Troubled ZestMoney's FY23 revenue from operations rose to Rs 243.7 crore; Losses grew marginally

Troubled buy-now-pay-later (BNPL) startup ZestMoney, which was once valued at over $400 million, has reported a net loss of Rs 412.4 crore for FY23, a slight increase from the previous year's Rs 399-crore loss. 

Despite this, the startup's revenue from operations rose significantly to Rs 243.7 crore from Rs 138.5 crore, marking a 72% increase. However, the total expenses also escalated to Rs 662.2 crore, a 21% rise year-on-year, according to media reports. 

What are the revenue sources?

The growth in revenue was driven by a substantial increase in merchant commissions and technology usage charges. Merchant commissions alone saw a 2.8X increase, generating Rs 26 crore, while income from technology usage charges grew 3.3X to Rs 43 crore.

Additionally, a one-time software licensing arrangement brought in a significant fee, contributing to the revenue spike.

Management changes and operational challenges

The company faced turmoil following the departure of its founding team in May 2023, including CEO Lizzie Chapman, CFO & COO Priya Sharma, and CTO Ashish Anantharaman. This led to a reshuffling of the management team but failed to stabilize the company.

The startup's difficulties were compounded by failed acquisition talks with PhonePe and the withdrawal of lending partners.

Impact of regulatory changes

ZestMoney's struggles were exacerbated by regulatory changes from the Reserve Bank of India, impacting its business model. Despite attempts to revive the business, including a plan named "ZestMoney 2.0," the company could not recover from its financial struggles, leading to its decision to shut down operations by the end of 2023.

ZestMoney closure

In December 2023, ZestMoney announced that it would be shutting down its operations, which would result in the layoff of the remaining 150 employees. The company's accumulated losses have reached Rs 1,243 crore. As it prepares to shut down, ZestMoney's existing investors are looking to sell off the remaining assets.

Last month, an ET report said that the fintech startup is in talks with its lending partners and non-banking finance companies, DMI Finance and Aditya Birla Finance, for a firesale.

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