Published By: Sayan Paul

PhonePe's Revenue Up By 74% For FY24: What Were The Strategies Behind This Humongous Growth?

The Walmart-backed fintech company is aiming to go public in the coming years.

"Our approach has been to ensure predictable growth while diversifying our revenue sources...!" - Adarsh Nahata (CFO of PhonePe)

Fintech giant PhonePe reported a 74% jump in its revenue for the financial year 2023-24 (FY24), reaching ₹5064 crores. This, without an iota of doubt, is a humongous growth compared to ₹2,914 crores in the previous fiscal. Moreover, the company had an adjusted PAT (profit after tax) of ₹197 crores for FY24 compared to ₹738 crore loss in FY23. The standalone payments business, on the other hand, recorded an adjusted PAT of ₹710 crores for FY24, a notable improvement from ₹194 crores in the previous year.

Credit: PhonePe

Well, PhonePe is currently a leading digital payments platform in India - thanks to over 270 million daily transactions with an annualized total payment value (TPV) of more than $1.5 trillion. And its mammoth success owes to not one but a combination of factors. In this article, let's discuss them in detail.

The Market Leadership

PhonePe is currently the undisputed king in the unified payments interface (UPI) ecosystem in India. The firm has over 48 percent market share in UPI transaction volume and around 50 percent in UPI transaction value - which is much more than its competitors Google Pay (37 percent) and Paytm (7.8 percent).

Credit: Mint

The Walmart-backed firm has achieved this success in a comparatively shorter period than its competitors. Hence, experts believe that it will grow even better in the coming years. PhonePe co-founder and chief executive Sameer Nigam said in a press statement, "The NPCI has managed to convince the government to increase the UPI subsidy substantially last year to around Rs 4,000 crore, which has lifted a lot of the payment companies close to profitability. Our focus on disciplined financial management will help us continue in the progression towards profitability of our payments business. We also view that the optimization of investments and capital allocation, in conjunction with building a diversified revenue model, will provide a solid foundation for sustainability future success."

PhonePe CEO Sameer Nigam

Diversification Strategy

Inarguably, the most significant factor behind PhonePe's recent success is its diversification strategy. In fact, the company's chief financial officer Adarsh Nahata has credited diversification of revenue streams as its major financial strategy.

They got into offline merchants' payments earlier this year and also launched a payments gateway business for online merchants. Over the past year, they have invested heavily in ONDC-based e-commerce app Pincode, equity trading and investment app Share.Market, and the indigenous app store Indus.

Credit: My Mudra

Notably, Share.Market recorded an increased active investor base of 1.7 lakh in July, while Indus crossed one million user downloads in March. Also, PhonePe's insurance business has sold more than 3 million policies in the last quarter.

Credit: PhonePe

Each of these businesses has helped PhonePe generate considerable profits in recent times. Also, in Nigam's words, "There are a lot of value-add services, including point of sale (PoS) machines, sound boxes, advertisements merchant loans, where we are able to charge and monetize."

PhonePe is aiming to achieve profitability consistently for the next couple of years, and then go public.