How Mygate Reduced Cash Burn By 85% In FY24, Turned Ad Sales Into Biggest Revenue Generator

How Mygate Reduced Cash Burn By 85% In FY24, Turned Ad Sales Into Biggest Revenue Generator

SUMMARY

Mygate is a B2B2C product, which means an individual can download and use the app only after their resident welfare associations (RWAs) or similar bodies pay for the service and onboard the entire community

The Bengaluru-based startup closed FY23 with dismal numbers. Eventually, it earned INR 77.2 Cr in revenue against a loss before tax (IND AS) of INR 226.4 Cr, a 57.9% YoY increase from INR 143.3 Cr loss in FY22

Refocussing on revenue, job cuts and belt-tightening eventually paid off. Within a year, Mygate reduced its cash burn by 85% during FY24, with zero cash burn recorded in Q4 (January-March quarter)

In January 2023, the cofounders of Mygate, a visitor and security management platform for gated communities, were experiencing turbulence. Set up by Vijay Arisetty, Abhishek Kumar and Shreyans Daga in 2016 and widely lauded as a category pioneer, the Bengaluru-based startup was about to close FY23 with dismal numbers. Eventually, it earned INR 77.2 Cr in revenue against a loss before tax (IND AS) of INR 226.4 Cr, a 57.9% YoY increase from INR 143.3 Cr loss in FY22.“In FY21 and FY22, we scaled aggressively and went from 5K to 25K communities. But throughout the pandemic, most services were offered at minimal prices or even for free. Mygate was burning cash excessively across technology, product development, personnel, sales and operations,” said Kumar in a recent interaction with Inc42.“What helped at that stage was our vision to solve a significant problem across gated communities and our goal to emerge as the largest and most comprehensive community platform,” said Kumar.“Around February 2023 (FY23), we took a tough call and stopped offering freebies. Our focus shifted from community acquisition to revenue generation, prompting a significant change in strategy. Mygate also laid off nearly 200 employees between December 2022 and February 2023 as part of the business restructuring, bringing the headcount down to 400,” the CEO clarified.To tackle multi-pronged issues, the platform has adopted a microservices architecture capable of handling 600K check-in requests per minute. This setup has ensured quick scaling to meet fast-expanding business needs. The platform is technology-agnostic, deploying the best solutions for specific problems – a horses-for-courses approach.“Despite 100% business growth since 2023, our infrastructure costs have only risen by 10%. We control costs by adopting new technologies and re-architecting bottlenecks,” said Daga.By leveraging its technology prowess, Mygate anticipates 75% YoY revenue growth in FY25. It competes with Gatekeeper (by ApnaComplex), NoBrokerHood and JioGate and claims to be the largest community management app in India, with a presence in 4 Mn+ homes in 30+ cities.The community management app now earns 65-70% of its revenue from advertising. Schools, hospitals, automobile companies and other businesses increasingly rely on Mygate to run their campaigns.“Many initiatives were introduced during this period, enabling us to examine the business holistically from a P&L standpoint. We reviewed each revenue item to explore scaling opportunities and analysed each cost item to enhance efficiency and service quality while increasing revenue. The FY24 results are the culmination of those efforts.”

Mygate’s financial health raised eyebrows over the years as the startup sold subscriptions to apartment complexes. No doubt its revenue grew significantly year over year, but so did its losses. Plans were afoot to expand beyond its three core services – gate security (visitor and delivery management), in-community operations (booking amenities, managing clubhouses and related payments) and home management system (home services, help desk, household staff management, recurring bill payments). However, more advanced features like end-to-end security (think of integrated security cams or automated boom barriers) or collaboration with ecommerce firms for a ‘hitchless’ delivery ecosystem did not happen on-ground.

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