At the start of the year, WhatsApp’s local challenger — Hike — announced that it would shut down its messaging app after nine years of operations in India. Perhaps a good decision considering that the company, launched by Kavin Mittal, was muddled in monetization and user retention issues.
Hike was burning through a large cash pile to survive without generating any meaningful revenue in its nearly a decade-old history. And in FY20, the company witnessed its revenue plummet. Hike’s operating revenue during the fiscal year 2020 reduced by 96% to a mere Rs 13,000 from Rs 3.5 lakh in FY19, data sourced from regulatory filings show.
It earned another Rs 12 crore through financial instruments which made up most of its collections during FY20.
Hike was under process to scale back operations which can be seen across its expense sheet of FY20. The total expenditure reduced by 17% from Rs 232 crore spent in FY19 to around Rs 193 crore in FY20. Due to negligible revenues, Hike spent Rs 1,48,461.5 to earn a single rupee of operating revenue.
Employee benefit expenses reduced by 25.3% from Rs 109.3 crore in FY19 to nearly Rs 82 crore in FY20. These costs accounted for 42.4% of the total expenditure incurred during the last fiscal.
Marketing expenses remained relatively stable at Rs 23.4 crore in FY20 as compared to similar payments of Rs 24.2 during FY19. Costs incurred to maintain its servers reduced by 5.2% to nearly Rs 32 crore in FY20 from server expenses of Rs 33.63 crore in FY19.
Hike paid out around Rs 16 crore for IT consumables, in-app costs and video usage costs during FY20 as compared to Rs 15.6 crore paid for the same in FY19.
Due to decreased scale of operations and expenditure, Hike managed to reduce its annual loss by 12% to Rs 193 crore in FY20 from Rs 232 crore in FY19. Outstanding losses had amassed to around Rs 1,539.5 crore at the end of last fiscal.
Historically, Hike has failed to impress on the product as well as business model fronts as it failed to stick users and churn any revenue. The company which once had 100 million registered users across 10 regional languages lost to WhatsApp and emerging media companies including Bytedance and ShareChat.
While the shutdown of Hike and consistent worsening of financial health is not an end of the road for Mittal and the team, the company is now working towards developing a social media platform that promises to weed out fake profiles with a flavour of gaming.
Despite an altogether new focus, one thing won’t change for Hike: it would continue to compete with the Facebook Group. During its initial years, WhatsApp was Hike’s competitor, now it’s Facebook.
Update: The headline has been updated to reflect Hike posted expense of Rs 193 crore in FY20, not losses. The error is regretted.