Kuku FM’s scale mounts 9X in FY23, splurges Rs 95 Cr on advertising

Fundamentum-backed audio content platform Kuku FM managed to grow its collection by 9.3X during the previous fiscal year ending March 2023.

The spike in growth, however, does not reflect the complete picture as the revenue hovered just above Rs 40 crore whereas the losses at the same time crossed Rs 100 mark, though at a 2X growth rate.

To be precise, Kuku FM’s revenue from operations rose to Rs 41.2 crore during FY23 from Rs 4.4 crore in FY22, according to its annual financial statements filed with the Registrar of Companies.

Kuku FM makes money through paywalled subscriptions on its audio books to individuals and businesses. It offers a wide range of audio content spanning multiple genres such as business, self-help, personal finance, historical, religion, entertainment and fitness. During the second quarter of the last fiscal, the company also forayed into workforce upskilling with a portfolio of courses on productivity, discipline, task management etc.

The sale of subscription services for the content offering was the only source of revenue for the firm in FY23. Kuku FM did not provide the break-up across the sale of subscriptions and B2B component [workforce upskilling].

Coming straight to its expenditure, marketing and advertising accounted for 57.3% of the total spending. This cost soared 3X to Rs 94.7 crore in FY23 from Rs 31.9 crore in FY22. Its employee benefit cost jumped 2.3X to Rs 34.8 crore during the previous fiscal year. This expense also includes Rs 4.98 crore [non-cash in nature] as ESOP costs.

The Gurugram-based firm spent Rs 11.2 crore and Rs 15.6 crore towards audio content creation and information technology, respectively. Overall, the total expenditure grew by 190% to Rs 165.4 crore while Kuku FM’s losses spiked 2.23X to Rs 116.5 crore in FY23. On a unit level, the company spent Rs 4.02 to earn a unit of operating revenue in the last fiscal [FY23].

Kuku FM’s local rival Pocket FM recorded 11.4X growth in operating scale to Rs 17 crore during FY22 from Rs 1.49 crore in FY21. As per sources, the firm’s revenue has reached three-digit figures in FY23.

The emerging market for audio content throws up some huge challenges for firms, and it will take some serious persistence and compelling content to make it a worthwhile business. It is apparent from the high marketing costs that the cost of educating potential consumers remains the biggest issue, and in a price sensitive market like India, it is no cliche to say that parting a listener and his money for content is no easy task. However, it is not all gloom, with the possibility of audio OTTs replacing even radio in many segments, and in an information hungry society like India, successful streams are easier to find than ever.