Digital Gold Platform Safegold Shines with Revenue Growth and Profit in FY23

While online investment platforms like Zerodha and Groww saw a surge in users due to pandemic restrictions, another asset class also gained traction: digital gold. This is reflected in Safegold’s impressive financial performance for the fiscal year ending March 2023 (FY23).

Safegold reports a staggering 81.8% increase in revenue for FY23, reaching Rs 4,498 crore.

Safegold, a digital platform that allows users to easily buy, sell, and store gold securely, saw its gross revenue jump by 81.8% to Rs 4,498 crore in FY23, compared to Rs 2,474 crore in FY22. This growth is evident in their financial statements filed with the government.

The Delhi-based company’s revenue stream solely comes from the sale of digital gold through online and offline channels. Interestingly, nearly 80% of Safegold’s transactions are bulk purchases by wholesalers, with the remaining 20% catering to retail investors.

For Safegold, the primary expense is the cost associated with acquiring the digital gold and related services, which accounted for 99.1% of their total expenditure in FY23. As their business scaled, this cost understandably increased by 99.1% to Rs 4,459 crore, up from Rs 2,443 crore in FY22.

Safegold’s FY23 Outlays: Increases in Professional Fees, Distribution Costs, and Overheads

Employee benefits, legal and professional fees, advertising, distribution costs, and other overheads contributed to the remaining expenses. These overheads grew proportionally, reaching Rs 4500 crore in FY23 compared to Rs 2475 crore in FY22. You can find a more detailed breakdown of expenses on TheKredible.

The combination of a significant year-on-year increase in sales (80%) and controlled spending on overheads (up 80%) allowed Safegold to turn a profit of Rs 11 crore in FY23, compared to a 1 crore rupee deficit in FY22. Their Return on Capital Employed (ROCE) and Earnings Before Interest, Taxes, Depreciation, and Amortization (EBITDA) margin stood at 46% and 0.2%, respectively. Essentially, for every rupee spent acquiring gold, Safegold earned a rupee in revenue in FY23.

Safegold’s investors include Pravega Ventures, Beenext, a Singaporean angel network, and prominent individuals like Rajan Anandan, Roshan Angrish, Prashant Malik, and Niraj Shah. You can find a complete list of shareholders on TheKredible (link not provided).

While Safegold has achieved impressive growth in a competitive market with razor-thin margins, their profitability currently relies on interest income. To ensure long-term success, the company will need to keep a close eye on cost control as their business volume grows. However, considering the potential of the digital gold market and the current bullish trend for gold, Safegold is a company worth watching closely.