Prosus Doubles Profit in H1FY25

Dutch technology investor Prosus has reported a strong performance in the first half of the fiscal year 2025 (H1FY25), nearly doubling its profit and showcasing impressive growth across key business verticals. Consolidated e-commerce revenue hit $3 billion, a 26% topline growth, and adjusted EBITDA surged fivefold to $181 million. These achievements highlight Prosus’ strategic acumen in leveraging its diverse portfolio, particularly in India, where the company continues to deepen its investments.

Key Highlights of H1FY25

1. E-commerce Revenue Growth
   E-commerce remains Prosus’ crown jewel, generating $3 billion in revenue during H1FY25. This segment’s 26% year-on-year growth reflects its ability to capture expanding digital adoption trends globally, particularly in high-growth markets.
2. Surge in Profitability
   The significant jump in adjusted EBITDA to $181 million, a fivefold increase, signals a successful pivot towards operational efficiency. Prosus’ emphasis on streamlining costs while scaling its businesses appears to be paying off.
3. Major Win with Swiggy IPO
   The Swiggy IPO marked a watershed moment for Prosus. The food delivery giant achieved a valuation of $11.3 billion, a testament to its growing dominance in India’s burgeoning digital economy. Prosus capitalized on this opportunity, selling a portion of its stake for $500 million.
4. Indian Investments Delivering High Returns
   Beyond Swiggy, Prosus’ Indian portfolio has been a cornerstone of its success. Investments in ElasticRun, Meesho, and PayU have delivered impressive internal rates of return (IRRs) of 31%, 32%, and 30%, respectively, outperforming Swiggy’s modest 7%.

Swiggy IPO: A Mixed Bag

The Swiggy IPO, while lucrative, presented mixed outcomes for Prosus. The $11.3 billion valuation underscores the platform’s position as a leader in India’s food-tech ecosystem. However, the modest 7% IRR on Prosus’ investment signals that Swiggy’s growth trajectory has been slower compared to its other Indian ventures.

Implications of Swiggy’s Performance

• Market Leadership vs. Profitability
  Swiggy’s focus on market leadership in food delivery may have come at the expense of profitability. Despite its robust valuation, the modest IRR suggests that heavy investments in customer acquisition and infrastructure limited returns.
• Partial Stake Sale
  Prosus’ $500 million exit from Swiggy showcases a pragmatic approach to locking in profits while maintaining a stake in the company. This move balances liquidity generation with long-term participation in Swiggy’s growth story.

India: A Powerhouse for Prosus’ Portfolio

India has emerged as a pivotal market for Prosus, with several of its investments delivering exceptional returns. Beyond Swiggy, Prosus has backed high-growth companies that leverage India’s rapid digital transformation.

ElasticRun: 31% IRR

ElasticRun, a tech-driven supply chain platform, exemplifies Prosus’ ability to identify niche opportunities in underpenetrated sectors. Its 31% IRR reflects the platform’s success in streamlining logistics for small retailers and empowering last-mile connectivity.

Meesho: 32% IRR

Meesho, a social commerce platform, has capitalized on India’s thriving small business ecosystem. Its focus on enabling entrepreneurs, particularly in tier-2 and tier-3 cities, has positioned it as a leader in the rapidly expanding e-commerce space.

PayU: 30% IRR

PayU’s strong returns underscore the growing demand for digital payment solutions in India. The platform’s strategic acquisitions and innovations have made it a formidable player in the fintech landscape.

EdTech Portfolio: Eruditus Shines Amidst Global Challenges

The global edtech sector has faced headwinds, with prominent names like Byju’s, Stack Overflow, and Skillsoft struggling to maintain positive trajectories. However, Prosus has found a bright spot in Eruditus, which continues to deliver positive returns.

Why Eruditus Succeeds While Others Struggle

1. Targeted Offerings
   Eruditus focuses on executive education and professional development, addressing a niche market with high demand.
2. Partnerships with Top Universities
   Collaborations with global academic institutions have bolstered its credibility and attracted a diverse clientele.
3. Scalability Without Compromise
   Unlike its peers, Eruditus has maintained a balance between scaling operations and ensuring profitability.

New Investments: Doubling Down on India’s Potential

Prosus’ confidence in India’s market potential is evident from its recent investments in Mintifi and Vastu Housing Finance.

Mintifi: $80 Million Investment

Mintifi, a supply chain financing company, aligns with Prosus’ strategy of tapping into underserved markets. The platform’s ability to streamline credit for small and medium enterprises (SMEs) positions it as a critical enabler of India’s economic growth.

Vastu Housing Finance: $100 Million Investment

Prosus’ investment in Vastu Housing Finance highlights its interest in India’s growing housing finance market. With rising urbanization and housing demand, this sector offers significant growth potential.

Strategic Vision: What Drives Prosus’ Success?

1. Diverse Portfolio
   Prosus’ investments span e-commerce, fintech, edtech, and logistics, ensuring a balanced risk profile and exposure to high-growth sectors.
2. Focus on High-Growth Markets
   The company’s strategic emphasis on emerging markets, particularly India, has yielded substantial returns, reflecting its ability to capitalize on macroeconomic trends.
3. Operational Efficiency
   Adjusted EBITDA growth indicates that Prosus prioritizes operational efficiency alongside topline expansion. This approach ensures sustainable profitability.
4. Pragmatic Investment Approach
   Prosus’ willingness to partially exit investments like Swiggy showcases its ability to manage liquidity while retaining stakes in high-potential companies.

Challenges Ahead

Despite its strong performance, Prosus faces challenges that could impact its growth trajectory.

1. Global Economic Uncertainty
   Rising interest rates and inflationary pressures could dampen consumer spending and investment flows in key markets.
2. EdTech Volatility
   The global edtech sector remains volatile, and even strong performers like Eruditus could face challenges in maintaining growth.
3. Competition in Emerging Markets
   As emerging markets attract more global investors, Prosus will need to navigate increasing competition to secure lucrative deals.

Future Outlook

Prosus’ H1FY25 performance underscores its resilience and strategic foresight. The company’s strong results are built on its ability to identify high-potential investments and optimize operational efficiency.

Focus Areas for the Future

• Deeper Engagement in India
  Prosus’ recent investments in Mintifi and Vastu Housing Finance highlight its commitment to India’s market. Future investments may focus on sectors like healthcare, renewable energy, and digital infrastructure.
• E-commerce Expansion
  Continued investment in e-commerce platforms will drive long-term growth, particularly in underserved regions.
• Sustainable Profitability
  With a focus on operational efficiency, Prosus is well-positioned to sustain profitability even in challenging macroeconomic conditions.

Conclusion

Prosus’ H1FY25 performance reflects its strategic prowess in navigating complex markets and delivering strong returns. Its ability to leverage India’s digital transformation and maintain profitability across diverse sectors has solidified its position as a global technology investor. As Prosus doubles down on high-growth markets and strategic investments, its future looks promising, with the potential to deliver sustained value for stakeholders.