Hike Pvt. Ltd, the messaging app operator that touched $1.4 billion in valuation last year, has a problem—it has no revenue to show.
Filings with the Registrar of Companies show that the five-year-old firm was back to square one in the financial year ended March 2017, after managing to clock its first-ever operating revenue of Rs 42.32 lakh in the previous year. To be sure, the instant messaging app hadn’t come up with a significant or scalable revenue stream in FY16—coupons that users bought to play in-app games accounted for almost all the operating revenue.
Total income for FY17 more than halved to Rs 11.4 crore from Rs 34.9 crore in FY16, which had come on the back of profit from sale of investments.
Cash burn continues to be high, even though Hike managed to reduce total expenditure in FY17 to Rs 227.3 crore from Rs 252.2 crore in the year prior. Net loss for FY17 was Rs 215.9 crore, a tad lower than Rs 217.3 crore in the previous fiscal.
A detailed questionnaire sent to the company did not elicit a response till the time of filing this story. Calls and messages to Hike’s founder Kavin Bharti Mittal went unanswered.
A peer-to-peer messaging app like Facebook-owned WhatsApp, Hike doesn’t charge the consumer. It is not into advertising either. Founded in July 2012 by Kavin, son of Bharti Enterprises Ltd chairman Sunil Bharti Mittal, it was part of Bharti SoftBank—the joint venture between 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 then) 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 had raised so far to $250 million. It had previously raised funds from US hedge fund titan Tiger Global.
Hike has another problem—WhatsApp.
India is the biggest market by subscriber base for WhatsApp, which had 201 million monthly active users in the country as of February. Hike claims to have 100 million monthly active users in India, half that of WhatsApp. It supports multiple languages, including English, Tamil, Hindi, Malayalam, Gujarati and Bengali.
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.
“Though revenue is meagre vis-a-vis their losses, they have a user base of around 100 million, which is fairly decent. On top of that, they have the backing of top-class global investors, so it’s unlikely that they will run out of capital even as losses mount,” an industry analyst said on the condition of anonymity.
Hike has over 300 employees spread across two offices in Delhi and Bangalore.
In a separate development, Hike announced on Thursday that its payment service Hike Wallet had crossed 5 million monthly transactions. “The Hike Wallet has seen growth of over 30% month-over-month, in just five months from the launch of Hike 5.0 and the wallet,” the Delhi-based company said in a statement.
The wallet enables bank-to-bank money transfer via the government-backed unified payments interface (UPI) platform. With the wallet, Hike seeks to gain an early-mover advantage over rival WhatsApp.
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