BharatPe clocks its highest-ever gross revenue in August 2023 at $23.5 million, ARR zooms to $282 million

In June 2023, BharatPe reported an ARR of $270 million

Fintech unicorn BharatPe clocked its highest-ever gross revenue of $23.5 million (around Rs 200 crore) for the month of August 2023, mainly due to revenue from its lending business as well as its foray into other services such as Point of Sale devices, per internal documents seen by Moneycontrol.

The pick-up in growth will not only give a fillip to its plans for a public listing but also comes as a relief, after the high drama that roiled the startup in the last year, precipitated by the exit of its controversial co-founder Ashneer Grover.

Some of its most prominent investors include Ribbit Capital, Coatue, Insight Partners and Peak XV partners (previously Sequoia Capital India).

Further, in August the company also clocked an annualised revenue run rate (ARR) of $282 million which was up 5.4 times the revenue it reported during August of 2021 when the company last raised its Series E round of $370 million.

In June 2023, BharatPe reported an ARR of $270 million, per the same internal data.

Annual run rate or ARR is a metric used to project upcoming revenue based on current earnings, assuming a company will grow at the same pace in the coming months.

Gross revenue is not equal to operating revenue, which is a metric that is more relevant. The company has not disclosed the operating revenue for FY23.

The company’s revenue rose 169 percent to Rs 321 crore for the entire financial year of 2022, compared to Rs 119 crore in the preceding financial year. In FY22, BharatPe incurred a loss of Rs 5,594 crore.
BharatPe did not respond to Moneycontrol’s queries.

BharatPe’s Ebitda burn

While BharatPe’s revenues are moving up steadily, the company in the document has said that its Ebitda burn was around $1.3 million in August.

In FY22, BharatPe incurred a huge loss of Rs 5,594 crore and the loss stirred further controversies since the company’s investors fell out with former managing director Ashneer Grover.

Amid the chaos, the company said that an accounting norm was the reason behind 85 percent of the loss amount.

While it missed its initial target to achieve profitability by March, the firm is likely to report a positive Ebitda by October of 2023.

"The merchant lending strategy is working for the company, payment via QR codes doesn't make money. BharatPe will be Ebidta positive in October," a person familiar with the company's numbers said. Ebidta is a metric used to track profitability at an operating level.

The lending business is heating up

India’s fintech startups, including some of the highest-valued companies, are increasingly jumping on the digital lending bandwagon, thanks to soaring disbursements seen in the previous fiscal year that showcased the massive opportunity offered by the country’s credit-starved market.

Paytm which announced its Q2 FY24 results last week said that its overall loan disbursement came in at Rs 16,211 crore, up nearly 122 percent year-on-year in the September quarter.

In the current year, fintech startups like PhonePe, backed by Walmart, and Jar, backed by Tiger Global, have introduced digital lending services.

BharatPe is also witnessing healthy growth in its lending business. BharatPe’s Assets Under Management is recorded at $85 million as of August 2023. “We are adding new revenue stream on PostPe through the PL DSA (Personal Loan - Direct Selling Agent) for BharatPe,” as per the company’s document shared internally.

BharatPe’s swelling loan book also comes on the back of its growing active merchants. As per the document, the company’s active merchant base grew from 1.8 million in 2021 to a whopping 3.1 million in August of 2023.

In May 2023, BharatPe acquired a 51 percent stake in Mumbai-based non-banking financial company (NBFC) Trillion Loans, which sells a range of secured and unsecured loans to small businesses and credit products such as auto, gold, and education loans to retail customers.

In fact, while announcing the acquisition, BharatPe’s co-founder and COO, Shashvat Nakrani said that its merchant lending vertical is growing exponentially. “We launched our merchant lending vertical in 2019 and it has grown exponentially over the course of the last three years. Today, we facilitate loans of over Rs 500 crore every month to our merchant partners,” Nakrani said.

The PoS device market is competitive

BharatPe is one of the early entrants in the PoS device market along with players like Paytm and Pine Labs. It claims to have nearly 2 lakh POS machines across 400 cities in India and it is one of the top 3 fintech players in the category.

The company’s PoS adoption is likely to further accelerate as it is witnessing growth in its merchant base as of August of 2023. It clocked its first-ever Speaker Active Merchant base of 1 million.

In August, the fintech major also announced its plans to scale up its Point-of-Sale business over the next 12 months.

The company listed plans to launch integrated inventory, billing, and payment solutions customised for industry segments such as restaurants and retail stores in the next phase of scale-up for its POS business and launched its Android POS terminal, BharatPe Swipe Android.

PhonePe is the new entrant into the space and the biggest player Paytm is also looking to add around 1.5 million offline point-of-sale (PoS) devices like soundboxes and debit card machines every quarter for the next 18-24 months, it said in its analyst call held on October 21.

BharatPe is currently helmed by interim CEO Nalin Negi. It has also made a raft of hires in the last year- CTO Pankaj Goel, apart from a chief information security officer, head of internal audit and head of compliance. While banking veteran Rajnish Kumar serves as chairman, co-founder Shashvat Nakrani is still involved in strategic decisions.

"It takes at least 12-18 months for things to settle down after such differences at the top. Many have exited but they have also made hires," a second person told Moneycontrol.

Ashneer Grover, who has been engaged in a battle with the board of BharatPe, had submitted his resignation as MD and director in March of 2022, days after his wife Madhuri Jain Grover had been terminated as the head of controls on allegations of funds misappropriation. Apart from Ashneer Grover, CEO Suhail Sameer too quit in the last year, along with other other senior executives.