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M2P Fintech revenue slips over 13% in FY24, losses remain unchanged

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M2P Fintech revenue slips over 13% in FY24, losses remain unchanged M2P Fintech provides API infrastructure that enables businesses to offer their own branded financial services through partnerships with fintech companies, ensuring regulatory compliance. Banking infrastructure startup M2P Fintech struggled to grow in FY24, in contrast to FY23, when its scale more than doubled. The company's operating revenue declined by over 13% for the fiscal year ending March 2024, while its losses remained unchanged during the same period. M2P’s revenue from operations decreased 13.4% to Rs 382 crore in FY24 from Rs 441 crore in FY23, its annual consolidated financial statements sourced from the Registrar of Companies (RoC) show. M2P Fintech provides API infrastructure that enables businesses to offer their own branded financial services through partnerships with fintech companies, ensuring regulatory compliance. Operating in over 30 markets, including Asia Pacific, MENA, and Oceania regions, M2P Fintech claims to power more than 200 banks and 300 lenders. The Tiger Global-backed company has not disclosed a revenue breakdown for the last fiscal year. M2P Fintech generates income from multiple sources, including API usage fees, card issuance and management fees, platform subscription fees, commissions from banking partnerships, and cross-border forex services. The company states that it operates in 30 markets across the Asia Pacific, MENA, and Oceania regions. However, its export income stood at only Rs 4.6 crore, marking a steep 76.2% decline from Rs 19.3 crore in FY23. For the SaaS firm, employee benefits remained the largest cost center, accounting for 47.5% of total expenses. This expense rose by 33.5% to Rs 251 crore in FY24, including a non-cash ESOP cost of Rs 36 crore. With a decline in scale, spending on technology, cloud services, and co-branding dropped by 56.4% to Rs 160 crore in FY24. Legal, advertising, impairment, travel, and other overhead expenses brought M2P's total costs to Rs 528 crore, marking a 15.2% decline compared to FY23. Despite a 13.4% decline in scale, a 56.4% reduction in technology and related costs helped M2P Fintech contain its losses at Rs 134 crore in FY24, maintaining a similar level to FY23. On a unit level, the company spent Rs 1.38 to earn a rupee in FY24. By the end of FY24, M2P Fintech recorded a negative ROCE of -28.23% and an EBITDA margin of -22.51%. Its total current assets stood at Rs 318 crore, including Rs 78 crore in cash and bank balances as of March 2024. M2P has raised over $200 million to date including $100 million in its Series D round in a mix of primary and secondary led by Helios Investment Partners last year. According to the startup data intelligence platform TheKredible, Beenext is the largest external stakeholder followed by Tiger Global and Helios Partners. On Tuesday, the company also acquired Chennai-based Mad Street Den in a deal worth around $10-15 million. The deal has been cited as a distress sale considering Mad Street Den’s inadequate funding for future growth. M2P’s liquidity situation has clearly been the decider in this acquisition, besides hopes to use the assets from Mad Street Den to add a layer of AI and efficiency to its own offerings. Thus, with a lower balance sheet impact in terms of goodwill costs, what remains to be seen is if the acquisition will hasten its own much needed improvement in margins and a divisive return towards growth and profitability.