Cloud telephony platform Exotel has been struggling financially in its pursuit of growth, as evidenced by its financials for the fiscal year ending March 2023. The company released its annual results this week, originally due on September 30, 2023.
Exotel’s revenue from operations grew 32.1% to Rs 420 crore in FY23 from Rs 318 crore in FY22, according to its consolidated financial statements sourced from the Registrar of Companies (RoC).
The 13-year-old company provides voice and SMS contact center capabilities for businesses to manage customer engagement over the cloud. The primary source of revenue for Exotel was from internet-enabled cloud communication services. Additional revenue channels included income from software licenses, chatbot services, and the sale of its products, including APIs, browser extensions, software development kits, and mobile phone applications.
In FY23, the Blume Ventures-backed firm generated 81% of its operating revenue from domestic services, with the remaining revenue coming from Southeast Asia, the Middle East, and Africa.
On the cost side, employee benefits accounted for 44.2% of the overall expenditure, which increased by 43.3% to Rs 245 crore in FY23 from Rs 171 crore in FY22. The company’s spending on telephone-postage, legal, marketing (advertising and promotional), hosting, and other overheads inflated its overall cost by 51.8% to Rs 554 crore in FY23 compared to Rs 365 crore in FY22.
The 43% and 65% surge in employee benefits and telephone/postage, respectively, led Exotel to post a 2.5x increase in losses to Rs 109 crore in FY23 from Rs 43 crore in FY22. Notably, the company was profitable during FY21 and FY20. Its ROCE and EBITDA margin worsened to -21.9% and -18.3%, respectively. On a unit level, it spent Rs 1.32 to earn a rupee in FY23.
Exotel had generated significant hype and hopes around its future back in 2020, but those hopes seem to have been disappointed, considering the story since then. In addition to slipping into losses, the firm has also grown below estimates. Notably, the company had claimed at the time of its last fundraise in 2022 that it was growing at an annualized rate of 70% on a revenue run rate of $50 million, or almost 400 crores. Competition in the cloud telephony business is one issue, but margins present an even bigger challenge.
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