CRED-owned Happay fires 35% of its employees in restructuring exercise
What's the story
Happay, a business expenses management solution provider owned by CRED, has laid off about 35% of its workforce. The layoffs affected different departments of the company. Founded in 2012 by Anshul Rai and Varun Rathi, Happay was acquired by CRED in 2021. Fintech companies have been struggling due to the economic slowdown and a cut down in start-up funding.
Context
Why does this story matter?
The layoffs at Happay come at a time when CRED is grappling with increasing losses. In FY22, the company posted losses of Rs. 1,279 crore despite a four-fold increase in revenue. The company sees bringing down losses as an important objective. Is mass terminations at Happay a way to achieve that? We don't know that yet.
Layoffs
At least 160 employees were affected
Happay's LinkedIn profile says the company has over 450 employees. If that's true, at least 160 employees were affected by the restructuring exercise. Staffers across various departments, including marketing, sales, tech, product, and operations, were let go. The company informed teams about the decision on Friday. Neither Happay nor CRED said the firings are related to cost-cutting measures.
Reason
Layoffs were a result of the annual appraisal cycle
According to Inc42, the layoffs were part of the annual appraisal cycle, which means employees were let go based on their performances. However, the sheer number of affected staffers says there might be more to the story. The company is offering axed employees a standard severance package, including three months' salary, health insurance, and job placement assistance.
Acquisition
CRED acquired Happay for $180 million
CRED acquired Happay in a deal worth around Rs. 1,480 crore ($180 million). The company attributed the acquisition to the growing share of professional expenses in credit card payments. "With professional expenses forming a significant portion of credit card spending, bringing professional expense management into the CRED ecosystem is a natural extension of our proposition," CRED CEO Kunal Shah said at the time.
CRED
Company saw a 3-fold increase in marketing expenditure
CRED has been on an expansion spree. The company has introduced multiple new features and services on its platform in the last few months. The addition of new products, acquisitions, and associated marketing expenses was the chief driver of its losses. Marketing expenses increased from Rs. 324 crore in FY21 to Rs. 975 crore in FY22.