In a move aimed at achieving profitability, Bengaluru-based fintech firm, Khatabook, recently embarked on a round of layoffs, focusing on employees in its engineering, product, and marketing divisions, according to sources familiar with the situation.
The fintech landscape is known for its rapid evolution, and Khatabook is no exception. In its latest development, the company has initiated a series of layoffs, signaling a strategic shift. Both technical and non-technical roles have been affected, reshaping the company’s workforce.
Severance Package Eases Transition
Employees impacted by the workforce reduction have not been left high and dry. They were provided with a severance package that includes three months’ salary, an extension on their insurance coverage, and continued ESOP (Employee Stock Ownership Plan) vesting. It’s a thoughtful move aimed at easing the transition for those affected.
“In-line with Profitability Goals”
A source familiar with the situation highlighted the company’s objective, stating, “They are trying to cut costs to attain profitability.” In response to inquiries, Khatabook issued a statement, shedding light on their rationale, “In-line with our profitability goals, we are reorienting some parts of our business which requires us to operate with a leaner team on certain business lines. This restructuring has impacted 6% of our 700 employees. All impacted employees have been provided with a separation package which covers 3 months of salary.”
Khatabook’s financial performance paints a dynamic picture. In the fiscal year 2022, the company reported a revenue from operations of Rs 71.1 crore, marking a fourfold increase. However, the company’s losses amounted to Rs 111.1 crore.
Employee benefits constituted the largest portion of the fintech company’s expenses, totaling Rs 101.1 crore, representing a significant year-on-year increase of 173 percent. Following closely, communication expenses amounted to Rs 24 crore, experiencing a substantial growth of 200 percent.
A Prominent Player in Fintech
Khatabook, originally founded by Vaibhav Kalpe, operates as a bookkeeping app and lending platform. In 2018, the company was acquired by Kyte Technologies, another prominent player in the fintech industry.
The fintech’s journey has been punctuated by significant milestones. During its Series C funding round in August 2021, Khatabook achieved a valuation of $600 million. The fintech successfully secured $100 million in funding from a consortium of investors including Tribe Capital, Moore Strategic Ventures (MSV), Alkeon Capital, Sequoia Capital, Tencent, RTP Ventures, Unilever Ventures, Better Capital, among others.
Khatabook’s recent workforce reduction is a strategic move that underscores the ever-evolving nature of the fintech industry. As they navigate these changes, the company remains focused on its goal of achieving profitability and continued growth in the dynamic world of fintech.