Zoho has submitted its results to the Ministry of Corporate Affairs for the full year 2023. Zoho’s total revenue rose by nearly 30% year over year to Rs 8,703 crore (approximately US$1.05 billion). Profits also rose by 3% to RS 2,836 crore (approx. US$342.23 million). Costs rose by 51% from RS3,572 Crore to RS 5,393 Crore as the firm invested in its growth. (Source Entrackr)
Those cost increases were not solely a result of a huge increase in sales and marketing. It appears as though the investment was spread across several categories. However, the highest percentage growth was seen in legal, advertising and promotions.
There was a small fall in EBITDA margin; FY23 fell to 44.55% from 53.07% in 2022.
Asia overtakes Europe to take second place
North America is Zoho’s biggest market, contributing 45.5% of operating revenue. Revenue from Asia saw a huge increase, 158% and is now larger than Europe, despite the significant 29.7% growth in that market.
What Zoho doesn’t reveal is a more granular breakdown of where it is seeing the growth in Asia. However, it announced that it saw a 30% growth in its partner ecosystem within India and saw growth for Zoho One, the Zoho CX Suite, Zoho Books and Zoho Workplace.
Other regions such as LATAM, Australasia and Africa made small contributions. However, with the investments that Zoho has been making in Africa and the Middle East it will hope to see those numbers grow during 2024.
In 2023, it saw a 43% revenue growth in the UAE market. Hyther Nizam, President of Zoho MEA, commented, “We are thrilled to see more leading homegrown companies across diverse sectors leverage our comprehensive solutions to streamline operations, optimise costs, and achieve sustained growth. This fertile ground has allowed Zoho to thrive and contribute to the UAE’s continued digital evolution.”
Zoho breaks down revenues between its flagship Zoho platform and ManageEngine. They are both solid performers. However, ManageEngine revenues rose 37% to INR 4,327.8 Cr in FY23. It reflects the focus on security by businesses in 2023 and perhaps is the cause of the rapid growth in Asia. Zoho did not break down the revenue streams any further. However, if both revenue growth trajectories are maintained, it could see ManageEngine outstrip the Zoho platform revenues.
The Zoho platform saw revenues increase by 23% to INR 4,359.1 Cr. There is no further breakdown, though Zoho sometimes reveals which products have done well in different sectors.
Enterprise Times: What does this mean
For a company of its size, Zoho is maintaining an impressive revenue growth that does not seem to be slowing down. That it is achieving this profitably, without the massive marketing investment often seen in high growth companies, is even more impressive. The firm also continues to develop its existing solutions as well as launching new ones.
In September, it announced that it now has over 100 million users, from 700,000 customers across more than 150 countries. Last year, it launched a privacy-centric browser, Ulaa and continues to localise its existing products for different markets. Zoho has good momentum, and while it is way behind some of the massive US-based tech companies, it has a strategy and culture that could see it grow to compete with them effectively. It is strengthening its financial solutions, and once these are more mature, it will be interesting to see how it competes head-to-head with more established players.