VerSe Innovation to reach Ebitda break-even by FY25-end: Co-founder

Company has acquired a majority stake in Valueleaf, is expecting a revenue increase of $100 mn

After a period of heavy losses, India’s largest local language technology platform VerSe Innovation is focused on “profitable growth” and is looking to reach earnings before interest, taxes, depreciation and amortisation (Ebitda) break-even by the end of the current financial year (FY25), after which it will consider going public, a senior executive at the firm said.

VerSe operates short video platform Josh and news aggregator platform Dailyhunt.

The company has announced the acquisition of a majority stake in performance-based digital marketing firm Valueleaf Group to enhance its “retargeting capabilities and full stack advertising solutions”. With this, the company is expecting a significant increase in its revenue to the tune of $100 million at a 10 per cent Ebitda margin in FY25.

“(This year) revenue has grown over 20 per cent due to a combination of organic growth and inorganic growth via acquisitions. Burn has come down by more than half (compared to last year), now in triple-digit crores. We are aiming to double our revenue in FY25 from the previous year, and break even in the last month of the year,” Umang Bedi, co-founder, VerSe Innovation, told Business Standard.

According to the company’s latest financial results, VerSe Innovation managed to cut its losses by 25 per cent to Rs 1,909 crore from Rs 2,563 crore, while improving its operating revenue by 51 per cent to Rs 1,457 crore in FY23 from Rs 964.7 crore in the year ago period. The company will file its FY24 results sometime in September.

“Dailyhunt is now at a significant revenue scale: 15 per cent Ebitda and growing. Magzter, which we acquired in April this year, is getting integrated into Dailyhunt. But even on a standalone basis, it is at 1.1 million paid users and single-digit Ebitda positive. Josh is currently not profitable,” Bedi said.

“Valueleaf’s acquisition will “create powerful synergies by combining VerSe Innovation’s advanced advertising tech stack and data management platform, delivering superior return-on-ad-spends (ROAS) for advertisers,” Bedi said.

In June 2024, Valueleaf reported an ARR (annual recurring revenue) of Rs 732 crore (around $87 million).

“Indian markets appreciate profitable companies. Our goal is to first get to break even as a company, and then we will become initial public offering (IPO)-ready… Our core focus is on profitable growth. We will always grow faster than the market but profitability is the goal,” the co-founder said.

In FY23, Dailyhunt clocked a revenue of over Rs 1,200 crore and was Ebitda-positive, while Josh began monetisation in H2FY23 and exited at an ARR of over Rs 300 crore. The firm’s revenue is being bolstered by growth in Dailyhunt, and the recent acquisitions (Magzter and Valueleaf).

On the other hand, Josh, which has driven most of the cash-burn for VerSe, is likely to reach Ebitda break-even by FY25-end, Bedi said.

“We have streamlined the cost of tech and service, and the cost around creator and content on Josh. We have also streamlined our customer acquisition spend in marketing,” he said.

“On the revenue side, we have diversified the business where, today, over half of our ad revenue comes from small and medium businesses (SMBs). We are not dependent on the top-500 brands, and have gone deeper into the market. We have also been able to add more commerce revenue,” he added.

Josh is currently pulling in commerce revenue from three channels: VerSe Collab — an influencer marketplace sitting on top of Josh which connects brands with influencers — live streaming and gifting, and e-commerce.

Currently, about 60-70 per cent of Josh’s revenue is coming from commerce, while about 30-35 per cent is coming from advertisements.

Josh is among a handful of short video apps that are currently operational in India. Others like Sharechat’s Moj, Chingari, Trell, Roposo, and Mitron, among others, have faced monetization challenges, leading to shutdowns in many cases.

“We have the advantage that our core business is generating revenue. We also raised a large amount of capital recently. We were also able to figure out the formula for commerce at the right time,” said Bedi.

VerSe Innovation is aiming to become India’s largest digital media tech conglomerate. According to Bedi, the firm is looking to double its Ebitda margin from 15 per cent currently.

“We also want to grow Magzter globally, but in a capital efficient manner. With Valueleaf, we want to increase market share from 3-4 per cent today to 10 per cent in the next three years,” he added.