Decoding DailyHunt Parent VerSe’s Booster Plan To Increase Revenue, Cut Losses Via Acquisitions

In July this year, Inc42 wrote about the struggles of short video platform Josh and the challenges faced by its parent VerSe Innovation in scaling up revenue and improving its bottom line. However, VerSe, which is also the parent of news aggregator DailyHunt, seems to have figured a way out — acquisitions and adtech offerings. 

Earlier this week, the company announced its newest acquisition – Bengaluru-based adtech company Valueleaf Services. With this, VerSe is looking to bolster its digital advertising and marketing verticals. 

While VerSe didn’t disclose the acquisition cost, sources told Inc42 that it spent $150 Mn – $200 Mn for the acquisition.

The announcement came on the heels of VerSe launching NexVerse.ai to provide AI-based solutions for brands and advertisers through performance marketing tools.

Explaining the company’s strategy, VerSe CEO and cofounder Umang Bedi told Inc42 that it is aiming to build Bharat’s biggest ad exchange which will use performance marketing strategy to provide better returns on investments to advertisers. 

This is part of VerSe’s plans to diversify its revenue sources. As part of this, the company announced acquisition of news subscription platform Magzter earlier this year. Bedi said that Magzter now has 1.1 Mn paid subscribers. 

Talking about the acquisition of Valueleaf, the CEO said that the company has been working with advertisers and brands for the last 15 years. Valueleaf has access to proprietary data as well as performance marketing campaigns, which are its biggest assets, Bedi said. 

Besides, Valueleaf has familiarity with websites, apps and other destinations where the advertisements are served, which will make retargeting advertisements on third-party websites easier, he added. 

“In addition, Valueleaf also has some industry and vertical-specific solutions like Buddy Loan for banking and financial services and Share and Earn, an earning app for growth hacking,” Bedi said. 

Valueleaf will be merged with VerSe, which will enable the latter to utilise the former’s assets to target users on Josh and DailyHunt through NexVerse.ai.

VerSe expects Valueleaf’s acquisition to increase its revenue by helping it charge higher amounts from advertisers and grow average revenue per user. In a statement, the company said that the acquisition would likely add $100 Mn to its top line in FY25. 

It must be noted that Valueleaf’s operating revenue almost doubled year-on-year to INR 281 Cr (about $33.5 Mn) in FY23, while net profit declined 8% to INR 11 Cr.

Cost-Cutting Measures At VerSe 

The developments come at a time when VerSe has been on a cost-cutting spree to reduce its losses. Amid the funding winter, VerSe laid off around 150 employees in 2022, months after it raised a funding of $805 Mn. 

This helped it cut its loss in FY23. VerSe’s net loss declined 25% to INR 1,909.7 Cr during the year from INR 2,563.3 Cr in the previous fiscal year. Operating revenue zoomed 51% to INR 1,456.5 Cr in FY23 from INR 964.7 Cr in the previous fiscal year.

For context, VerSe has raised a total funding of $1.5 Bn till date from the likes of Alteria Capital, Sumeru Ventures,  Peak XV Partners, Ontario Teachers’ Pension Fund, Luxor Capital, among others.

While the company is yet to release its FY24 numbers, Bedi told Inc42 it managed to narrow its loss by 50% in FY24 and double its revenue. He declined to disclose the exact numbers but said that the acquisitions would help it increase revenue and improve EBITDA margin. 

 

Bedi said that VerSe managed to bring down its expenses by reducing marketing, technology, and server costs. On Inc42’s report about layoffs at Josh, the cofounder said that it was performance-based employee attrition, which is a “routine exercise” in high-growth companies.

He further said that DailyHunt currently accounts for a majority of VerSe’s revenue, but Josh has started seeing green shoots in terms of diversification of revenue stream from advertisements to digital commerce. 

“DailyHunt, which is a news content focussed platform, derives 100% revenue from advertising. The digital advertising spends have grown after a slump last year which gives us a promising outlook on DailyHunt. With the acquisition of Magzter, we have also expanded our access to a premium customer base for subscription content. Magzter offers subscriptions to more than 10,000 outlets at a reasonable market price which has unlocked the opportunity,” Bedi said. 

Josh’s Digital Commerce Focus

After India banned TikTok in 2020, there were expectations that Indian short video platforms would fill in the gap and, in the process, monetise their services. However, monetisation turned out to be a challenge, as most of the Indian startups are struggling on that front. 

Acknowledging this, Bedi said many such apps, especially the ones that raised small-ticket funding rounds, have not been able to withstand costly licensing agreements, streaming fees, content creator costs, among others, while relying on advertising as the sole source of revenue.

“At Josh, we have realised this challenge and tried to tap the digital commerce offerings on similar lines like China’s Kuaishou app, which has significant revenue coming in from ecommerce offerings. Right now at Josh, the revenue mix is 60:40 in terms of commerce and advertising channels,” Bedi said.

Josh’s digital commerce offerings are in the form of in-app gifting, tie-ups with ecommerce platforms, among others. VerSe is eyeing to take the share of commerce revenue of Josh to 85%.

“Global market leader TikTok, which started off with a purely advertising revenue model, is now deriving 80-85% of its revenue from commerce. This is what we want to do with Josh now,” the CEO said.