HRTech SaaS firm Darwinbox reports 58% YoY jump in revenue to Rs 392 crore in FY24

(L-R) Darwinbox founders Chaitanya Peddi, Jayant Paleti and Rohit Chennamaneni.

Software-as-a-Service (SaaS) platform Darwinbox has reported a 58 per cent increase in total revenue for the financial year 2024 (FY24), driven primarily by its international expansion and the introduction of artificial intelligence (AI)-powered products to its offerings, co-founder Jayant Paleti told Moneycontrol.

The company's FY24 revenue stood at Rs 392 crore, marking a 3.2x increase over the past two years. This growth was bolstered by a rising share of international revenue, which reported an 87 per cent increase in the past year. The rise contributed more than 50 per cent of new annual recurring revenue (ARR), the firm said in a statement.

Darwinbox has also attributed its revenue growth to improved efficiency, with operating cash burn shrinking by 12 per cent in FY24.

“Strong focus on internationalisation and investment into product development and R&D [research and development] has helped us achieve growth in revenues…Our growth is a priority and we will continue to invest in these areas,” Paleti said. However the firm is yet to turn PAT (Profit After Tax) positive.

“We are a well-capitalised company. Our balance sheet is strong. And as a board, we took a call that the most important priority is to invest in some of these things, so that growth happens for a long period of time…Our net margin is negative but it is a conscious choice,” Paleti said.

Darwinbox has expanded globally, which has aided in its revenue growth. It launched operations in North America about 18 months ago and established a presence in Southeast Asia and the Middle East as well. The firm also reported a 17-percentage point improvement in its EBITDA (earnings before interest, taxes, depreciation, and amortisation) margin.

Darwinbox counts Southeast Asia and India as the highest contributors towards its revenue and has opened new offices in West Asia, Saudi Arabia, the United Arab Emirates (UAE) and the United States (US). The firm will also launch a new global payroll product line for seven new countries early next year, Paleti said.

“We went to South East Asia first and entered the US market just 18 months ago. We're already seeing strong traction, with our international business revenue growing by 87 per cent year-on-year,” Paleti said.

Darwinbox also reported that 25 per cent of its new revenue came from existing customers, with a net revenue retention (NRR) rate of 110 per cent, reflecting strong customer sentiment and robust expansion.

The firm recently announced the elevation of Vineet Singh, its Chief Technology Officer (CTO), to the position of co-founder on August 30.

Darwinbox was founded by Jayant Paleti, Rohit Chennamaneni and Chaitanya Peddi in 2015. The firm works in the human resources (HR) tech space, digitising functions such as attendance, payroll and employee onboarding. Its prominent investors include Sequoia, Lightspeed India and Salesforce Ventures. Endiya Partners, 3One4Capital, JGDEV and SCB 10X have also invested in the firm.

Darwinbox  joined the unicorn club in 2022 after it announced raising $72 million led by TCV at a valuation of over $1 billion. In 2023, Microsoft invested an undisclosed amount in Darwinbox.

Speaking about AI disrupting the HRtech space, Paleti said that “as long as employees exist, Darwinbox will continue to exist, however that doesn’t mean we will not be AI-powered. Large part of our business will be transformed using AI”.

Darwinbox claims to have grown over 3x in the last two years. The firm presently serves more than 900 enterprises and is used by three million employees globally.

Paleti added that the firm is presently investing around 46 per cent of its operating revenue into R&D. The firm is also eyeing an initial public offering (IPO) in the next two-four years, he said.

“This has enabled product innovations such as the integration of intelligent automation and the development of new offerings like a global payroll product for seven new countries, slated for release next year,” he added.