Its overall expenses went up 31% to Rs 7,756 crore in FY24 compared to Rs 5,907 crore in FY23. The expenses were primarily driven by employee expenses which in FY24 stood at Rs 3,603 crore compared to Rs 3,096 crore in FY23. Payment processing charges for fiscal 24, the cost payment companies have to bear to settle digital transactions with banks, jumped 74% to Rs 1,166 crore compared to Rs 667 crore in the year prior.
Sharing the details in its annual report for FY24, the Walmart-backed company said it reported a profit of Rs 197 crore in the last financial year, excluding employee stock ownership costs, which shows that its core operational business has started to show profits.
PhonePe has tightened its balance sheet with regard to cashback and incentive-based expenses by spending only Rs 15 crore in payment incentives in FY24. In FY19, at the peak of the cashback battle between Paytm, Google Pay and PhonePe, the Bengaluru-headquartered startup had spent Rs 950 crore, it said.
PhonePe said multiple factors like diversification of revenue streams through distribution of mutual funds, credit and other measures have helped the company stabilise its topline and show strong growth.
PhonePe is also building revenue channels from its over-4 crore merchant base by selling sound boxes, point of sales machines. Currently, 10% of its overall revenue comes from MDR-related incentives that the government provides, the company said.
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MDR, or merchant discount rate, is the cost merchants pay to payment processors in lieu of digital payment services.PhonePe has reduced its customer service team to around 400 agents compared to more than 1,100 five years back. It has also automated 90% of customer queries, which has helped it reduce overhead expenses.
“We believe a focus on disciplined financial management will help us continue in the progression towards profitability, especially in our payments business which by itself is a unique aspiration in the Indian context,” the company said.