments interface (UPI) infrastructure to attract more customers and cross-sell financial services such as credit and peer-to-peer (P2P) lending to users.
Currently, Cred operates Cred Cash, where it provides unsecured lending to its users, through partners such as IDFC First. It also provides P2P lending on its platform through a tie-up with P2P non-banking finance company (NBFC) Liquiloans, and allows users to gain interest of up to 9% from the product.
In a bid to bolster its credit play, Cred is also upping the ante on its own NBFC, NewTap Technologies, owned by founder Shah. ET reported on May 1 that NewTap Technologies has discussed raising $50-$70 million from Cred’s existing backers GIC and Sequoia Capital, likely valuing the NBFC at $250 million. Cred owns 20% of NewTap Technologies.
The company is also eyeing an insurance distribution licence as it looks to widen its financial services offerings for users, to keep them in the Cred ecosystem.
The Tiger Global and Ribbit Capital-backed Cred has raised over $800 million till date and was last valued at $6.4 billion last June.