India’s popular messaging app Hike’s FY18 financials show how the company has difficult path ahead in regaining its mojo and repairing its financial health.
The company’s revenue has gone up by a mere 20.51 per cent, from Rs 32.9 crore in FY17 to Rs 39.64 crore in latest FY. While the major source of income was driven by fair valuation of mutual funds in FY17 (Rs 21.19 crore), in FY18 it was profit on a sale of mutual funds (Rs 38.76 crore).
On a more positive note, the company made Rs 50.89 lakhs as turnover generated out of business activities of the company as opposed to nothing in last FY.
However, the losses for the company increased by 87.8 per cent, going up to Rs 399.58 crore from Rs 212.77 crore in a span of one financial year ending March 2018. Sadly, the gap between loss and revenue, instead of improving, has widened from being 6.4X to 10X.
The expenses for the company also took a hike of 79.07 per cent and went up from Rs 245.67 crore to Rs 439.93 crore for FY18. The employee benefit expense was the major area of expenditure for the company in both FYs, increasing 40.1 per cent, from Rs 110.27 crore to Rs 154.49 crore.
This gives more insight into why the company fired 75 of its employees in May this year, most of whom belonged to the companies it acquired in the financial year (2017-2018).
Within the year, the company also raised Rs 83.33 lakhs from Hike Global Pte. Ltd., its holding entity registered in Singapore.
As far as the launch of services is concerned, Hike launched the ‘Total’ service in January this year, whereby it distributed data packs for Re 1 to bring the next 1 billion people online.
The launch of such services and diversification of its activities cost Hike significantly, as can be seen from its financial performance.
However, in an interview with Entrackr in Chindia TMT Dialog 2018, Kavin Bharti Mittal had agreed upon the mistake of putting his fingers in lots of pies and the future plans to be on refocusing on the core activities of the application.
He aims the company to attain scale before venturing into monetisation, and ‘Total’ seems to be a step in that direction. Using payment wallet as just an enabler, Mittal is looking to go back to core activities and improve the future of the company.
It would be interesting to see how this plan pans out for the firm, financially and in all other aspects of the business.