Exotel, a Bengaluru-based cloud telephony platform, has announced its financial results for the fiscal year 2024 (FY24), reflecting a modest revenue growth but a significant improvement in its financial health. The company reported a 5.7% increase in revenue from operations, reaching ₹444 crore, up from ₹420 crore in FY23. Despite this flat growth, Exotel successfully narrowed its losses by over 60%, showcasing its effective cost management strategies.
PC: The Economic Times
The main services provided by Exotel are cloud-based voice and SMS contact center solutions that enable efficient customer interaction for businesses. The firm did not break down how much income is generated in terms of its various services but generates revenue through internet-enabled communication services, software licensing, chatbot services, and selling products, including APIs and mobile applications. Business revenue from international markets such as Southeast Asia, the Middle East, and Africa accounted for 14% of the company’s business revenue.
Along with operational revenue, interest on deposits and investments generated ₹16 crore for Exotel, thereby bringing its total revenue to ₹460 crore in FY24 against ₹447 crore in the previous fiscal year. A minor increase in the overall revenue profile, thus, indicates Exotel’s resilience in the competitive market landscape.
One of the significant reasons behind Exotel’s decrease in losses was that the company adopted a cost-cutting strategy. Cost of telephone and postage forms one of the major expense heads for the company. In FY24, this particular expense head has increased by 10.2% to ₹195 crore. However, Exotel could bring down its employee benefits cost by 24%, bringing it from ₹245 crore in FY23 to ₹186 crore in FY24. Part of this has been possible due to the reduction of the workforce by 15%.
The company also reduced advertising expenses, legal costs, payment gateway charges, travel expenses, and other overheads. Consequently, the total expense of Exotel declined by 10% from ₹555 crore in FY23 to ₹499 crore in FY24. This disciplined approach helped Exotel to reduce its net losses by 60.6%, bringing the same down to ₹43 crore as against ₹109 crore for the previous fiscal year.
While Exotel’s revenue growth was flat, the company’s financial metrics have improved. Its expense-to-revenue ratio stands at ₹1.12, with a return on capital employed (ROCE) of -8.9% and an EBITDA margin of -3.48%. All these numbers reflect challenges in operation but also indicate potential recovery since the company continues to optimize its operations.
As of March 2024, the company reported total current assets amounting to ₹379 crores with cash and bank balances aggregating ₹206 crores. The Exotel firm has raised more than $100 million in funding so far, including one notable $40 million Series D round led by Steadview Capital back in 2022. A91 Partners is the biggest external stakeholder, owning a 25.7% stake followed by Blume Ventures.
Exotel competes with several others like Knowlarity, MyOperator, Ozonotel, and Tata Communications in a competitive landscape. Therefore, as demand for cloud communication solutions grows, adaptability and innovation for Exotel would be very crucial in the long term.
In conclusion, though Exotel has experienced flat growth in FY24, the significant reduction in its loss is a testament to the effectiveness of its cost management strategies. The future of the company will depend on its ability to optimize operations and expand its service offerings in a dynamic market environment. Exotel’s financial resilience sets a solid foundation for future growth and potential profitability.
