The Australian fintech Zip-backed buy now pay later (BNPL) firm ZestMoney witnessed its loss triple year over year (YoY) to INR 398.8 Cr in the fiscal year that ended on March 31, 2022, as a result of a significant increase in its costs.
Lizzie Chapman, Priya Sharma, and Ashish Anantharaman founded the Bangalore-based ZestMoney in 2015 with the goal of enabling its customers to pay their shopping expenses in three equal instalments with 0% interest.
The fintech startup’s loss earlier increased by 216% from INR 125.8 Cr recorded in the financial year 2020–21. (FY21).
From INR 89.3 Cr in FY21 to INR 145 Cr in FY22, total revenue increased by 1.6X, while operating revenue increased by 68.6% to INR 138.4 Cr from INR 82 Cr in FY21.
ZestMoney works in collaboration with NBFCs to offer its services to retail customers and business owners. Its integration with merchants in both offline and online channels generates the majority of its revenue. The startup serves as both a payment partner and an affiliate partner for them.
Additionally, it makes money by charging lenders (NBFCs) direct selling agency fees (DSA) for referring them clients.
When compared to FY21, the financial startup’s expenses increased by 2.5X to INR 543.8 Cr in FY22. This indicates that throughout the reviewed year, the startup spent INR 3.9 to make INR 1.
Increased service deficiency charges were the leading cause of the overall expense increase. Service deficiency charges for the launch increased 3X to INR 233.4 Cr from INR 63.3 Cr in FY21. Service deficiency charges show the price of poor loans.
Employee benefit costs at ZestMoney increased 89% to INR 93.3 Cr from INR 49.1 Cr in the previous fiscal year.
Salaries, PF contributions, gratuities, and other employee welfare perks typically make up employee benefit expenses. Increased employee benefit costs signify that the startup hired more staff in the current year than it did the previous year.
ZestMoney’s marketing and advertising costs climbed 2.3X to INR 97.8 Cr in the reviewed year from INR 41.3 Cr in the preceding fiscal year. From -143.86% in FY21, its EBITDA margin declined to -278.98%.
ZestMoney claims that over 100K offline establishments and 15K internet retailers nationwide accept their services.
Last year, it raised $50 Mn in its Series C investment, led by the Australian fintech company Zip Co Limited. According to ZestMoney, fundraising was a portion of a more considerable Series C investment in which existing investors would participate.
ZestMoney competes in the national BNPL market with companies like Simpl, Lazypay, and ePayLater. According to a survey by Inc42, the lendingtech market in the nation is predicted to grow at a CAGR of 32% over the following three years, with a market opportunity of $616 Bn by 2025.
Quona Capital, Reinventure Ribbit Capital, Omidyar Network, PayU, and Xiaomi are other investors in the firm.