PhonePe's revenue rises 74% to over Rs 5,000 crore in FY24, but is it profitable now?

Bengaluru-based fintech giant PhonePe has crossed a significant milestone by posting revenue of Rs 5,064 crore for the fiscal year ending March 2024.

This marks a 74% jump from Rs 2,914 crore in FY23. The company’s revenue growth is primarily attributed to its payment services and a substantial interest income of Rs 661 crore, which mainly came from deposits and investments following a $195 million funding round.

Overall, PhonePe’s total revenue increased to Rs 5,725 crore in FY24, up from Rs 3,085 crore the previous year.

Losses narrow significantly

Notably, PhonePe reduced its losses by 28.6%, bringing them down to Rs 1,996 crore in FY24 from Rs 2,795 crore in FY23.

The company also reported a significant achievement—reaching profitability, excluding Employee Stock Ownership Plan (ESOP) costs, for the first time with an adjusted net profit of Rs 197 crore.

According to PhonePe, this financial improvement was driven by better cost management and automation, alongside the company’s continuous focus on operating leverage.

Employee costs and operating expenses rise

PhonePe’s operating expenses also saw a notable increase during FY24. Employee benefits constituted 46.45% of total expenses, with these costs rising by 16.4% to Rs 3,603 crore.

ESOP expenses alone accounted for Rs 1,876 crore, though only Rs 288 crore was settled in cash, the rest being non-cash expenditures.

Payment processing charges surged by 74.8% to Rs 1,166 crore, while expenses related to advertising, IT, and legal fees contributed to the overall rise in costs, which reached Rs 7,756 crore in FY24.

AI-powered efficiency and job creation

One of PhonePe’s key achievements in recent years has been its focus on AI-driven automation, which has helped the company reduce its customer support staff by 60%.

Despite this, PhonePe has seen a 40-fold increase in transactions over the last five years, achieving 90% automated customer issue resolution.

According to the company, this increased efficiency has been achieved without sacrificing customer satisfaction, as evidenced by its rising Net Promoter Score (NPS). 

Additionally, PhonePe has contributed to job creation, employing more than 22,000 people across India, including 1,500 engineers developing new digital payment solutions.

Market leadership and valuation

PhonePe continues to dominate the UPI-based payments market, holding nearly 50% of the transaction volume and value in India.

As of March 2024, the company had 53 crore registered users and processed over 770 crore transactions monthly, amounting to a total payment value of Rs 10.5 lakh crore ($1.5 trillion annually).

With a valuation of $12 billion, PhonePe remains India’s most valuable privately-owned fintech startup.

Sameer Nigam, Founder and CEO at PhonePe said, “At PhonePe, our goal is to build Internet platforms that empower Indian citizens to improve their lives and achieve their aspirations. We believe continuous innovation is key to shaping a modern, developed economy by India’s 100th anniversary of independence. Free market competition, driven by product innovation and service excellence, is the future. Transparency is central to this, which is why we are proud to release our first annual report. We hope that it will give readers a better understanding of our operating philosophy, culture and governance model, and our business strategy.”