Dream11 is perhaps the only unicorn in the consumer internet space in India with a hefty profit. Sporta Technologies, which operates fantasy gaming platform Dream11 posted Rs 180.8 crore of profit in the financial year ending 2020, according to its regulatory filings. This is a massive jump from its Rs 87.8 crore loss during FY19.
The company also saw a 2.67X increase in its revenue from operations which grew to Rs 2,070.4 crore in FY20 from Rs 775.5 crore in FY19.
Dream11 also generated a financial income of Rs 59.7 crore which grew 87.4% fiscal on fiscal. The growth in the company’s scale was quite evident from the surge in cash generated from operations and this could be validated from its cash flow.
Dream11 had a negative operating cash flow of Rs 57.4 crore during FY19 which turned around to positive cash inflows of nearly Rs 261 crore during FY20.
Dream11 spent Rs 1,328.02 Cr on advertising & promotion
Looking over the expense sheet, it was clear that the company relied heavily on advertising across media platforms and contest promotions to drive downloads on its app solely through APKs or Android Application Package — since the app is not available on the Playstore. Advertising and promotional expenses were the biggest cost centre for the company in FY20, accounting for 71.1% of the annual expenses.
These costs grew by 69.20% to Rs 1328.02 crore during FY20 from Rs 785.1 crore in FY19. Interestingly, sponsorship costs incurred by the company actually dropped by 39% to Rs 100.7 crore during FY20.
Dream11 had to increase its employee base to keep up with the growth and as a result, its employee benefit expenses jumped by 133.6% to Rs 153.21 crore during FY20.
The growth in Dream11’s scale and the number of active users is also reflected in the transaction processing fees paid out by the company which doubled to Rs 40.12 crore during FY20.
The second-largest cost on Dream11’s expenses sheet was the expenditure on information technology, making up 12.3% of the company’s annual costs. These expenses swelled up 5.7X to Rs 230.5 crore during FY20. Interestingly, the insurance costs incurred by the Mumbai-based company ballooned nearly 10X to Rs 38 crore while legal expenses grew by 155 to Rs 11.73 crore during FY20.
Dream11 also operates “Dream Sports Foundation” which works to support sportspersons through various initiatives: Dream11 ‘s expenditure on donations ballooned 16.8X to Rs 9.6 crore in FY19, most of which was routed through Dream Sports Foundation. During the pandemic, Dream11 has also claimed to have supported more than 6 lakh Indians through its various relief initiatives.
Other operational expenses of Rs 77.8 crore pushed total costs incurred by Dream11 during FY20 to Rs 1867.60, which grew by around 99% from Rs 934.4 crore spent in total during FY19. On a unit level, Dream11 spent Rs 0.9 to earn a single rupee of operating revenue, improving from Rs 1.2 spent to earn the same during FY19.
Dream11’s road to Rs 181 Cr profit, new fundraise & IPO plan
Even as Dream11 burned through a pile of cash during FY20, growth in its revenue outpaced the costs. Its EBITDA margin improved from -15.63% in FY19 to 13.41% in FY20.
Not only did the company have Rs 87.8 crore worth losses during FY19, but its balance sheet also sported outstanding losses of Rs 147.5 crore as on March 31, 2019. Dream11 recouped those losses and paid out Rs 81.71 crore in taxes during FY20.
The company’s turnaround is clearly attracting more investors: Entrackr had exclusively reported Dream11’s potential round where it could touch $8.5 billion in valuation. This would be a massive jump from the $5 billion valuation it attained during the previous fundraise in March.
The potential round is likely to be a pre-IPO one as Dream11 gets ready for a public listing in the US next year. If its listing plan goes through, the 13-year-old firm will probably be the second consumer internet company (after MakeMyTrip) to list on the American stock exchange.