In a surprising financial update, digital payments leader MobiKwik has reported a net loss of ₹3.59 crore in the second quarter of fiscal year 2025 (Q2 FY25), marking a significant reversal from the ₹5.22 crore profit it posted in the same period last year. Despite the losses, the company has shown robust growth in its revenue, which surged 42% year-on-year (YoY), reaching ₹293.66 crore for the quarter. However, while its revenue growth reflects strong demand for its services, Mobikwik faced some challenges, particularly in its ZIP products.
The surge in losses is attributed to a combination of factors, primarily the rising costs associated with the company’s expanding operations. Despite the top-line growth, Mobikwik’s cautious approach to credit management led to a decline in the Gross Merchandise Value (GMV) from its ZIP products. This cautious strategy comes as the company takes measures to ensure financial sustainability, particularly after a high-profile IPO debut earlier this year.
However, Mobikwik’s user base continued to grow impressively. The company onboarded 6 million new users and 140,000 new merchants during the quarter, bringing its total number of users to 167 million and its merchant count to 4.4 million. This expansion highlights the company’s continued reach and potential in the rapidly growing digital payments ecosystem in India.
Mobikwik’s decision to focus on more cautious credit strategies appears to be part of a broader effort to build a more resilient and sustainable business model, particularly as it navigates increasing competition in the digital payments space. The digital payments sector in India is experiencing fierce competition from established players like Paytm and PhonePe, as well as the growing adoption of UPI (Unified Payments Interface) services.
In light of these challenges, the company’s decision to adjust its strategy seems prudent, although it may temporarily impact some of its products like ZIP. The cautious stance on credit may have contributed to the reduction in the GMV for ZIP products, but Mobikwik’s overall growth trajectory remains strong, evidenced by the substantial increase in revenue.
Even in the face of this loss, Mobikwik’s recent IPO has brought a significant boost to the company’s stock price. Mobikwik’s stock surged by 90% from its issue price following the IPO, reflecting a strong level of investor confidence and optimism about the company’s long-term potential. This rise in stock price has been seen as a sign of resilience and highlights the trust that investors place in Mobikwik’s ability to navigate the challenges it currently faces and emerge stronger in the competitive digital payments space.
Looking ahead, Mobikwik is expected to continue expanding its user base and merchant network while refining its credit strategies to ensure sustainable growth. Despite the current challenges, the company’s strong revenue growth, combined with its expanding user base, puts it in a good position to capitalize on the opportunities presented by the growing digital payments and financial services sector in India.
In conclusion, while Mobikwik’s Q2 FY25 results indicate challenges, particularly in its ZIP products, the company’s strategic investments in user acquisition, merchant onboarding, and financial services bode well for the future. With investor confidence on the rise and a proven ability to adapt to market conditions, Mobikwik is likely to remain a key player in the evolving digital payments landscape. The company’s focus on sustainable growth and its ambitious expansion plans are expected to drive continued growth in the quarters ahead.
