Bengaluru-based stock broking platform Groww turned profitable in the financial year ended March 31, 2023. Billionbrains Garage Private Limited, the parent entity of the primary competitor of Zerodha, reported a net profit of INR 448.7 Cr in FY23 as against a net loss of a whopping INR 239 Cr in the previous fiscal year.
Founded in 2017 by the so called ‘Flipkart Mafia’, comprising Harsh Jain, Lalit Keshre, Neeraj Singh, and Ishan Bansal, Groww is a wealthtech startup that enables users to invest in stocks, exchange-traded funds (ETFs), and IPOs.
Groww entered the coveted unicorn club in 2021 after bagging $83 Mn in its Series D funding round led by Tiger Global. It has raised a total funding of $393 Mn till date and is also backed by the likes of Tiger Global, Peak XV Partners, Ribbit Capital, among others.
The startup’s operating revenue more than tripled to INR 1,277.8 Cr in FY23 from INR 351 Cr in the previous fiscal year. At 95.9%, a majority of its revenue came from subscriptions and commissions fees in FY23. The startup earned INR 1,226.1 Cr from subscriptions and commissions fees during the year under review.
Additionally, it earned INR 4.8 Cr from tech platform and support charges, a decline of 80% from INR 23.6 Cr in FY22.
Inside Groww’s Expenses
Compared to the rise in its operating revenue, Groww’s expenses increased by a muted 41% to INR 932.9 Cr in FY23 from INR 663.6 Cr in the previous fiscal year.
Employee Benefit Costs The Biggest Expense: In FY23, the startup’s employee benefit expenses increased 25% to INR 287 Cr from INR 230 Cr in FY22. Employee salaries and wages increased over 2X to INR 251 Cr from INR 109.5 Cr in the previous fiscal year. As per LinkedIn, Groww’s headcount has increased by 15% YoY to 1,467 employees, as of today.
Advertisement Expenses Decline: Groww managed to reduce its advertisement costs to INR 243.8 Cr in FY23 from INR 254.5 Cr in the previous fiscal year. In the past, the startup has spent on cricket teams and tournaments to improve its market share by focussing on mindshare. While it sponsored IPL teams in the past, most-recently it was a sponsor for the Asia Cup.
Transaction & Other Related Charges Surge: Groww’s transaction and other related charges ballooned 187% to INR 219 Cr in FY23 from INR 76 Cr in the previous financial year.
EBITDA margin improved to 35.6% in FY23 from -54.6% in FY22.
The improvement in Groww’s top and bottom line can be attributed to its rapidly growing user base. Just last month, the Peak XV Partners-backed startup surpassed bootstrapped unicorn Zerodha in terms of number of active users.
As per the National Stock Exchange (NSE) data, Groww had 6.63 Mn active investors at the end of September 2023 as against Zerodha’s 6.48 Mn.
As per the data, the active traders in the country stood at 32.56 Mn at the end of September 2023. Within this, Groww’s market share stood at 20.35%, closely followed by Zerodha at 19.9%.
Meanwhile, Zerodha’s revenue jumped to INR 6,875 Cr in FY23, almost 5X of Groww’s revenue. Zerodha’s profit rose 39% to INR 2,907 Cr during the year under review from INR 2,094.3 Cr in FY22.
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