XoXoday, a leading fintech startup, experienced a slower growth trajectory in FY23, marking a departure from the 2.5X surge in its collections witnessed during the previous fiscal year, FY22. Notably, the company reported a substantial seven-fold escalation in losses for the last fiscal year, primarily attributed to amplified costs linked to employee benefits and advertising expenses.
According to the company's annual financial filings with the Registrar of Companies, XoXoday's revenue from operations exhibited a 20% growth, reaching Rs 816 crore in FY23 from Rs 680 crore in FY22.
Functioning as a provider of infrastructure facilitating businesses to automate rewards, incentives, and payouts across their value chains, XoXoday boasts a product portfolio comprising Plum, Emplus, and Compass, addressing diverse needs such as rewards distribution, employee engagement, and incentive computation.
The lion's share of XoXoday's revenue stemmed from the sale of various vouchers, constituting 97% of the total collections, witnessing an 18.4% uptick to Rs 791 crore in FY23 from Rs 668 crore in FY22. Commissions and other operational activities contributed to the remaining income streams, as detailed in TheKredible's comprehensive revenue breakdown.
However, the firm's expenditure, particularly in procuring coupons and rewards from brands, constituted 83% of the total spending. This cost escalated by 16.1%, totaling Rs 729 crore in FY23 compared to Rs 628 crore in FY22, emphasizing its strategic focus on scaling operations.
In addition to the costs associated with rewards and incentives, XoXoday incurred increased expenses in employee benefits, information technology, legal-professional services, advertising, and other overheads. Consequently, the company's overall expenditure surged by 27.1%, reaching Rs 881 crore in FY23 from Rs 693 crore in FY22.
The disproportionate rise in expenses vis-à-vis revenue growth led to a substantial spike in XoXoday's losses, soaring 6.8 times to Rs 62 crore in FY23 from Rs 9 crore in FY22. The company's Return on Capital Employed (ROCE) and Earnings Before Interest, Taxes, Depreciation, and Amortization (EBITDA) margins stood at -90% and -6%, respectively. The firm spent Rs 1.08 to earn a single rupee in the fiscal year ending March 2023.
While the pronounced escalation in losses raises concerns, it serves more as a temporary distraction for the company, which is currently focused on solidifying its position in the market. The competitive landscape in rewards, incentives, and loyalty management offers myriad options, challenging platforms to curate and present compelling packages to customers. XoXoday aims to navigate this challenge by establishing robust filters that attract top-tier products and services on favorable terms.
Despite intensifying competition, XoXoday appears poised to ascend to this level, albeit amidst fierce competition. Given the rapidly evolving space, it wouldn't be surprising if established entities such as Cred venture into this domain, inching closer to the fintech unicorn status, as evidenced by recent launches like its Garage option for users. Observers keen on market dynamics await developments in this space, tracking potential entries from major players like Cred.
