Indian fintech firm BharatPe, which became EBITDA profitable for the first time in October, said it expects to become profitable on a full-year basis in the next fiscal year, which ends on March 31, 2025.
The five-year-old unicorn recorded positive EBITDA in single-digit crores in October, it said without disclosing specific numbers.
BharatPe’s plans to touch profitability come as the drastic steps taken by several Indian startups—cost cuttings, layoffs, and diversification of revenue streams—to fall in line with investor expectations and achieve profitability may be starting to bear fruit.
Less than a year ago, the company was operating at a negative margin, and now it stands at a positive margin of 3-4% in terms of overall portfolio margins, BharatPe said, adding that it is optimistic about reaching double-digit margins in the near future.
BharatPe, which competes with apps such as SoftBank’s Paytm and Google Pay in India’s booming online payments market, was regarded as one of India’s most successful up-and-coming companies.
Helmed by Ashneer Grover, BharatPe’s valuation had touched nearly $3 billion in three years as it raised successful fundraising rounds from investors, including Sequoia Capital, Tiger Global Management, Ribbit Capital, Coatue Management, and Beenext.
Things, however, changed dramatically in March 2022, when Grover was removed from all titles and positions following multiple complaints and a third-party audit that alleged serious governance lapses under him. Since then, the firm has seen multiple executive departures such as Ankur Jain, who held the position of Chief Product Officer, former Chief Executive, Suhail Sameer, who transitioned to a strategic advisor role in January and Chief Operating Officer Dhruv Dhanraj Bahl.
However, changing investor expectations from ‘growth over profitability’ metrics to ‘profitability at all costs’, are forcing Indian startups to hunker down and slash expenses, lay off employees, and diversify revenue streams to fight the prolonged funding winter.
Earlier this year, Tiger Global-backed Indian food delivery platform Zomato announced that it had dished out its first-ever consolidated profit in the June quarter.
Meanwhile, Indian social commerce player Meesho, backed by Softbank, Fidelity Investments and B Capital Group, announced in August that it turned profitable for the year ended March 31, 2023, helped by a rise in order value and a drop in expenses.
Separately, Sequoia Capital-backed fintech platform Mobikwik is another Indian startup that announced becoming profitable in Q1 2024.
BharatPe said its current challenge lies in scaling up its business model. We are confident that by maintaining regular loans facilitation, profitability will be sustained, the firm said.
BharatPe said its annualised revenue surged past Rs 1,500 crore, a growth of 31% from FY23. In October, it facilitated loans exceeding Rs. 640 crore for its merchants in partnership with its NBFC partners, demonstrating a spike of 36% YoY.
“In the coming months, we’ll focus on scaling our lending, POS, and soundbox businesses. We will also focus on launching new products tailored for our merchant partners while concentrating on the development of our consumer and NBFC businesses,” said Nalin Negi, CFO and Interim CEO, BharatPe.