M2P Fintech Revenues Approach Rs 200 Cr in FY22, Losses Balloon Over 6X
Application programming interface (API) infrastructure platform M2P Fintech (formerly Yap) acquired five companies since the beginning of FY22 and raised $56 million in January at a premium of 4.6X compared to its November 2021 valuation.
M2P Fintech’s valuation crossed $600 million in Series D round, which apparently came on the back of strong growth in scale during FY22. Operating income rose 4.6X to Rs 194 crore during the financial year ended March 2022, according to the company’s annual accounts with the Registrar of Companies (RoC).
M2P Fintech generates revenue from API services, payment infrastructure contracts and card processing services. The collection from these services increased by 4.6 times to Rs 194 crore in FY22.
The company also earned Rs 8.55 crore in non-operating income which pushed its total revenues to Rs 202.6 crore in FY22.
The APIs enable businesses and platforms to offer their own branded financial services through partnerships with fintech companies. According to the company websitefintechs powered by their API serve over 35 million customers in 20 markets with an active loan portfolio (core lending package) of $9 billion.
Apart from India, M2P has a market presence in Nepal, UAE, Australia, New Zealand, Philippines, Bahrain and Egypt. The company earned over 98% of its revenue from domestic contracts and the rest from foreign contracts, hhowever, the company does not provide revenue breakdowns from individual countries.
On the expenditure front, technology, card processing and co-branding expenditure accounted for 68.7% of the firm’s total expenditure. These costs outpaced revenue growth, rising 5.9X to Rs 167.4 crore in FY22 from Rs 28.6 crore in FY21.
The expenditure on employee benefits was the second largest cost item which increased by 3.4 times to Rs 58 crore in FY22 from Rs 17.2 crore in the previous financial year. Importantly, this cost also includes expenditure on employee stock option scheme and employee share purchase plan of Rs 1.75 crore.
Expenses for legal and professional fees and rent were Rs 6.76 crore and Rs 2.36 crore which increased by 2.3X and 4.6X respectively. M2P Fintech also incurred advertising with ad spend of Rs 1.3 crore pushing total spend 4.8X to Rs 243.5 crore in FY22 compared to Rs 51 crore in FY21.
A sharp increase in M2P Fintech’s expenses negatively impacted the bottom line and losses widened 6.2 times to Rs 41 crore during the year from Rs 6.6 crore in FY21. Cash flows from operating activities increased by 11X to Rs 63.4 crore in FY22 against Rs 5.67 crore in the previous financial year.
Coming to ratios, EBITDA margin and ROCE deteriorated by 484 and 93 BPS to -17.93% and -7.30% respectively. At the unit level, M2P Fintech spent Rs 1.26 to earn one rupee in FY22.
The Chennai-based company competes with the likes of Setu, Signzy and Decentro in the API infrastructure business. The company has emerged as a poster boy in its space and the company’s scale is likely to grow even stronger on the back of its core lending package that weeds out the need for 10-12 different service providers for a bank or NBFC.
