With the arrival of Spotify and YouTube Music, the competition in the music streaming space was at its peak in FY20. The race to lead the streaming airwaves in India pushed segment leader Gaana to spend more money on growth to maintain its dominant position and which is quite apparent from its financial performance in FY20.
Gaana recorded 53.25% growth in operating revenue in the last fiscal, but its expenses too shot up by 61%. The company’s revenue reached Rs 120 crore in FY20 as compared to Rs 78.3 crore during FY19.
The uptrend in revenues has come with an even greater increase in costs incurred by the Gurugram-based firm during FY20. Expenditure on employee benefits has doubled to Rs 77.6 crore in FY20 from Rs 37.8 crore in FY19.
The overall cost of service has witnessed a 37% spike to Rs 173.02 crore while Gaana also incurred another Rs 255 crore to operate and market its streaming platform in India during FY20.
With the onus to push sales this year after it witnessed a 27.5% decline in its revenues during FY19, Gaana burned through a bigger pile of cash during FY20. The total expenditure incurred during FY20 stood at Rs 506 crore, registering a 61% jump as compared to Rs 314.4 crore it spent during FY19.
On a unit level, Gaana spent Rs 4.2 to earn a single rupee and the income statement went further in the red as net profit ratio further depleted to -228.5% from around -160% in FY19.
In the preceding fiscal, the company’s losses had ballooned 4.2X to Rs 193.2 crore, and the theme continues this year as this figure grew by 82.2% to Rs 352 crore during FY20.
The ten-year-old company, which recently raised $50 million from Tencent, saw its cash and cash equivalents drop by 54% to Rs 131.4 crore at the end of FY20 as compared to Rs 284.1 crore in FY19.
Working towards a leaner organisation, Gaana liquidated its current investments during the last fiscal and its total assets also reduced by 46.4% to Rs 330.3 crore at the end of FY20 from Rs 616.3 crore in FY19. This, along with the resurrecting revenues, helped the asset turnover ratio to improve from 17.5% in Fy19 to 32.5% during FY20.
These figures are quoted from excerpts of the audited financials filed by Gaana along with the return of allotment of shares. We will release a full Fintrackr feature when they file their financial statements for the financial year ending March 2020.