Safexpay’s Revenue Plummets Following Payment Gateway Hack
Safexpay, a Mumbai-based fintech company, has experienced a harsh fiscal year in FY24, with its revenue declining dramatically by 67% following a cyberattack on its payment gateway in October 2023. During this period, the company’s losses have also doubled, creating a challenging financial landscape.
Financial Performance of Safexpay
In accordance with the consolidated financial statement obtained from the Registrar of Companies (RoC), Safexpay’s operational revenue fell to Rs 88.5 crore in FY24 from Rs 269.5 crore in FY23. This marks a significant downturn for the company.
Impact of the Hack on Revenue
The drastic revenue drop is primarily attributed to a substantial decrease in transaction volumes processed through its payment gateway, resulting in a 79.57% decline in related income. The cyber breach severely impacted both the company’s finances and its reputation. Reports indicate that the Thane Police are currently investigating a scam worth Rs 16,180 crore connected to this breach.
Cost Management and Expense Analysis
On the expenditure side, Safexpay saw total expenses decrease by 52.41%, amounting to Rs 143 crore in FY24, down from Rs 300.5 crore the previous year. Employee benefits costs were reduced by 17.46% to Rs 26 crore, and the costs associated with payment gateway services, which represent the company’s largest expense, fell by a significant 79.57% to Rs 48 crore. However, due to the ramifications of the hack, legal expenses surged by 5.5 times to Rs 11 crore, and bad loans increased by nearly tenfold to Rs 16 crore. The firm also faced a cost of Rs 21 crore as a result of the hackers breaching Safexpay’s accounts and stealing funds.
Net Loss and Return on Capital Employed
Despite implementing cost-cutting strategies, Safexpay has struggled to counterbalance the decline in revenue, leading to an increase in net loss to Rs 44 crore in FY24, compared to Rs 22 crore in the previous fiscal year. The company’s Return on Capital Employed (ROCE) and EBITDA margin have fallen to -186% and -42.12%, respectively. On a unit basis, Safexpay expended Rs 1.62 to generate a single rupee in FY24.
Current Assets and Investment Status
The fintech firm reported current assets of Rs 77 crore in FY24, which included a cash and bank balance of Rs 10.5 crore.
Funding and Ownership
As per various sources, Safexpay has secured a total of $6 million in funding, with Ardor Advisors and Choithram International acting as lead investors. The founder retains a 44% ownership stake in the enterprise.
Outlook for Safexpay
The challenges that Safexpay is currently facing are substantial and could potentially jeopardise its sustainability. In the fintech domain, where trust is of utmost importance, this situation poses a significant threat. Safexpay is now in a precarious position, and without identifying long-term financial support, its future appears increasingly uncertain.
