Fampay is no less than a boon for children seeking cashless transactions of money! We all know the advantages of using UPI for daily purchases. But sadly UPI is not applicable for children below 15 years. Fampay observed this loophole as a golden opportunity and launched e-payment methods for teenagers. However, the outcome doesn’t seem positive when you see the Fampay revenue in FY22.
Why? You may ask! Just look at the title again. Fampay is all over the news for making hardly Rs.3 crore after spending Rs.50 crore in FY22. That sounds too disastrous… You must be wondering- How did this happen? How come Fampay revenue couldn’t reach even 50% of its expenditures? Did it spend heavily on expenses without proper planning?
You will get the answers to all these questions in this write-up. We will provide a detailed financial breakdown of Fampay in this article.
A fintech company i.e. Fampay valued at Rs.350 crore earned a revenue of Rs.3.06 crore in FY22. Well, it is quite higher than the revenue it earned in its previous year i.e. FY21.
Let’s look at the revenue earned by the company in the last two fiscal years-
|Revenue Sources||FY 22||FY21|
|Sale of Services||Rs.1.74 crore||Rs.0.26 crore|
|Interchange Fee||Rs.1.2 crore||Rs.0.09 crore|
|Other Operating Revenue||Rs.0.12 crore||–|
|Total Revenue Earned||Rs.3.06 crore||Rs.0.35 crore|
As you can see, Fampay revenue increased impressively from Rs.26 lakh in FY21 to Rs.1.74 crore in FY22. Apart from that, it earned a good amount from interchange fees and other operating incomes.
Note: We have already explained the revenue sources and working strategy of Fampay in the article “Fampay Business Model.” You can look into it for more details.
After seeing positive growth in revenue in the last two fiscal years, you may assume that the company is running successfully. Well, it is true that it is running successfully! But the mounting losses may raise your concerns about the company.
Let’s head toward the expenses side, and see the expenditures that cost the most for Fampay-
|Employee Benefit Expenses||Rs.21.34 crore||Rs.5.2 crore|
|Advertising & Promotional Expenses||Rs.15.14 crore||Rs.5.13 crore|
|Legal & Professional Fees||Rs.7.11 crore||RS.1.78 crore|
|Subscription Fees||Rs.2.7 crore||Rs.0.31 crore|
|Other Expenses||Rs.4.33 crore||Rs.0.98 crore|
|Total||Rs.50.62 crore||Rs.13.4 crore|
Among the expenses, the employee benefit expenses comprised over 42.2% of the total expenditure. And other costs also increased in the last two consecutive fiscal years.
Recently, you must have heard about the layoffs and top-level exits in Fampay. Were these incidents related to the massive employee benefit expenses? Yes, somewhat true. We will cover it in the upcoming sections.
Mounting Losses: High Expenses & Low Revenue
By now you have realized what could be the financial condition of the company. Spending heavily on expenses and earning low revenue comparatively, resulted in the mounting losses of the company.
Look at the overall financials of Fampay-
|Fampay Financials (FY22)||Amount (in crores)|
|Market Valuation||Rs.350 crore ($42.9 million)|
|Revenue Earned||Rs.3.06 crore|
|Profit/Loss||Loss of Rs.43.36 crore|
High Expenses and low revenue led to the humongous loss of Rs.43.36 crore for Fampay. Its cash expenses have surpassed the threshold value. Due to this, its annual losses mounted over three folds. Back in the year 2020 (the first year of its operations), Fampay earned a profit of Rs.32 lakh. Unfortunately, it couldn’t regain its profitable status in the following years.
Future Plans of Fampay
The first half of 2023 was quite tough for Fampay. Reason? Layoffs & mounting losses. As per the latest reports, the company is all set to raise new revenue sources. But they haven’t released any official statements yet. The company is exploring more mergers and acquisitions opportunities, to diversify the portfolio and gain a steady growth rate.
Currently, Fampay’s user base is around 10 million. And with the diversification of its portfolio and operations, it is expecting the expansion of its user base too. You may say that the company spent too much on the expenditures.
But Fampay doesn’t see it merely as expenditures. As per the company, its expenses are the significant investments that will bring a good ROI in the future!