Highlights
Keka’s Remarkable Revenue Growth Despite Financial Hurdles
We are excited to share that Keka, a leading name in the HR technology industry located in hyderabad, has reported an notable 62% increase in revenue year-over-year for the fiscal year ending March 2024.However, this achievement comes amidst considerable financial challenges, with losses rising to nearly three times those of the previous fiscal period.
Overview of Financial Performance
Founded in 2015 by Vijay Yalamanchili, Keka focuses on delivering comprehensive HR solutions that streamline and automate various functions such as:
- Payroll management
- Recruitment processes
- Leave tracking
- Attendance monitoring
- Performance evaluations
Currently, around 2.5 million employees across diverse sectors benefit from Keka’s innovative HR software. in FY24, Keka’s operational revenue soared to ₹78 crore from ₹48 crore reported for FY23 according to annual financial statements submitted to the Registrar of Companies (RoC). Notably:
- A remarkable 97.4% of this income was generated from subscriptions to its cloud-based HR and payroll platform (Keka HR), which experienced a robust growth rate of 60%, reaching ₹76 crore during this period.
- The remaining revenue came from one-time implementation fees for their services.
- Keka also earned an additional ₹9 crore through interest on deposits and current investments; thus total revenue reached ₹87 crore for FY24 compared to ₹54 crore the previous year.
An analysis of Expenditures
The trends observed among many SaaS companies reflect that employee-related expenses accounted for a important portion—64.5%—of Keka’s overall expenditures. These costs surged dramatically by an remarkable 94%, amounting to ₹107 crore for FY24; this figure includes non-cash ESOP expenses totalling ₹6 crore. The company’s marketing budget also saw explosive growth; it increased more than threefold (3.6X), reaching approximately ₹22 crore during FY24.
The Challenge of Profitability
The considerable rise in advertising expenditure alongside increasing employee benefits and other operational costs resulted in significant losses for Keka—growing more than two-and-a-half times—as they reached approximately:
In FY23, Keka recorded ₹83 crore, which is expected to soar to an impressive ₹166 crore in FY24. However, the company is facing challenges with profitability. The sharp increase in advertising expenses, along with rising employee benefits and other operational costs, resulted in significant losses that grew more than two and a half times, reaching around ₹80 crore for FY24. This is a stark contrast to the ₹28 crore loss reported in the previous year. The company’s return on capital employed (ROCE) was recorded at -85%, while earnings before interest, taxes, depreciation, and amortization (EBITDA) stood at -89%. Additionally, their expense-to-earnings ratio was concerning, at ₹2.13 for every ₹1 earned. By the end of FY24, it is estimated that Keka’s total current assets reached approximately ₹97 crore, which included cash reserves of ₹88 crore.
Insights into Investment Landscape: To date, Keka has successfully raised around $59 million, with a noteworthy $57 million Series A funding round led by Westbridge Capital in November 2022. According to data from startup-focused intelligence platforms, Westbridge Capital holds the largest external stake at 20%, while founder and CEO Vijay Yalamanchili retains a 66% ownership stake in the company.
