Three points you will get to know in this article:
- Zeta, the Indian entity of fintech SaaS unicorn, turned profitable in FY23 after reporting a significant increase in revenue, reaching INR 816.20 Cr.
- Employee costs accounted for 79% of the total expenditure, and while other expenses increased, the EBITDA margin improved to 2.68% in FY23 from -3.36% in FY22.
- Backed by major investors including Softbank and Mastercard, Zeta is looking to expand its presence in North America, aiming to capitalize on significant revenue potential.
Zeta’s Financial Performance in FY23
Zeta, a fintech SaaS unicorn based in Bengaluru, has turned profitable in the financial year ending on March 31, 2023, through its Indian subsidiary Better World Technology Pvt Ltd. The company reported a profit after tax (PAT) of INR 21.94 Cr in FY23, a remarkable improvement from the loss of INR 20.7 Cr in FY22. The company also witnessed a significant increase in its revenue from operations, which grew by almost 33% to reach INR 816.20 Cr in FY23, compared to INR 615.05 Cr in the previous financial year. The overall income, encompassing miscellaneous earnings, witnessed a robust surge to INR 817.79 Cr in FY23, reflecting a substantial 32.73% increase from the INR 616.11 Cr recorded in the previous year. This financial upswing underscores the company’s impressive strides toward financial success.
Zeta is a pioneering platform that provides innovative solutions for the financial sector. Founded in 2015 by Bhavin Turakhia and Ramiki Gaddipati, Zeta offers a range of services for financial institutions, such as card issuance and processing, loan management, fraud detection, and risk management. Zeta has a strong presence in the banking industry, with clients such as RBL Bank, IDFC First Bank, and Kotak Mahindra Bank. Zeta also powers the payment processing of Sodexo, a global leader in food services and facilities.
Going beyond conventional services, this innovative startup extends digitized solutions to enterprises, introducing automated cafeteria billing and more. Zeta has even developed an access control server (ACS) tailored for ecommerce players, ensuring cutting-edge security features for payment transactions. In a nutshell, Zeta’s journey is marked by technological innovation and a commitment to transforming the way financial operations are conducted.
The Expenditure Breakdown
The Bangalore-based unicorn experienced a notable uptick in its overall expenditures, marking a 24.97% increase to reach INR 795.85 Cr in the fiscal year concluding in March 2023, compared to INR 636.82 Cr in the preceding fiscal year. When dissecting the expenditure components, employee benefit costs emerged as the most substantial outlay. These costs surged by 22.53%, amounting to INR 631.57 Cr, a notable leap from the INR 515.44 Cr recorded in the prior fiscal year. Impressively, these employee-related expenses constituted a significant 79% of the total expenditure. Staff welfare expenses also experienced a remarkable threefold increase, reaching INR 12.13 Cr in FY23 from the INR 3.97 Cr reported in FY22.
In a favorable turn, other expenses demonstrated better control. Unlike the previous fiscal year when these costs more than doubled year-on-year, the current fiscal year saw a more measured increase. This category, encompassing expenditures such as rent, training, recruitment expenses, and legal charges, rose by 35% to INR 151.07 Cr from INR 111.86 Cr in the previous fiscal year.
Meanwhile, during the fiscal year ending March 31, 2023, the startup witnessed a notable 54.91% decrease in cash and cash equivalents, with the figure dropping to INR 25.89 Cr compared to INR 57.42 Cr in the preceding fiscal year. On a positive note, the EBITDA margin showed improvement, climbing to 2.68% in FY23 from a previous -3.36% in FY22.
Back in May 2021, Zeta achieved unicorn status by securing $250 Mn in a funding round led by Masayoshi Son’s SoftBank, bringing its total funding to $340 Mn thus far. Noteworthy backers include prominent names like Softbank Vision Fund, Sodexo, and Mastercard.
Expanding its footprint beyond India, Zeta’s offerings have reached countries such as Brazil, Spain, the Philippines, and Vietnam. In a recent interview with Hindu Business Line, Turakhia, one of the brains behind the startup, expressed intentions to broaden its presence in North America. This move aligns with the recognition that North America represents a substantial 30%-35% of the global revenue opportunity within the sector it operates in.
Zeta, the fintech SaaS unicorn, saw substantial growth in the financial year ended March 31, 2023, reporting a profit after tax of INR 21.94 Cr, a significant improvement from the previous year’s loss. Revenue from operations grew by almost 33% to INR 816.20 Cr, with total expenses increasing 24.97%. Employee costs accounted for 79% of the total expenditure. Despite a decline in cash and cash equivalents, the EBITDA margin improved to 2.68%. Zeta, backed by major investors like Softbank and Mastercard, is looking to expand its presence in North America.
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