SaaS company Capillary Technologies turned profitable in the run up to its IPO. The SaaS company posted a profit after tax (PAT) of INR 13.3 Cr in FY25 as against a loss of INR 59.4 Cr in FY24, as per its DRHP.

The company, which was founded in 2008, had been a loss-making entity for the previous three fiscal years. After reporting a net profit of INR 16.7 Cr in FY21, Capillary slipped into the red in FY22, reporting a loss of INR 22.2 Cr. Its loss increased further to INR 87.7 Cr in FY23.

Notably, this is Capillary’s second attempt at public listing. In 2021, the company filed DRHP to raise INR 850 Cr from its IPO. However, it deferred its IPO plans owing to market conditions.

In January this year, Inc42 reported that the SaaS company was looking to refile its IPO papers in June. Subsequently, Capillary filed its DRHP with SEBI yesterday. Its IPO will comprise a fresh issue of up to INR 430 Cr and an offer for sale of up to 1.83 Cr shares. The company plans to raise INR 86 Cr in its pre-IPO placement.

Capillary plans to utilise the proceeds from the fresh issue to build its cloud infrastructure, further R&D, and fund acquisitions.

In FY25, Capillary returned to profit on the back of a robust growth in its top line and a moderation in its expenditure. Its profit from continued operations stood at INR 14.2 Cr in FY25 as against a loss of INR 68.4 Cr in the previous fiscal. However, it reported a loss of INR 87.4 Lakh from discontinued operations during the year as against a profit of INR 8.5 Cr in FY24.

In January 2025, Capillary discontinued its ‘Anywhere Commerce+’ product, which was an integrated order management system designed for ecommerce businesses. The company said that the decision was taken owing to the unsustainable scale of ecommerce operations as a result of competition.

Besides, Capillary also shut its digital business, acquired through Persuade Group, in FY25 pursuant to its “focus on scaling enterprise-grade loyalty solutions”. The company acquired Persuade in September 2021 to complement its capabilities in customer loyalty programmes.

“The digital business of our company comprised operations and cashflow that were clearly distinguished from the operations of the rest of our company. The business did not have any assets which were not recoverable and accordingly, no amount was derecognised to the restated statement of profit and loss for FY25,” the DRHP read.

The company’s operating revenue for the fiscal year stood at INR 598.3 Cr, up 14% from INR 525.1 Cr in the previous fiscal year. Interestingly, the operating revenue jumped a whopping 230% from INR 266.3 Cr in FY23.

Helmed by CEO Aneesh Reddy, Capillary provides AI-based cloud-native SaaS products and solutions for loyalty management and customer engagement to enterprises. The company’s offerings are sector agnostic. Capillary received the highest revenue from the retail sector in FY25 (28%), followed by healthcare (20%), BFSI (16%) and consumer packaged goods (11%), and more.

North America was the biggest market for the company, accounting for about 57% of its operating revenue in FY25. Asia-Pacific accounted for 24% of the company’s revenue, down from 33% in FY24.

In the DRHP, Capillary said that the US market is a key focus area for it and estimated the total size of the market at $7.8 Bn in 2024. Going ahead, it plans to acquire “small to mid-sized companies” that have cultivated dedicated customer bases within the loyalty sector.

Notably, Capillary acquired B+P in April 2023 and Kognitiv in May 2025. The companies primarily operate in the US and other North American markets.

“We believe we have the capability to further penetrate into this market with our API first platform built for scale, already powering loyalty programs for 16 Fortune 500 companies, as of March 31, 2025,” it said.

The Bengaluru-based SaaS company counts the likes of Tata Digital, Domino’s, Aditya Birla Fashion & Retail, Arvind Fashion, among its clients. Its top customer contributed 16.5% or INR 98.9 Cr to its top line, up significantly from INR 35.8 Cr (6.8%) in FY24.

Capillary said that the minimum term of contract signed with its top 10 customers during FY25 was three years. “Our long-term relationships with marquee clientele is demonstrated by the average length of our relationship of over 2.5 years with our top 10 customers, as of March 31, 2025,” the company claimed.

Here’s a detailed breakdown of revenue sources of Capillary:

This is the revenue the company earns by leasing its cloud-based intelligent customer engagement software solutions to “retail chain operators”.

This service was the primary driver for the company’s growth, bringing in INR 481.1 Cr. It was a 20% growth from INR 402.1 Cr revenue it earned from it in FY24.

This is a one-time fee that businesses pay to install Capillary’s software. In FY25, the company earned INR 110 Cr from this vertical, up 47% from INR 74.7 Cr in the prior fiscal.

Capillary provides one-time installation services that are bundled together with the retainer services. This revenue is recognised over time because its clients simultaneously receive and consume the benefits provided to them.

Under this, Capillary provides its clients SMS campaign services which are bundled together with the retainer services. This revenue is either earned on a principal basis or an agent basis.

On a principal basis, the company recognises revenue based on the usage of its messaging services on the specific terms of the contract with customers. Capillary’s revenue from this was nil in FY25 as against INR 48.3 Cr in the previous fiscal year.

“During FY25, we changed our business model for campaign services and entered into new arrangements with our service providers pursuant to which, we act as an agent and not as a principal for campaign services transactions,” the company’s DRHP read.

As an agent, the company facilitates a transaction between its clients and their customers. In FY25, Capillary registered an income of INR 7.1 Cr by providing its campaign services on an agent basis.

The company also reported an other income of INR 13.6 Cr in FY25, up slightly from INR 10.3 Cr in the previous fiscal year. The other income constituted the interest it earned from its financial assets and a dividend income.

Overall, the IPO-bound company’s total income for the fiscal year stood at INR 611.9 Cr, a jump of 14% from the INR 535.4 Cr in FY24. Meanwhile, Capillary’s EBITDA stood at INR 78.6 Cr in FY25 as against an EBITDA loss of INR 1.5 Cr in the previous fiscal year.

Capillary managed to reduce its total expenses to INR 533.3 Cr in FY25 from INR 536.9 Cr in the previous year. Here’s a breakdown of the expenses:

Employee Benefit Expenses: As is common for SaaS companies, employee cost was the biggest expense for Capillary. It spent INR 295.5 Cr on its employees in FY25, an increase of 9% from INR 271.9 Cr in FY24.

Software & Server Charges: Expenses under this head stood at INR 92.2 Cr, a slight reduction from INR 93.6 Cr in FY24.

Consultancy Expenses: The spending under the head stood at INR 99.5 Cr, up 14% from INR 87.3 Cr in FY24.

Other Expenses: This bucket, which included travelling, rent, among others, accounted for INR 46.1 Cr of the SaaS company’s expenses, up 9% YoY.

(Edited by: Vinaykumar Rai)

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