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Amazon-Backed ToneTag Turns Profitable After a Decade of Operations

After a decade of perseverance, Bengaluru-based ToneTag has achieved a significant milestone: profitability. The contactless payment solutions provider, backed by Amazon, has not only doubled its revenue in FY24 but also demonstrated strategic financial discipline that has paid off in spades.

Revenue Growth Outpaces Expectations

ToneTag’s revenue surged by 111.7% in FY24, reaching ₹47.78 crore compared to ₹22.57 crore in FY23. This leap in earnings marked a stark turnaround for a company that faced slower growth in FY22 and FY23. A major chunk of this revenue—₹30.87 crore, accounting for 64.6%—came from upfront customization services, underscoring the company’s ability to adapt its offerings to client needs.

ToneTag voice-based payment system

However, not all segments followed the same growth trajectory. Revenue from smart stores saw a significant decline, plummeting 53.8% to ₹10.33 crore. Other income streams included ₹4.14 crore from monthly fees, ₹1.63 crore from one-time integration services, and ₹81 lakh from licensing fees.

This diversified revenue structure illustrates how ToneTag has managed to secure multiple streams of income despite fluctuations in some areas.

Cutting Costs While Growing Revenue

ToneTag’s expense management has been a key factor in its profitability. The company slashed overall expenditures by 9.3%, bringing them down to ₹26.95 crore in FY24 from ₹29.70 crore the previous year. Employee benefits remained the largest cost, accounting for 49% of total expenses at ₹13.22 crore—a figure that has remained relatively steady.

Other notable expenses include:

  • Finance costs, which soared 5X to ₹2.49 crore.
  • Telephone and IVR charges, which grew by 143.8% to ₹2.17 crore.

Despite these increases, the overall cost-cutting measures enabled ToneTag to report a ₹20.94 crore profit for FY24, a remarkable improvement from the ₹6.12 crore loss in FY23.

Improved Metrics Indicate Financial Health

ToneTag’s profitability wasn’t just limited to its net income. The company’s EBITDA margin climbed to 54.18%, reflecting its efficient operations. Additionally, its Return on Capital Employed (ROCE) improved to 30.09%, further cementing its position as a financially robust entity.

Interestingly, the company spent just ₹0.56 to earn a rupee of operating revenue, showcasing a lean operational model that many startups aspire to emulate.

Funding and Future Plans

While ToneTag’s financials are shining, the company is actively exploring growth opportunities. Reports suggest that it is seeking $50 million in funding, with Iron Pillar and other investors expressing interest. To date, ToneTag has raised over ₹90 crore ($11 million), with its last valuation pegged at ₹800 crore ($96 million).

Given its strong backing from major players like Amazon, Reliance, and 3one4 Capital, ToneTag’s plans for expansion seem within reach. Notably, the company has not raised funds in over six and a half years, making this potential round even more significant.

Competing in a Crowded Market

ToneTag operates in a competitive landscape, rubbing shoulders with giants like Paytm, PhonePe, Pine Labs, BharatPe, and MobiKwik. Despite the crowded market, ToneTag’s niche in voice-powered commerce and payment solutions sets it apart.

Its Oyeti platform facilitates seamless interactions for shopping, ordering, and payments, while its VoiceSe UPI service allows voice-based transactions without internet connectivity. These innovations cater to retail and F&B sectors, offering unique solutions that competitors may struggle to replicate.

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