PhonePe's Rs 2,193 Cr ESOP bill pushed it into losses in FY24

Digital payments giant PhonePe saw its losses shrink by about 29%, dropping to Rs 1,996 crore in FY24 from Rs 2,795 crore in the year-ago period.

The company had earlier announced that it had become profitable on an adjusted basis at Rs 197 crore, after excluding ESOP of Rs 2,193 crore incurred in FY24.

ESOPs have become a major strain on PhonePe's bottom line. Between FY22 and FY23, ESOP costs grew 73.44% from Rs 1,186 crore in the FY22.

Employee benefits expenses increased by 16.37%, amounting to Rs 3,603 crore compared to Rs 3,096 crore the previous year.

As per the consolidated financial statements mentioned in PhonePe's annual report, the company also faced higher payment processing charges, which rose by 74.81% to Rs 1,166 crore in FY24, compared to Rs 667 crore in FY23. Total expenses climbed by 31.30%, reaching Rs 7,756 crore in FY24 from Rs 5,907 crore in FY23.

Its revenue soared to Rs 5,064 crore in FY24, which is a 74% jump from the previous year's Rs 2,914 crore.

PhonePe downsized its customer service over the past five years by around 60%, from 1,100 agents to over 400. AI-powered chatbots now resolve over 90% of customer service issues.

PhonePe processes nearly half of all payments made on the UPI ecosystem. In August, PhonePe processed payments worth Rs 10,33,264.34 crore, representing 50.14% of the Rs 20,60,735.57 crore worth of payments processed within the UPI system in the month.

In the last few years, PhonePe has expanded beyond payments into financial services, including insurance distribution and wealth management. It also launched lending and stockbroking services, entered e-commerce with the Pincode platform, and ventured into account aggregation for secure data sharing.

Its insurance arm posted a loss of Rs 247 crore while its lending business posted a loss of Rs 128 crore.

The app store Indus's Singapore entity made a profit of Rs 80 crore while the India entity posted a loss of Rs Rs 123 crore. QuanTech Capital, its wealth tech owned by PhonePe platform registered a loss of Rs 15 crore in FY24.

This is a developing story.