Profits up 43%, margins at all-time high. What is this Indian SaaS company doing right?

Indian Express

25-06-2025

In late 2021, new-age IPOs were sweeping through Indian markets. Tech companies, digital platforms, and global SaaS players were all going public. RateGain Travel Technologies was one of them.
The IPO was priced at Rs 425. It was subscribed 17 times and listed at a strong premium. But by 2022, the stock had fallen nearly 40% from its issue price, trading around Rs 260. Many investors moved on, assuming the early optimism was misplaced. But the company kept building. Over the next two years, it launched new products, expanded into new regions, and sharpened its focus on profitability.
The market eventually took notice. The stock climbed to Rs 870 by early 2024, generating a return of over 230% from the bottom.
Yet today, it has given up most of those gains. The stock is back around Rs 425, almost exactly where it began. Four years later, the net return since IPO is close to zero.
But the business is no longer the same.
In FY25, RateGain crossed Rs 1,076 crore in revenue, operating margins touched 21.6%, and net profit grew 44%.
So, this is no longer just a recovery story. Something deeper is playing out underneath. Let us take a closer look.
RateGain ended FY25 with its highest-ever revenue of Rs 1,076 crore. That is a decent 12.5% growth over the previous year. The company also improved its operating margins to 21.6%, the best it has ever recorded.
But what exactly helped RateGain deliver these numbers?
The answer lies in how its three main business segments performed and how each one quietly improved both reach and profitability.
Almost half of RateGain's revenue now comes from this segment. In FY25, MarTech grew by nearly 19%. That is a strong number, especially in a year when many global tech budgets were under pressure.
So what does MarTech do?
In simple terms, it helps travel brands like hotels, airlines, banks, and even amusement parks run smarter marketing campaigns. RateGain provides tools that track where people are planning to travel and when, so that these brands can show the right ads to the right people at the right time.
The company's Demand Booster product was a big contributor here. It helps hotels boost direct bookings through more targeted and real-time marketing. More clients are now buying this product as part of RateGain's broader platform bundle, Uno.
In FY25, RateGain also saw a sharp rise in MarTech demand from Europe and Asia. For a business that was once heavily US-focused, this diversification matters.
The second biggest revenue driver was DaaS, which made up about one-third of RateGain's business. This segment grew 8.5% during the year.
Here, RateGain helps clients, especially airlines and Online Travel Agents (OTAs), forecast demand and adjust prices based on what competitors are doing. The platform collects and processes large amounts of travel data to generate actionable insights.
In FY25, more airlines signed up for this. Mid-sized players in Asia and Latin America began using RateGain's tools to better manage inventory and pricing. Cyprus Air and Sky Airline are two such clients that adopted RateGain's platform to get real-time market intelligence.
DaaS is not the fastest-growing part of RateGain's business, but it is deeply embedded and sticky. Once clients integrate these tools, they tend to stay for the long run.
This is RateGain's original business that is helping hotels and travel providers connect with online travel agencies like Expedia and Booking.com.
Growth here was slower at just over 5%, but the company still renewed major contracts and won recognition as a top-tier partner by multiple platforms.
One standout deal in FY25 was with a large global travel tech company owned by one of the world's biggest software firms. This contract is expected to improve visibility and boost scale over the next few years.
Distribution might not be grabbing headlines right now, but it plays an important role in maintaining long-term customer relationships and gives RateGain valuable access to booking platforms across the world.
So if you are wondering how RateGain went from declining margins and investor apathy to posting record profits in FY25, the answer lies in this mix:
RateGain's FY25 performance was not only crucial from a topline growth or better margins perspective, but more so how the company is evolving its product stack and customer base in ways that could make its future more predictable and defensible.
Let us break it down.
Over the last 18 months, RateGain has steadily added new products that sit on top of its existing data and distribution rails. Most of them are designed to automate tasks, improve conversion rates, or simplify pricing decisions for their clients.
Two key examples stood out in FY25:
These products are important not just because they are innovative. They also make it easier for RateGain to increase revenue per customer. A hotel using Smart ARI is more likely to adopt other services from RateGain's suite, whether it is marketing tech or distribution.
In other words, the platform is becoming more 'sticky.' And sticky platforms lead to better customer retention and higher margins.
RateGain's customer base today looks very different from what it did just three years ago.
It has grown from just over 1,300 customers in FY21 to 3,224 in FY25, more than doubling its reach. But growth in numbers is only one part of the story. The more important shift is how diversified the revenue base has become across customers, geographies, and engagement models.
Let us look at it piece by piece:
Only 29.5% of revenue comes from the top 10 customers. That means nearly 70.5% of business comes from a long tail of small- and mid-sized clients. This matters.
If any one large client slows down, the impact on overall revenue is limited. It also gives RateGain the opportunity to upsell across a wider base.
And it is not just the spread, but efficiency has improved too. The company's LTV to CAC ratio (lifetime value to customer acquisition cost) now stands at 13.6x, one of the best in the industry. That means for every Re 1 spent acquiring a customer, RateGain expects to earn Rs 13.6 over the relationship.
RateGain's revenues are no longer concentrated in a single region.
This geographic spread helps the company reduce dependence on any single travel economy. For instance, if bookings slow in North America, growth from Europe or APAC can cushion the impact. It also creates a stronger foundation for cross-border product rollouts.
Not all clients engage with RateGain in the same way.
This mix gives RateGain the best of both worlds: predictable subscription revenue and upside during strong travel cycles through variable components.
Finally, nearly 95% of revenue comes from business travel, not leisure. This makes the business more stable. Business travel may be slower to grow, but it is less prone to sudden drops like seasonal leisure demand. It also creates a more consistent base of demand for pricing, data, and distribution tools.
In the past, RateGain's margins were volatile. But FY25 showed that the company is now operating from a stronger base.
Employee costs as a percentage of revenue have come down by nearly 300 basis points over the last two years. At the same time, operating leverage from platform adoption and automation is kicking in.
Management has guided for sustaining EBITDA margins above 22%, which would place RateGain in a strong position compared to most mid-cap Indian SaaS companies.
The question now is: What does this all mean for long-term investors?
After all the progress in FY25, which is record revenue, rising margins, and new product launches, RateGain's stock is back where it started.
As of mid-2025, the stock trades around Rs 425. That is almost exactly the IPO price from December 2021. In between, it fell nearly 40%, then rallied to Rs 870 (a 236% gain from the bottom), and has now corrected again by about 50% from the peak.
So, despite a 43% profit jump and strong operating metrics, the stock has delivered zero returns in four years since listing.
What explains that?
Part of it is market timing. RateGain went public at the peak of the tech optimism cycle. But part of it is also about expectations.
Investors expect tech companies to grow fast, expand margins, and constantly innovate. RateGain has done a lot of that, but not all of it has shown up in revenue growth just yet. In FY25, revenue grew at 12.5%. Healthy, yes. But not explosive.
That is why the valuation today looks reasonable.
For a profitable, cash-rich SaaS company with over 3,200 global clients and zero debt, this multiple is not expensive. But it is also not low enough to attract deep value buyers.
1. Reacceleration in revenue growth: If MarTech and DaaS segments grow above 15% and new products like Viva or Smart ARI start scaling, RateGain can push overall revenue growth closer to 18-20% annually.
2. Operating leverage kicking in again: In FY25, margins hit 21.6%. If the company sustains this while growing faster, profit could compound sharply. However, management has guided that margins might dip slightly in FY26 as it invests more in go-to-market teams and product.
3. Higher recurring revenue share: Currently, only 22.6% of revenue comes from pure subscription. If this mix improves, the company could earn more predictable income and command higher multiples over time.
4. Stronger visibility in APAC and Europe: APAC now contributes 13.7% of revenue, up from 11% two years ago. If this crosses 20% in the next few years, it would show RateGain's success in newer markets and reduce over-dependence on the US.
RateGain is not a unicorn story or a high-volume retail brand. But it is building a software business with global clients, stable margins, and practical innovation in a niche that is undergoing digital change.
For long-term investors, this makes it an interesting bet.
The company has already done the hard part: survived post-IPO disillusionment, launched AI-native products, reduced customer concentration, and grown its client base by over 2.5x in four years.
What it needs now is consistency. If it can grow steadily in the 15-20% range while keeping margins above 20%, the stock is likely to reward patient shareholders.
It may not deliver overnight returns. But for investors looking for a globally exposed, cash-generating, margin-expanding Indian SaaS play, RateGain is worth tracking closely.
Note: This article relies on data from annual and industry reports. We have used our assumptions for forecasting.
Parth Parikh has over a decade of experience in finance and research and currently heads the growth and content vertical at Finsire. He holds an FRM Charter and an MBA in Finance from Narsee Monjee Institute of Management Studies.
Disclosure: The writer and his dependents do not hold the stocks discussed in this article.
The website managers, its employee(s), and contributors/writers/authors of articles have or may have an outstanding buy or sell position or holding in the securities, options on securities or other related investments of issuers and/or companies discussed therein. The content of the articles and the interpretation of data are solely the personal views of the contributors/ writers/authors. Investors must make their own investment decisions based on their specific objectives, resources and only after consulting such independent advisors as may be necessary.