ZingHR, a human resources (HR) technology platform, achieved a 51% expansion in its operational scale during the fiscal year ending in March 2023. However, the company experienced a surge in losses, which nearly reached Rs 21 crore in the same period, outpacing its revenue growth.
Backed by Tata Capital, ZingHR’s revenue from operations increased to Rs 84.48 crore in FY23 from Rs 55.77 crore in FY22, as per its consolidated financial statements filed with the Registrar of Companies (RoC).
ZingHR offers a range of HR tech solutions such as recruitment, payroll management, employee administration, talent management, and more. It boasts a customer base of over 1,100 globally, with more than two million active users spread across 8 countries.
The primary revenue source for ZingHR was the sale of subscription-based software, which saw a growth of 51.48% in FY23. Additionally, the company earned Rs 1.63 crore from non-operating finance income, bringing its total revenue to Rs 86.1 crore in the last fiscal year.
Employee benefits expenses constituted 55.52% of the total expenditure, witnessing a 48% increase to Rs 59.2 crore in FY23 from Rs 39.8 crore in FY22.
Various expenses including marketing, product maintenance, professional fees, server and data security charges, and other overheads contributed to a 61.5% rise in total expenditure to Rs 106.69 crore in FY23 from Rs 66.05 crore in FY22.
As a result, the company’s losses surged by 84.4% to Rs 20.56 crore in FY23. Its Return on Capital Employed (ROCE) and Earnings Before Interest, Taxes, Depreciation, and Amortization (EBITDA) margin deteriorated to -54% and -23%, respectively. ZingHR spent Rs 1.27 to earn a rupee in FY23.
ZingHR has raised approximately $13 million to date, including a $10 million investment from Tata Capital. Tata Capital holds the largest external stake in the company at 35.82%, followed by Erasmic Venture Fund and Triton Fund.
While Tata Capital’s significant ownership suggests confidence in the company and its founders, ZingHR faces stiff competition in a crowded market with limited product differentiation. HR tech firms may encounter challenges in raising capital in the future unless they introduce disruptive solutions that set them apart in the industry.
