Razorpay Aims for Profitability and IPO in Two Years

Preeti Bali / 1:40 pm / March 1, 2024

Razorpay, a leading Indian fintech company, is setting its sights on profitability across all business segments and an eventual Initial Public Offering (IPO) within the next two years. This ambitious plan was revealed by Harshil Mathur, co-founder and CEO, in a recent interview.

Profitability as a Long-Term Strategy

While the upcoming IPO is a significant milestone, profitability remains a core focus for Razorpay in the long run. Their online payments business has already reached break-even, showcasing their financial strength. However, the company acknowledges the ongoing efforts required to reduce losses in its non-payment ventures.

Building a Strong Foundation

The online payments segment, contributing roughly 70% of Razorpay’s revenue, serves as a solid foundation for their financial goals. This segment has successfully achieved break-even, indicating their financial stability in this core domain.

Domestic Listing and Regulatory Steps

Razorpay is actively pursuing a domestic public listing in India. They are currently in the process of shifting their domicile back to India by FY25. The company has submitted the necessary paperwork and is awaiting approvals from relevant authorities in both the United States and India.

Growth in Point-of-Sale Business

Following the acquisition of Ezetap (Razorpay POS) in 2022, Razorpay witnessed a 60% growth in their point-of-sale devices business during FY23. The total payment volume (TPV) processed by Razorpay POS also saw a significant 40% increase from April to October 2023 compared to the same period the previous year.

Impressive Transaction Volume

Currently, Razorpay boasts an impressive annualized processing volume of $150 billion across its payment products.

Continuous Product Innovation

Razorpay remains committed to expanding its product portfolio. They continue to launch innovative solutions catering to both the online and offline payment markets.

Lifting of Restrictions and Merchant Onboarding

In December 2023, the Reserve Bank of India (RBI) lifted a restriction that previously prevented Razorpay from onboarding new merchants for its payment aggregator business. Since then, the company has successfully onboarded 10,000 new merchants.

New Product Launches

Razorpay has recently introduced various products targeted at diverse segments, including D2C brands, e-commerce marketplaces, small online and offline businesses, and large enterprises.

Enhanced Payment Gateway

One of their key launches is the Razorpay Payments Gateway 3.0. This AI-powered service claims to reduce instances of fraud, expedite the payment process, and improve customer retention.

Building Trust with Customers

Razorpay is also taking steps to build trust with customers by offering trust badges to specific merchants based on their checkout experiences. This initiative aims to reduce cart abandonment due to customer apprehension about fraud or mismanagement.

Offline Payment Solutions

Expanding their reach beyond online transactions, Razorpay offers a new dynamic QR code and contactless tap card payments product targeting large enterprises and businesses with a UPI-first interface.

Loyalty and Rewards Management

Marking their entry into the loyalty and rewards management space, Razorpay launched Razorpay Engage HQ. This platform leverages their 2022 acquisition of Poshvine to help brands offer personalized rewards programs to customers across online and in-store channels.

Strategic Partnerships

Razorpay has also partnered with tech giants Google and OpenAI to enhance their offerings in the payments and payroll business. Notably, they launched RAY, which they claim is India’s first AI assistant for various financial services.

Financial Strength and Future Outlook

With a total funding of $741.5 million thus far, Razorpay is well-positioned to achieve its ambitious goals. Their commitment to profitability across all business segments, combined with continuous product innovation and strategic partnerships, positions them for sustained growth and a successful IPO in the near future.

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