Pocket FM's FY24 revenue tops Rs 1,000 crore; losses down 21%

United States accounts for 70 percent of Pocket FM's revenues, followed by India at 15 percent

Pocket FM surpassed the Rs 1,000-crore revenue milestone in the financial year 2023-24 on a robust growth in microtransactions and advertising, the audio series platform said on November 27.

Pocket FM’s revenue came in at Rs 1,051.97 crore, a nearly six-fold increase from Rs 176.36 crore in the previous year. The growth was primarily driven by a 484 percent year-on-year (YoY) increase in microtransaction-led subscription revenue, which rose to Rs 934.73 crore in FY24.

The Bengaluru-based startup narrowed its losses by 21 percent to Rs 165 crore in FY24, from Rs 208 crore loss in FY23, it said.

In an interview to Moneycontrol, Pocket FM CFO Anurag Sharma said the United States accounts for 70 percent of the firm's revenues followed by India at 15 percent. The remaining 15 percent comes from other parts of the world, where the customer acquisition efforts have been minimal.

Pocket FM, which previously offered its content through various subscription plans, moved to a microtransactions-led model in early 2022. The platform now offers consumers free access to a few episodes every 24 hours. To access more episodes, users can purchase virtual coins to unlock them, a model that is commonly seen in popular mobile games.

Advertising revenue grew more than seven-fold to Rs 89.34 crore in FY24, up from Rs 12.5 crore in FY23.

Pocket FM said it also focused on optimising costs and improving operational efficiency in its push for profitability.

The firm's expense-to-earnings ratio improved to 1.16 in FY24, down from 2.18 in the previous year. This means, Pocket FM spent Rs 1.16 for every rupee earned in FY24 compared to Rs 2.18 for every rupee earned in FY23.

Sharma said the overall cash flow is negative, largely due to the firm's investments in content creation as it expands into new markets across Europe, Latin America (LATAM), Canada, Australia, and New Zealand.

"We've been focusing on European expansion in a big way. We have been able to make some impact in English-speaking countries such as the United Kingdom. We want to replicate our model in other languages and new geographies," Sharma said.

The company has started creating content in Spanish and German languages and plans to expand to two or three more countries in 2025.

"Our focus will always remain on growth first. I think profitability is a by choice definition for us. Even if we were to remove or lower our marketing spends, we could be profitable at any given point of time," Sharma said.

"We are focusing more on user engagement, their experience, retention on our platform, and creating more diverse content to target different sets of users. Profitability will be a byproduct of our growth" he added.

Surging user consumption

Founded in 2018 by Rohan Nayak, Prateek Dixit, and Nishanth Srinivas, Pocket FM offers more than 75,000 audio series on its platform spanning genres such as romance, drama, thriller, fantasy and science fiction. The series are offered in English and several Indian languages such as Hindi, Tamil, Telugu, Malayalam, Bengali, Kannada and Marathi.

The app claims to have more than 200 million listeners who have streamed more than 100 billion minutes of content, with an average daily listening time of over 115 minutes. It also claims to have registered more than 45 million transactions, so far, in 2024.

Over 30 audio series have surpassed the Rs 10-crore revenue mark, including seven that have crossed the Rs 100-crore mark, the company said.

In June, Pocket FM partnered with the artificial intelligence (AI) voice cloning startup ElevenLabs to launch a feature called AI Audio Series, which allows writers to turn their stories into audio series on the platform with a single click.

The firm said more than 40,000 AI audio series have generated more than Rs 25 crore in revenue, so far, in 2024.

"In the content business, one of the important elements is how do you identify blockbuster shows. AI is helping us in launching many shows on our platform. We see this as a testing ground for us," Sharma said. This approach will help the startup run a lean model, as it won't have to burn money on discovering shows in new markets.

Pocket FM is currently leveraging AI to build a "blockbuster engine" that can identify which shows to launch and which ones to promote to users, Sharma said.

Although the technology is still in the nascent stage, Sharma said AI has been a "great enabling tool for our writers, helping them think outside the box, offering suggestions, and providing different show cliffhangers".

Sharma also noted that they have been mindful of not changing the human experience that the company's users currently have while keeping the momentum alive.

Pocket FM counts Lightspeed, Tencent, Tanglin Venture Partners, Goodwater Capital, Stepstone Group, Times Group and South Korean internet giant Naver among its investors.

The company was last valued at $750 million when it raised $103 million led by Lightspeed in March. It has raised $196.5 million financing to date.

Cross-town rival Kuku FM reported a revenue of Rs 87.95 crore for FY24, a two-fold jump from Rs 41.2 crore in the previous year. It also trimmed its losses by 17.8 percent YoY to Rs 95.8 crore for the year, from Rs 116.6 crore in FY23.