The ban on TikTok and other China-linked apps have offered new business propositions for news aggregators and social media companies such as Dailyhunt and ShareChat. Soon after the ban, both companies launched their own short video apps and used them as anchors to mop up large funding rounds.
Early this year, Dailyhunt had raised over $100 million from Qatar Investment Authority and Glade Brook Capital for its short video app Josh. Incidentally, the company has also improved its financial performance in FY20.
Dailyhunt and its subsidiaries are controlled by the holding entity VerSe Innovation and the group derives its revenue primarily from online advertisement and subscription services through its mobile and web apps. The Bengaluru-based unicorn saw its total collections surge 95% from Rs 159.1 crore in FY19 to around Rs 310 crore in FY20.
Its revenue from operations grew 75.3% to Rs 267.6 crore in FY20 from Rs 152.7 crore. The group generated Rs 42.1 crore in financial income in FY20, which grew 558% in the fiscal.
Advertisement and promotional expenditure stood out as the largest cost centre for the company, accounting for nearly 48% of the total expenses incurred during the last fiscal. These costs grew in line with the operating revenues, increasing 74% from Rs 214.6 crore in FY19 to Rs 373 crore in FY20. Apart from these costs, Dailyhunt also paid out Rs 8.4 crore as commissions to selling agents during the fiscal ended in March 2020.
Expenditure on employee benefits is the second-largest cost centre for the content and news aggregator, making up 21.6% of the annual costs. These expenses surged 36% from Rs 114 crore in FY19 to Rs 155.2 crore in FY20. These costs also included share-based payments of Rs 12.1 crore, accounting for 8% of these payments. Additionally, Dailyhunt also spent another Rs 3 crore on training and recruiting costs during the last fiscal.
Further going down the expense sheet we observed unexplained “miscellaneous expenses” that jumped 54.4% from Rs 81.6 crore in FY20 to Rs 126 crore in FY21. These costs likely include the IT infrastructure and server costs for the content publishing platform.
Legal and professional costs of Rs 16.7 crore pushed the total expenses incurred during the fiscal to grow by 57.2% to nearly Rs 720 crore in FY20 from Rs 458 crore in FY19.
Dailyhunt spent Rs 2.7 to earn a single rupee operating revenue in FY20, improving from the Rs 3 spent during FY19.
While costs have been piling up, the company has managed to bring down their negative margins. Annual losses have grown 34.3% from Rs 300 crore in FY19 to Rs 401.3 crore in FY20. On the other hand, EBITDA margins have improved from -181.2% in FY19 to -124% during FY20.
The financial performance of Dailyhunt has improved in FY20 but it requires control cost, which is unlikely. According to analysts tracking the company, its expenses are bound to grow in FY21 as well as FY22 because of Josh. Unlike news aggregation business, the company’s short video app is facing intense competition from ShareChat’s Moj, InMobi’s Roposo and MX Takatak and will continue to guzzle cash.
If we compare Dailyhunt financial with competition such as ShareChat, it appears to be healthy. ShareChat had posted a revenue of Rs 9.4 crore in FY20 with a loss of Rs 677 crore.