Pine Labs Reports Strong Revenue Growth But Faces Soaring Losses

Pine Labs disclosed a significant upsurge in operating revenue, reaching Rs 1,280.5 crore in the fiscal year ending March 2023, marking a 37% increase compared to the previous year’s consolidated revenue of Rs 932 crore. However, the company’s losses grew considerably, nearly 2.5 times, from Rs 22.6 crore to Rs 56 crore in FY23. Pine Labs primarily generates revenue from various sources, including digital payments, transaction processing fees, aggregator services for merchants, Point of Sale (PoS) installation and program integration fees, and Buy Now Pay Later (BNPL) services.

Additional income streams come from cashback and subscription-based services, encompassing one-time installation fees for hardware and software, gift cards, and co-branding fees associated with credit cards.

Despite the revenue growth, Pine Labs experienced a 35% rise in expenses, amounting to Rs 1,402 crore for the fiscal year, compared to Rs 1,032 crore in the previous year. Employee benefit expenses (Rs 606 crore) and legal professional fees (Rs 114 crore) were the primary contributors to the increased expenditure. Additionally, the company doubled its spending on advertising and promotions, escalating from Rs 25 crore to Rs 42.4 crore in FY23.

Pine Labs, a major player in the Point of Sale (PoS) sector, ventured into the online gateway arena with the introduction of ‘Plural’ in 2021. Recently, they launched ‘Mini,’ a payments device offering visual and audio confirmation for contactless card payments and QR code scanning, competing with fellow fintech companies such as Paytm, PhonePe, and BharatPe.

Despite being backed by investors like Peak XV Partners, Actis Capital, Temasek, PayPal, and Mastercard, Pine Labs experienced a 9.2% valuation markdown, with Fidelity Investments reducing its valuation to $4.5 billion. As a result, the fintech firm postponed its plans for an initial public offering (IPO) in the US, initially scheduled for 2022, now targeting next year.