Safexpay's Revenue Plunges 67% Following Payment Gateway Hack, Losses Double in FY24

Mumbai-based fintech company Safexpay suffered a severe financial setback in FY24. Operating revenue plummeted 67% to Rs 88.5 crore from Rs 269.5 crore in the previous fiscal year after hackers breached its payment gateway system in October 2023.

According to consolidated financial statements filed with the Registrar of Companies, the company, which provides digital banking solutions and API-based payment infrastructure for businesses, saw its net losses double to Rs 44 crore, up from Rs 22 crore in FY23.

The security breach had significant repercussions. There was a whopping 79.57% decline in payment gateway transaction volumes, severely impacting the fintech's core business operations.

While Safexpay slashed overall expenses by 52.41% to Rs 143 crore, down from Rs 300.5 crore in FY23, this cost-cutting failed to offset the massive revenue decline. Employee benefit expenses decreased by 17.46% to Rs 26 crore, and payment gateway charges—the company's most significant cost component—fell by 79.57% to Rs 48 crore.

The hack created additional financial strain, with legal expenses surging 5.5 times to Rs 11 crore and bad loans increasing nearly tenfold to Rs 16 crore. The company directly lost Rs 21 crore when hackers breached its accounts and siphoned off funds.

Financial efficiency metrics reflected the company's deteriorating position, with Return on Capital Employed (ROCE) falling to -186% and EBITDA margin dropping to -42.12%. On a unit economics basis, Safexpay spent Rs 1.62 to earn a single rupee in FY24.

The payment processor reported that the current assets were worth Rs 77 crore in FY24, including Rs 10.5 crore in cash and bank balances. According to TheKredible, Safexpay has raised $6 million to date, with Ardor Advisors and Choithram International as lead investors. The company's founder maintains a 44% ownership stake.

Undoubtedly, the security breach raises questions about Safexpay's credibility due to customers' loss of trust. Without securing long-term financial backing, the payment gateway provider faces significant challenges in rebuilding its business and restoring market confidence in its digital payment solutions.