Freo, a prominent digital banking platform formerly known as MoneyTap, has demonstrated remarkable financial improvement in FY24, reducing its net losses by 64.54% to ₹14.16 crore from ₹39.94 crore in the previous year. This significant turnaround, coupled with an 11% increase in operational revenue to ₹111.46 crore, marks a crucial milestone for the company and holds promising implications for Tamil Nadu’s growing fintech ecosystem.
The Bengaluru-based startup, which has a strong presence in Tamil Nadu’s tech corridor, has shown impressive progress in optimizing its operations, reflected in its improved EBITDA margin of -11% in FY24, up from -37% in the previous year. This 26 percentage point improvement signals growing operational efficiency and sustainable growth potential.
“Our focus on operational excellence and strategic expansion has yielded positive results, particularly in key markets like Tamil Nadu,” says Kunal Varma, Co-founder of Freo. “The significant reduction in losses while maintaining strong revenue growth demonstrates the viability of our business model.”
The company’s transformation extends beyond financial metrics. In October 2023, Freo secured a corporate agent license from IRDAI, enabling its expansion into the insurance sector. This diversification strategy has particular relevance for Tamil Nadu’s insurance market, where digital penetration is rapidly increasing.
Freo’s revenue streams have shown robust growth across segments. The company’s core services, including technology development, credit processing, and strategic marketing services, saw a 9% increase to ₹99.54 crore in FY24. Other operating revenue demonstrated even stronger growth, jumping 45% to ₹11.92 crore.
Notably, the company has achieved significant cost optimization, reducing total expenses by 10.28% to ₹125.58 crore. Employee benefit expenses saw a 15.14% reduction to ₹39.56 crore, while maintaining strategic investments in information technology, which increased by 18.78% to ₹4.30 crore.
“The fintech landscape in Tamil Nadu is maturing, and Freo’s performance indicators set a positive precedent,” notes Dr. Rajesh Kumar, Head of Tamil Nadu Fintech Forum. “Their success in balancing growth with fiscal discipline offers valuable lessons for local startups.”
For Tamil Nadu’s startup ecosystem, Freo’s journey holds significant implications. The state, with its strong technical talent pool and growing digital adoption, stands to benefit from the company’s expansion plans. The platform’s success in digital banking and credit services aligns well with Tamil Nadu’s push toward financial inclusion and digital transformation.
Freo’s consideration of shifting its domicile back to India reflects a broader trend among startups looking to capitalize on India’s booming economy. This move could potentially create more opportunities for collaboration and growth within Tamil Nadu’s fintech sector.
The company’s diverse product portfolio, including personal credit lines, cards, loans, and UPI-based credit services, positions it well to serve Tamil Nadu’s diverse consumer base, from urban professionals to small business owners in tier-II cities.
As Freo continues its growth trajectory, its performance serves as a benchmark for Tamil Nadu’s aspiring fintech entrepreneurs, demonstrating that sustainable growth and operational efficiency can coexist in the digital banking space.
