Koo, the home-grown microblogging website, continues to witness a decline in its monthly active user (MAU) base, the company said in its latest communication to investors, primarily because it spent less money on acquiring new users as it lowers its monthly cash burn.
MAUs are the ones who log on to an app at least once a month.
Koo, which is considered Twitter’s clone, saw a sharp increase in MAUs when the government was locked in a tiff with the global microblogging website in June-July 2022.
That time, founders Aprameya Radhakrishna and Mayank Bidawatka aggressively pitched for celebrities and political leaders to use Koo as an alternative. A bunch of them, like Union IT Minister Ashwini Vaishnaw, created their accounts on the app but leaders from the opposition parties were largely missing. Even globally, users in Brazil flocked to Koo which pushed downloads late last year.
The Tiger Global-backed startup saw its MAUs drop to about 3.1 million in April 2023, the third straight month of decline this year.
In January 2023, Koo’s MAUs were around 4.1 million, which fell closer to 3.5 million in February and dropped again to about 3.2 million in March.
The 3.1 million MAUs in April was just about a third from a peak of 9.4 million in July 2022, when Twitter and the Indian government were involved in a legal tussle.
Lowering cash burn
The steady decline in Koo’s MAUs was largely because the Bengaluru-based startup was spending lesser to acquire new users, and also retain existing users as it lowers its cash burn rate in an environment where capital has become difficult to access.
Thanks to reduced marketing spends and at least two rounds of layoffs in the past year or so, Koo managed to reduce its monthly cash burn to around Rs 10.2 crore in April 2023, from roughly Rs 16 crore in January, according to Koo’s Management Information System (MIS), a set of documents startups file with their investors periodically.
The monthly cash burn of Rs 10.2 crore in April, however, is far from the target of Rs 6.5 crore Koo had set for itself by March-end. In response to Moneycontrol’s queries, the company did not mention when it will be able to achieve its target.
It, however, said the numbers were inaccurate and refused to share any specific details on the declining trend.
“As a privately listed company, we are not required to disclose information on our burn, financial information and DAU/MAU numbers publicly. The numbers you have stated in your questions are also incorrect. With the global slowdown and the current market environment, our focus this year has been to optimise our costs and focus on revenue. We have moved from a growth engine to a very efficient system that is super optimised on marketing, tech and people costs, successfully bringing down our burn by 4X,” a company spokesperson told Moneycontrol.
Catch-22 situation
An internet sector analyst said Koo is in a Catch-22 situation. “If the company continues to lower its burn rate, it will see declining MAUs. It can choose to shore up MAUs but that would mean burning more money than it already has and most investors won’t be willing to take that route now,” the analyst said.
To be sure, most consumer internet startups are facing a similar dilemma and the situation is not specific to Koo. “Even in the past, there have been messaging apps which tried to take away market share from WhatsApp but since their offerings were not incremental, they lost momentum. We’re seeing exactly that play out with Koo,” he added.
Driving up engagement
In fact, Koo, has been trying to offer differentiated services, compared with Twitter, with over 20 global languages and several other initiatives.
On June 16, 2023, Koo Premium was launched. It provides creators an opportunity to monetise their content and enhance engagement. Through Koo Premium, content creators can earn money by exclusively sharing content only with their subscribers.
The launch of Koo Premium comes after the Accel-backed startup had introduced ‘Koo Coins’, wherein it rewards users for spending more time on the platform, thereby driving engagement.
“We just launched our first creator monetisation offering, Koo Premium, last week to enable creators to engage their fans and earn money through subscriptions and are already seeing creators and journalists from across the country start to monetise their content on Koo,” the company spokesperson said when asked about the new initiatives.
Koo said it will continue to experiment with monetisation as it looks to build a sustainable business.
“We also started our monetisation journey late last year. We have achieved a very healthy revenue run rate in such a short span since we started focusing on revenue and proving unit economics. Our revenue per daily active user (DAU) is 3-4x that of Indian content unicorns that monetise using ads. We expect this to rise even further through constant experimentation,” the company spokesperson added, without revealing specific numbers.
This comes at a time when Koo’s revenues were just Rs 14 lakh in FY22, as per the latest available data, up from Rs 8 lakh in FY21. During the same period, Koo’s losses jumped 460 percent to Rs 197 crore from Rs 35 crore in FY21.
The jump in losses was also because Koo has scaled fast with 60 million downloads in the past three years.
“In just over three years of launch, Koo is the second-largest microblog available to the world with over 20 global languages on the platform. We are well-capitalised and remain positive about building a social media platform from India for the world,” the company spokesperson said when asked about fund-raising plans.
Founded by Radhakrishna and Bidawatka in 2020, Koo has raised over $65 million from large investors like Tiger Global, Accel, Blume Ventures and was last valued at over $270 million, as per data available on Tracxn, a market intelligence data provider. Naval Ravikant and Balaji Srinivasan are among the notable angel investors in Koo, data showed.
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