Hike Ltd, the messaging app operator that touched $1.4 billion in valuation last year, started earning revenue in 2015-16 but its bottom line worsened as it burnt more cash than ever.
The four-year-old company reported revenue from operations of Rs 42.32 lakh for the year through March 2016, according to VCCEdge, the data research platform of News Corp VCCircle, based on Hike’s filings with the Registrar of Companies.
While the app is free, users pay to buy coupons and play games. Coupons generated almost all its operating revenue.
Total income climbed to Rs 34.92 crore, thanks to a jump in profit from sale of investments to Rs 34.41 crore from Rs 3.83 crore in 2014-15.
Net loss, however, widened to Rs 217.36 crore from Rs 122.36 crore as costs climbed.
Total costs doubled to Rs 252.3 crore from Rs 126.5 crore. This is mainly because marketing expenses also doubled to almost Rs 130 crore while staff costs soared to Rs 58.8 crore from Rs 25.1 crore.
The company didn’t respond to an email seeking comment till the time of writing this article.
Hike joins other Indian unicorns such as e-commerce firms Flipkart and Snapdeal in reporting heavy losses, as consumer Internet firms burn capital raised from investors on discounts and rapid expansion to gain market share.
Hike is a peer-to-peer messaging app that uses both data and SMS to deliver messages. It was founded in July 2012 by Kavin Bharti Mittal, son of Bharti Enterprises Ltd chairman Sunil Bharti Mittal, and was part of Bharti SoftBank—the joint venture of Bharti Enterprises and Japan’s SoftBank Group Corp.
The company touched a valuation of at least $1 billion in August last year when it raised $175 million (Rs 1,170 crore) from China’s Tencent Holdings Ltd, Taiwan’s Foxconn Technology Group and other investors. This was the fourth funding round for Hike and took the total it has raised so far to $250 million. It had previously raised funding from US hedge fund titan Tiger Global.
Hike’s biggest competitor in India is Facebook-owned WhatsApp. Tencent, which is one of Hike’s investors, had launched WeChat in India in 2012, but didn’t gain much popularity due to competition from WhatsApp. While Hike’s financials may not paint a rosy picture, WhatsApp itself was making small revenue and heavy losses when it was bought by Facebook in 2014 for almost $21 billion.
Hike claims it has 100 million users—95% of them are in India—and transacts 40 billion messages a month. The Hike platform supports multiple languages, including English, Tamil, Hindi, Malayalam, Gujarati and Bengali.