CRED Revenue Surpasses 4X While Losses Widen to Rs 1,279 Cr in FY22
CRED remains an enigma for many startup watchers. Recently, it became one of the few growth-stage unicorns to win a new round at a premium of more than 65% over its last valuation in the mainstream fintech space: a Series F round at a valuation. of $6.4 billion in a difficult funding environment. The Bengaluru-based company’s rise was due to a more than 4.4x increase in total revenue in FY22.
The numbers began to show a picture of the plans and promises that CRED relied on, a story that clearly resonated strongly with major investors. Clearly, CRED is building its fintech wall, brick by brick.
Collection of CRED from operations jumped to Rs 393 crore in FY22 from Rs 89 crore in the previous financial year (FY21), according to internal company documents viewed by Coach.
The Kunal-Shah-led company also had non-operating income of Rs 29 crore from its financial assets in the financial year ending March 2022. It should be noted that CRED has not yet filed financial statements audited for the year ending March 2022. with the Registrar of Companies (RoC). CRED refused to comment on the requests sent by Coach.
Although CRED does not make money from its core credit card payment business, the company does make money from interest on “CRED Mint” vertical peer-to-peer lending and convenience fees collected on payments from rental of houses by credit cards.
Clearly, the card payment business that she built through a sustained push using cashback and special offers, was meant to bring together a community of users that she calls the “top 1%” of card users in India. It’s the exploitation of that grassroots, high-quality user base that’s starting to kick in now.
With a surge in its magnitude, the company’s spending also surged by 2.7X to Rs 1,702 crore in FY22 from Rs 619 crore in FY21. Marketing spend remained the largest cost center for CRED at Rs 973 crore in FY22. This cost recorded a 3X jump in FY22 and formed 57% of its total spend in FY22. EX22 course.
The marketing cost is quite obvious as CRED featured several TV commercials featuring notables such as Rahul Dravid, Ravi Shastri, Neeraj Chopra and Jim Sarbh, following its nostalgic trip last year.
Employee benefit expenses are the second largest cost item for the business, which rose 2.3 times to Rs 307 crore in FY22. While overall expenses jumped 2 .7 times, CRED’s losses soared 2.4 times to Rs 1,279 crore in FY22.
CRED has raised just over $600 million over three funding rounds in 2021 and 2022 from Falcon Edge, Tiger Global, DST Global, Insight Partners and Coatue. Along with back-to-back fundraising, the company has also invested in LiquiLoans, which runs CRED’s own P2P offering in the backend.
In October 2021, it acquired Chennai-based liquor shopping and delivery startup HipBar and expense management startup Happay.
With its UPI feature recently, CRED has finally taken on most other fintechs in the space, even though it uses the same playbook of cashbacks to drive usage. But its most notable success remains its lending business, linked to the P2P platform, where it has seen massive volumes across all accounts, with the big differentiator being the high credit quality of its borrowers and “lenders”. Contrast that with PayTm, which has also been a tear with its small lending business, without risking its own capital. However, it is a safe bet that the quality of CRED’s portfolio will be better, both in terms of default rate and loan ticket size. Thus, this is the number to watch when they finally come out.