Hyderabad-based HR tech platform Keka has reported its financial performance for the fiscal year ended March 2024. The company’s revenue went up 62% in the year-on-year scale, which is ₹78 crore from ₹48 crore in the previous fiscal year. However, this impressive growth came at a steep cost since Keka also reported a dramatic increase in losses, which was 2.8 times higher at ₹80 crore compared with ₹28 crore in FY23.
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Founded by Vijay Yalamanchili in 2015, Keka specializes in comprehensive, fully-integrated HR products designed to automate and streamline core activities of organizations, such as payroll management, recruitment, leave and attendance, and performance evaluation for all 2.5 million employees it claims its services are catering to.
The company generates most of its revenue, 97.4%, from subscription to its HR and payroll management software, Keka HR, which increased its income 60% to ₹76 cr in FY24. Interest income from deposits and current investments ₹9 cr added to its tally to reach ₹87 cr in revenues for the year, more than doubling from ₹54 cr in FY23.
While revenue was growing, Keka’s financial performance was marred by increasing costs. The company’s total expenditure doubled to ₹166 crore in FY24, from ₹83 crore in the previous year. A large part of these costs, around 64.5%, came from employee benefits, which increased by 94% to ₹107 crore. This sharp increase includes a non-cash expense of ₹6 crore related to employee stock ownership plans (ESOPs).
Moreover, Keka’s ad expenses increased 3.6 times and became ₹22 crore in FY24. Other operating expense, including IT, rent, travel, and legal expenses have also increased the overall expenditure during the period.
With such a substantial growth in revenue and expenses, the loss of Keka grew by an enormous amount. ROCE and EBITDA of the company stood at -85% and -89%, respectively. Expense-to-earning ratio stood at ₹2.13 for every ₹1 it had earned.
Keka has raised approximately $59 million to date, including a notable $57 million Series A round led by WestBridge Capital in November 2022. WestBridge Capital is now the largest external stakeholder, holding a 20% share, while CEO and founder Vijay Yalamanchili retains a commanding 66% stake in the company.
Despite the current financial challenges, Keka shows robust revenue growth, thereby indicating the demand for the services in the market. The money raised will be utilized to enhance its operational capabilities and continue technology and product development.
Keka FY24 results are a narrative of two stories: the growth story and the rise in losses. Though the company has been able to boost revenue and expand its user base, the sharp increase in cost is a challenge. On Keka’s journey ahead, controlling the growth with cost management would be essential to achieving long-term profitability in the competitive landscape of HR tech. This support from investors, such as WestBridge Capital, would be crucial going forward to establish Keka as one of the dominant players in the HR technology sector.