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Slice's FY22 Loss Skyrockets to INR 254 Cr, Causing Concern for Fintech Unicorn

Advertising Costs Take a Toll: Company Hit by Significant Financial Setback

31 March 2023


Jayashri Ghorpade

India produced 3X more unicorns than China in 2022.png
  • In FY22, the fintech startup experienced a YoY operating revenue growth of 4.2X, reaching INR 283.1 Cr.

  • During the year, advertising and promotional expenses increased to INR 209.8 Cr, ballooning by a factor of 33.8X.

  • A major blow was dealt to Slice when the RBI barred NBFCs from offering credit on PPI in June of last year.

Bengaluru-based fintech unicorn slice reports 2.5X increase in net loss to INR 253.7 Cr in FY22, driven by a surge in advertising expenses, while operating revenue surges 4.2X to INR 283.1 Cr, showcasing significant growth of the lending platform catering to students and young adults.

Founded in 2016 by Rajan Bajaj, slice (formerly Slicepay) operated as a buy now pay later (BNPL) platform in FY22. The fintech startup offered a credit card-like prepaid payment instrument (PPI) with no annual charges, no interest, and no late fees. However, it ceased this offering last year due to regulatory issues, which will be discussed further.

Slice's FY22 regulatory filing reveals impressive revenue growth, with fee and commission income surging to INR 149 Cr from INR 42.1 Cr in FY21, and interest income on loans jumping to INR 134.1 Cr from INR 25.6 Cr. Overall, the company's total income for the year surged to INR 292.9 Cr, a 4.3X YoY increase driven by its internet handling fees, commission income from its online platform, and credit facilities income.

During FY22, the startup raised $220 Mn in a Series B funding round led by Tiger Global and Insight Partners, entering the unicorn club. Earlier, in June 2021, Slice secured $20 Mn in a new equity funding round with backing from Blume Ventures and Gunopsy Capital.

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Amidst strong business growth and new funding rounds, Slice saw a staggering 33.8X increase in advertising and promotion expenses from INR 6.2 Cr in the previous fiscal year to INR 209.8 Cr in FY22. These costs accounted for 74% of the operating revenue during the year, with several new advertising campaigns aimed at GenZ and an ad campaign for the 2022 IPL season.

The total expenses tripled to INR 542.5 CR in fy21, employee benefits also tripled to INR 98.9 CR, with salaries and wages accounting for INR 86.1 CR.

Slice, India's unicorn startup, witnessed a massive surge in finance costs, increasing from INR 7.6 Cr in FY21 to INR 65.1 Cr in FY22. The company also faced a significant setback, with total impairment costs soaring ninefold YoY to INR 60.8 Cr. The Reserve Bank of India's (RBI) decision to bar NBFCs from providing credit on PPI dealt a major blow to the startup in June of last year, leading to the closure of its prepaid credit card vertical. In response to confusion surrounding its business model, slice divided its payments and credit businesses into two separate verticals.

Reports emerged earlier this month that Slice has acquired a 5% stake in Guwahati-based North East Small Finance Bank for $3.42 Mn (INR 28 Cr). While India's fintech market is expected to grow at a CAGR of 18% from 2022 and reach a size of $2.1 Tn by 2030, mounting losses continue to be a major challenge for startups in the sector. In FY22, Fintech unicorn OneCard's net loss widened over 5.5X to INR 183 Cr, and BNPL startup ZestMoney's loss grew 3X to INR 399 Cr during the same period. Meanwhile, on Thursday, reports emerged that PhonePe has cancelled its plan to acquire ZestMoney.

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