Healthcare focused edtech platform DailyRounds has quietly emerged as one of the top revenue generating startups in the space with profit to the tune of Rs 200 crore. After operating for five years, the Accel and Kae Capital-backed company was acquired by Japanese healthtech firm M3 in 2019. The deal turned out to be a tailwind for the Bengaluru-based startup as it has managed to grow at a decent pace since then.
DailyRounds’ revenue from operations grew 21.5% to Rs 402 crore during the last fiscal year (FY22) when compared to Rs 331 crore in FY21, as per its standalone financial statements with the Registrar of Companies (RoC).
The company primarily makes revenue from subscriptions through its online learning platform Marrow. According to the company’s website, Marrow is a learning platform for doctors, medical students and other healthcare practitioners with topic-wise learning modules, tests and performance analytics, and recorded medical video classes. The platform is currently used by over 6 lakh medical students in India to prepare for medical competitive exam NEET PG.
Fintrackr’s analysis shows that the collections from subscriptions accounted for 90% of the total operating income. This revenue from the vertical surged 19.2% to Rs 361.2 crore in FY22 from Rs 303 crore in FY21. These subscription plans range between 3 months to 36 months, wherein the subscription amount (ranging from Rs 6,999 to Rs 65,999) is typically collected upfront.
The company also sells medical course relevant books to students under certain plans and revenue from these sales inclined 44.2% to Rs 37.5 crore during the last fiscal from Rs 26 crore in FY21. It also collected Rs 3.3 crore revenue from M-Division (market research) during the year.
Besides operating revenue, DailyRounds also earned Rs 32 crore worth interest on fixed deposits and other non-operating income which took its overall revenue to Rs 434 crore in FY22.
Employee benefits expenses turned out to be the largest cost element accounting for 34% of the total expenses. This cost jumped 2X to Rs 57.3 crore in FY22 from Rs 28.16 crore in FY21. Its legal cost including consultancy charges spiked 21.3% to Rs 46.22 crore in FY22 from Rs 38.11 crore in FY21.
Further, purchase of books (after adjustments of changes in inventories) was another major cost and went up 27.8% to Rs 26.2 crore in FY22 whereas tech infrastructure costs consisting web hosting, software subscription and payment gateway charges spiked 25.5% to Rs 13 crore.
Unlike other cash burning edtech firms, DailyRounds spent only Rs 8.54 crore on sales & business promotion during the year which catalyzed its total expenditure by 46% to Rs 168 crore in FY22 from Rs 115 crore in FY21.
Though the expenses outpaced revenue growth, DailyRounds still managed to grow its profits by 11% to Rs 198 crore in FY22 as compared to Rs 178 crore in FY21. Significantly, it also registered positive operating cashflows of Rs 338 crore which doubled during the last fiscal, thanks to the advance payments cycle.
Coming to ratios, its EBITDA margin got hit by 582 BPS to 62.42% which could be ascribed to over two fold jump in employee benefits expenses. On a unit level, DailyRounds spent Re 0.42 to earn a rupee of operating income during FY22.
Founded in 2014 by Deepu Sebin, Nimmi Cherian, and Priyaank Choubey, DailyRounds was part of GSF India’s global accelerator program and also became part of Microsoft Ventures. The firm competes with Unacademy-owned PrepLadder and Byju’s. PrepLadder’s revenue from operations increased 27.6% to Rs 114.6 crore in FY22 whereas its net loss also jumped 74.9% to Rs 144 crore in the last fiscal year.
The sharp focus on medical education, combined with an online plus subscriptions model had delivered high returns for DailyRounds, and it remains to be seen how the firm manages growth without expanding further into other segments. On present trends, costs look set to stabilise as test prep material does not require constant changes and additions, and neither will additional subscriptions demand more hirings, allowing profitability to improve possibly. It’s the kind of situation many founders dream of, before they plan their next big move.
