Cashfree Revenue Surges 75% in FY23, Losses Soar to Rs 133 Cr 

Cashfree, a prominent payment industry player, has reported a robust 75% surge in revenue from operations for the fiscal year 2022-23, reaching INR 614 crore.

This significant growth comes amid a notable expansion of its services as a payment gateway and provider. However, the financial success is juxtaposed with a considerable loss increase, which ballooned to INR 133 crore during the same period.

The company’s financial report reveals a dichotomy in performance, showcasing remarkable revenue growth and a stark rise in losses. 

In the preceding fiscal year, Cashfree incurred losses of a modest INR 3 crore. This substantial jump in losses raises questions about the payments firm’s operational efficiency and cost management strategies.

A closer look at the financials discloses that total expenses more than doubled, soaring to INR 750 crore in FY23. This surge can be attributed mainly to a substantial increase in employee costs, which skyrocketed from INR 96 crore in the previous fiscal year to INR 198 crore in the reported period.

The spike in expenses, particularly in the personnel category, raises concerns about the sustainability of the current business model and the need for strategic adjustments to ensure long-term profitability.

Cashfree, having recently obtained approval from the Reserve Bank of India to resume onboarding new merchants, is a critical player in the payments landscape. The company’s revenue streams primarily flow from payment gateway processing charges provided to online merchants. 

In a strategic move to strengthen its position in the market, Cashfree acquired Zecpe, a one-click checkout company, in February of the previous year. This acquisition targeted the direct-to-consumer (D2C) segment, promising faster checkouts and enhancing the overall shopping experience for consumers of D2C brand partners.

The acquisition of Zecpe also signalled Cashfree’s intention to incorporate additional capabilities, such as return to origin (RTO) reduction on returns, fraud detection, and address pre-filling.

Cashfree envisioned these enhancements to distinguish itself by offering its clientele a more comprehensive suite of services, potentially increasing its market share.

Despite its efforts to fortify its position, Cashfree faced challenges from regulatory restrictions. The Reserve Bank of India imposed an embargo that temporarily halted the onboarding of new merchants, impacting the growth trajectory of Cashfree and its arch-rival, Razorpay.

This embargo allowed competitors like Plural from Pine Labs, PhonePe, Innoviti Payments, and Billdesk to sign up new merchants, gaining a competitive advantage aggressively.

While Cashfree’s FY23 financials clearly show the impact of the RBI embargo on its revenue and growth prospects, its repercussions are expected to become more apparent in the full-year revenues of the ongoing fiscal year, FY24.

The competitive landscape, regulatory environment, and the company’s ability to adapt to changing circumstances will likely shape Cashfree’s future financial performance and market standing.