Fintech firm Cred has reported Rs 1,400 crore in revenue from operations for FY 23, a 256 percent growth over the Rs 393 crore that the company reported in FY22.
The Bengaluru-based fintech unicorn’s losses grew marginally to Rs 1,347 crore in FY23, widening by 5 percent from Rs 1,280 crore in FY22. According to the company, it has reduced its customer acquisition cost by around 80 percent over the past four years.
The credit card bill payment firm has seen its marketing expenses go down by 27 percent to Rs 713 crore in the fiscal ending March 2023, from Rs 976 crore in FY22.
CRED's expenses grew to Rs 2,832 crore in FY23, a 66 percent increase over the Rs 1,702 crore reported in FY22.
“Our focus on rewarding good behaviour strengthened growth momentum in FY23, with new products and features contributing to higher engagement with members. We will continue the momentum to get close to overall profitability and meaningful revenue scale,” said Kunal Shah, founder of Cred.
The company further said that prudent financial behaviour is becoming a habit for the top 1 percent of the population and has helped the company to post strong financial performance.
While Cred has raised over Rs 8,000 crore to date, its cash reserves now stand at around Rs 2,050 crore. Based on its FY23 losses, this cash runway would last for the next three years. If Cred reduces its losses, it can potentially extend its runway.
Engagement and rising user base
Cred said that an average monthly transacting user (MTU) performs around 20 sessions on the platform, which may include credit card bill payments, other utility bill payments, travel packages, shopping, money transfers, and merchant transactions through UPI.
Founded by Kunal Shah in 2018, Cred was valued at more than $6 billion last year and has around 12 million users. In contrast, the country's unique credit card customers are estimated to be around 40 million. Recently, the number of credit cards issued in the country crossed 100 million, and most affluent customers use multiple credit cards.
One of Cred's biggest revenue drivers and profit engines is its lending division, Cred Cash, which has disbursed about Rs 12,000 crore worth of loans, according to sources. Almost 90 percent of its revenues come from Cred Cash, utility bill payments space Cred Max and insurance services.
Credit card bill payments in itself would not generate revenue for Cred. It is mostly a reason for Cred to attract premium customers.
Today, about one-third of credit card bill payments are made through popular UPI apps.
Betting big on UPI
Cred has been expanding its UPI payments game over the last year. From around 0.3 percent market share in UPI transactions last October, it has gone up to 0.8 percent this year. In UPI transaction value, Cred’s market share improved to 2 percent this year from around 1.6 percent last year.
Cred expects credit on UPI to grow rapidly over the next few years and also promotes an Axis RuPay credit card on its platform. Interest in credit on UPI has seen RuPay's share of new credit card issuances increase from less than 10 percent a year ago to 25 percent now. To facilitate the growth of credit on UPI, many private sector banks are issuing additional virtual RuPay credit cards to their existing credit card customers.
It makes sense for Cred to target a larger pie of UPI payments, when many transactions are moving towards the platform. Almost 75 percent of retail digital payments are made through UPI and this will potentially rise to 90 percent in the next two to three years, according to a PwC report released early this year.
The fintech firm has also entered a new business segment ‘vehicle management’ to expand its revenue.
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