Ongoing investments and efforts to scale operations using state-of-the-art technologies, acquire more customers and merchants and thus, expand the financial outreach — all will chip in to make Nagad, a disruptive mobile financial service in Bangladesh, a profitable venture by 2025.
The country's fastest-growing MFS carrier will see its annual losses come down to only Tk5 crore in 2024 before it moves into profitability in 2025 — when its net profits are projected to reach Tk28 crore, according to financial projections for Nagad in a prospectus submitted recently to Bangladesh Exchange Commission (BSEC), reads a press release.
In the following year, its net profit will more than double to Tk64 crore. And, from 2027, Nagad's profit will surpass Tk100 crore a year, as shown in Nagad's financial projections.
The change-maker mobile money carrier is also very optimistic about booking a profit of Tk171 crore in 2028, read the document that Nagad submitted to the BSEC to get approval for issuing zero-coupon bonds worth Tk510 crore.
Mohammad Rezaul Karim, executive director and spokesperson of BSEC, said: “Nagad has secured bond issuance approval as it has enough liquidity and shown profitability forecasts as well.”
“Nagad is spending on so many things including giving bonuses and cashback to customers,” he also said, hoping that the company will move into profits very soon.
Nagad forecasts that it will generate net revenue of Tk1,144 crore in 2024, Tk1,324 crore in 2025, Tk1,532 crore in 2026, Tk1,773 crore in 2027 and Tk2,053 crore in 2028.
Nagad has now gone for a massive investment in infrastructure development and technological upgradation to better serve its customers with diversified products.
Thanks to its one after another disruptive innovation, the MFS company has already gained a huge customer base of more than 7.5 crore with its daily transactions hitting Tk1,200 crore on average.
To improve customer experience all the more, it has already all plans lined up to emerge as a complete financial solution. All necessary investments are being made for this purpose.
All such investments have depressed the state-owned MFS's profitability for now but will pay dividends in the long run, say the authorities concerned, hoping that in this way, they will be able to establish a sustainable revenue stream.
Various government disbursements done successfully by Nagad have already helped this company to gain a strong position when it comes to revenue generation.
Various campaigns, especially the ongoing BMW campaign, have played a crucial role in boosting its daily transactions as well as revenue. All these bear testimony to Nagad's growing strength that will soon turn it into a profitable company.
Muhammad Zahidul Islam, head of Public Communication at Nagad, said from the financial transaction point of view, they are more focused on upgrading people's life to the digital space, rather than ensuring the company's profitability.
“Profits will automatically come and we are not concerned about that. Our main target is to bring change to people's lives by ensuring seamless digital transactions for them. This will fasten the country's shift to a cashless society; in this process, we will move into profitability too,” Islam added.
Industry experts say losing money is no one's priority but the fact is that startups focused on rapid growth do burn through financial resources before they start earning profits.
The same is true in the case of fintech startups like Nagad, they note.
Rashad Kabir, managing director of Dream71 Bangladesh and director of the Bangladesh Association of Software and Information Services (Basis) said: “I believe there is nothing wrong if a startup is counting losses as long as there is a way to profitability. Global companies, such as Amazon, Facebook Walmart, Uber, etc. are prime examples of building growth before profitability.”
Echoing Kabir, Zahidul Islam said it is not Nagad alone, all startups across the globe are having to burn through their financial assets before they turn profits.
“Many top Bangladeshis brands have also gone through a similar situation. They had suffered recurring losses for a certain period before they came into profits,” he added.
