Decoding Razorpay’s IPO roadmap

Marking a decade of its business operations, payments solutions company Razorpay has announced ESOPs to all its 3000+ employees, including those working in entities outside of India. With no eligibility criteria, all the full-time employees of the company have been given shares worth Rs 1 lakh. In the earlier two buybacks by the company (in 2018 and 2022), nearly 800 employees, both former and current, were given exits. For Razorpay founders, creating a liquidity event through an IPO is not something they want to do in a hurry.

Speaking to Fortune India, founders Harshil Mathur and Shashank Kumar recently laid out the milestones that will determine the company’s IPO readiness, which is at least two years away from now. “For us, IPO is not the end of the journey but the start of a journey. So, we don't want to time the market and do a great IPO and then be uncertain about what to do next,” said Harshil, co-founder and CEO.

While it could be a great exit point, “We are clear that we want to go public only when we are comfortable, that we can continuously deliver those returns quarter-to-quarter,” he added. To prepare themselves to go public, while on the compliance front Razorpay now has a group of experts advising the board, on the business side it's a work in progress. The payments business has already broken even, but the company is aiming for stronger cashflows and is hopeful of a stronger EBIDTA in the next two years.

The other verticals like RazorpayX, the offline POS business and the international business, which are in the scaling-up phase, are expected to break even in the next 12-18 months. “So, we want to go public when all the four big business lines are EBITDA positive, with payments generating significant amounts of cash; we feel we will then be in the right shape to go public,” Harshil says.

With the newer business verticals still exploring ways to scale up, the founders feel staying away from public markets for now will also give them room to experiment and provide the required business agility. As the company sees tapping deeper into omnichannel payment solutions, “There is a lot of scope for our digital payments to keep scaling, online or offline. We are tapping into deeper pockets with our Neo banking products, and this will play out over the next two-three years,” says Shashank Kumar, co-founder & MD. Razorpay is also in the process of flipping back its entity from the U.S. to India, which is expected to happen early next year.