Tiger Global-backed neobank Jupiter, last valued at over $710 million (approximately Rs 5,800 crore), earned just Rs 40 lakh in operating revenue in its second full year of operations, shedding light on the low penetration of neobanking platforms in India, a sector that garnered a great deal of investor interest last year.
Jupiter, which has raised more than $160 million (Rs 1,300 crore) in private market funding since its inception in August 2019, recorded a total revenue of Rs 19.3 crore in FY22, thanks to other income of Rs 18.9 crore, which includes interest on fixed deposits with banks and realised gains on quoted mutual funds, according to regulatory filings with the Ministry of Corporate Affairs (MCA) accessed by Moneycontrol. According to the filings, Jupiter's revenue from operations was only Rs 18,000 in FY21 (2020-21).
The filings revealed that Jupiter's losses increased to Rs 164 crore in FY22 from Rs 14 crore in FY21 as its employee benefit expenses tripled to Rs 68.6 crore from Rs 17.7 crore a year earlier. According to its filings, Jupiter's other expenses, which include advertising and marketing costs, software and web design costs, and customer retention expenses, increased to Rs 107.2 crore. During the year, Jupiter spent Rs 50 crore on advertising and marketing, up from Rs 1.3 crore the previous year.
Jupiter had a negative net cash flow from operating activities of Rs 137.1 crore as of March 31 this year, compared to Rs 20 crore as of March 31 last year, the filings showed. Simply put, negative cash flow from operations indicates that a company has more outgoing cash than incoming cash.
Jupiter, founded by second-time entrepreneur and former banker Jitendra Gupta, provides a platform with a simplified user interface that allows users to deposit and withdraw funds. As it lacks its own banking licence, the company also offers debit and credit cards in partnership with traditional banks such as Federal Bank.
Neobanks were a hot sector last year, which attracted investments worth more than $1 billion from VC (venture capital) firms across the globe, according to data by Tracxn. Neobanks offer a fully digital platform to customers and typically are mobile-first banks.
These firms lack banking licences and are thus not regulated by the Reserve Bank of India (RBI). Most of these firms, like Jupiter, have agreements with existing banks such as SBM (State Bank of Mauritius), DCB Bank, and Federal Bank.
Many fintechs, including Razorpay and IND Money, entered the neobanking space as it became popular in the country as a result of pandemic-led lockdowns, which gave a boost to digital banking.
Jupiter alone raised more than $130 million in two funding rounds in 2021, increasing its valuation from $100 million to over $700 million. According to Tracxn, Jupiter's closest competitor, Fi Money, raised $62 million in 2021 and another $62 million this year, and was last valued at $530 million. But, like Jupiter, Fi Money has struggled to generate revenue from operations. Fi Money generated no revenue from operations in FY21.
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