M2P Fintech Struggles in FY24

M2P Fintech’s performance in FY24 has faced hurdles, unlike its impressive growth in FY23, when the company saw its scale more than double. Operating revenue for M2P decreased over 13% for the fiscal year ending March 2024, while losses remained stable during this timeframe. Specifically, M2P’s income from operations dropped by 13.4% to Rs 382 crore in FY24, down from Rs 441 crore in FY23, as indicated by annual consolidated financial statements obtained from the Registrar of Companies (RoC).

M2P Fintech specializes in providing API infrastructure that allows businesses to implement their own branded financial services in collaboration with fintech firms, while ensuring they adhere to regulatory standards. The company operates in more than 30 markets across Asia Pacific, MENA, and Oceania, asserting that it supports over 200 banks and 300 lenders.

Despite backing from Tiger Global, M2P Fintech has not released a detailed revenue breakdown for the previous fiscal year. The company earns revenue from various streams, including fees for API usage, card issuance and management, platform subscriptions, commissions from banking collaborations, and cross-border foreign exchange services.

While M2P claims operations in 30 global markets, its export revenue was only Rs 4.6 crore, reflecting a significant 76.2% decrease compared to Rs 19.3 crore in FY23. For M2P, employee benefits constituted the largest portion of expenses, making up 47.5% of total costs. This expense rose by 33.5% to Rs 251 crore in FY24, which includes a non-cash ESOP charge of Rs 36 crore. Despite a contraction in scale, costs associated with technology, cloud services, and co-branding decreased by 56.4% to Rs 160 crore in FY24.

Other expenses, such as legal fees, advertising, impairments, travel, and overheads led to M2P Fintech’s total expenditure reaching Rs 528 crore, reflecting a 15.2% decrease from FY23. A detailed breakdown of these costs can be found in various financial reports.

Even with a 13.4% decline in scale, substantial cost reductions in technology spending enabled M2P Fintech to maintain its losses at Rs 134 crore in FY24, which is consistent with FY23 figures. On a unit basis, M2P spent Rs 1.38 for every rupee earned during FY24.

At the close of FY24, M2P Fintech noted a negative ROCE of -28.23% and an EBITDA margin of -22.51%. Its total current assets amounted to Rs 318 crore, which includes Rs 78 crore in cash and bank balances as of March 2024.

M2P Fintech has successfully raised over $200 million to date, which encompasses $100 million from its Series D funding round led by Helios Investment Partners last year. As per data from startup intelligence platforms, Beenext is identified as the major external investor, followed by Tiger Global and Helios Partners.

Recently, M2P acquired Chennai-based Mad Street Den for approximately $10-15 million. This acquisition has been described as a distress sale, attributed to Mad Street Den’s struggle to secure sufficient funding for future expansion. The liquidity status of M2P appears to have influenced this acquisition, alongside the goal of leveraging Mad Street Den’s assets to enhance AI capabilities and efficiency within its own offerings. The impact of this acquisition on the company’s balance sheet, particularly relating to goodwill, will be closely monitored, as stakeholders await potential improvements in margins and a strategic return to growth and profitability.