SaaS Unicorn Amagi Achieves Remarkable Rs 680 Cr Revenue in FY23
Three points you will get to know in this article:
- Amagi achieves notable revenue growth, expanding globally and dedicating 51% of expenses to employee benefits.
- Amid financial challenges, Amagi becomes a unicorn, securing substantial funding and sustaining a global presence in 40+ countries.
- Navigating pressures from softening broadcast markets and evolving OTT competition, Amagi strategically invests in technology to tackle future challenges in the vulnerable advertising market.
Amagi, the innovative cloud-based media SaaS technology firm, experienced an impressive threefold surge in its earnings over the past two financial years. Surging from Rs 219 crore in FY21 to a remarkable Rs 680 crore in FY23, the company displayed remarkable growth. However, despite achieving profitability in FY21, Amagi faced substantial losses in both FY23 and FY22.
Notably, Amagi’s revenue from operations exhibited a robust expansion of 57.77%, reaching Rs 680 crore in the preceding fiscal year ending March 2023. This substantial increase is evident in the consolidated financial statements obtained from the Registrar of Companies, showcasing a noteworthy rise from Rs 431 crore in FY22. The company’s financial journey reflects both resilience and challenges, emphasizing the dynamic nature of its performance.
Global Expansion and Client Portfolio
Established by Baskar Subramanian, Srinivasan KA, and Srividhya Srinivasan, Amagi empowers content creators to launch, distribute, and profit from live linear channels on free-ad-supported television and video services platforms through an array of solutions.
At the core of their revenue stream are innovative products such as Thunderstorm, a server-side ad insertion platform designed for OTT content publishers, and Cloudport, a broadcast-grade channel payout platform catering to both TV and OTT.
In the recent fiscal year, Amagi experienced its greatest success in the United States, where a substantial 71% of the total operating revenue was generated. Meanwhile, the United Kingdom and India contributed 12.9% and 2.6%, respectively, showcasing the company’s growing global footprint.
As per the website information, Amagi boasts an impressive portfolio of over 700 content brands, offering a whopping 50 billion-plus advertising opportunities. Operating in 40 countries worldwide, including prominent locations like the USA, UK, Korea, Canada, France, India, Singapore, Australia, and more, Amagi has truly established a global presence.
Expenditure Breakdown and Investment Strategies
When delving into the financial aspect, it’s noteworthy that a substantial portion, 51% to be precise, of the total expenditure is allocated towards employee benefits. In the fiscal year 2023, this expenditure witnessed a significant 22% increase, reaching Rs 438 crore. It’s important to mention that our calculation of employee benefits for FY23 excludes non-cash components such as ESOP and SARs, totaling Rs 161 crore. This meticulous approach provides a comprehensive perspective on Amagi’s financial landscape during the specified period.
Recent Funding and Valuation
The company dedicated Rs 38 crore and Rs 224 crore to Employee Stock Ownership Plans (ESOP) in fiscal years 2023 and 2022, respectively, settling them in cash. Notably, the communication expenses, encompassing servers and other information technology facets, observed a significant upswing of 55.6% in FY23. The collective impact of subscription fees, advertising, legal, training, and various other overheads propelled the overall expenditure by 40.39%, reaching Rs 855 crore in FY23 from Rs 609 crore in FY22.
It’s pertinent to mention that we have deliberately excluded the cost ramifications of Compulsory Convertible Preference Shares (CCPS), Optionally Convertible Preference Shares (OCPS), and the fair value of equity shares, totaling Rs 763 crore, in FY22, given their non-cash nature.
Despite commendable growth in the preceding financial year, Amagi successfully maintained its losses at Rs 175 crore in FY23, a subtle contrast to the Rs 178 crore recorded in FY22. The Return on Capital Employed (ROCE) and Earnings Before Interest, Taxes, Depreciation, and Amortization (EBITDA) margins were reported at -23% and 23%, respectively. On a unit level, the company expended Rs 1.26 to generate a single rupee in FY23.
Amagi achieved unicorn status by securing $95 million in a recent funding round led by its steadfast supporter, Accel. Just last November, the company successfully attracted an additional $110 million, valuing the company at an impressive $1.45 billion. According to reports from various media outlets, discussions were underway for Amagi to raise a substantial $250 million in a new funding round.
Challenges and Future Prospects
The global softening in broadcast markets is exerting some pressure on Amagi, particularly in a crucial segment for the company. Simultaneously, the OTT (Over-The-Top) segment is rapidly evolving, possibly intensifying competition. Notably, Amagi’s commitment to integrating its solutions with clients involves significant upfront investments in advanced technology. This approach, while creating a loyal customer base, poses a considerable initial cost.
Despite these strategic investments, a vulnerable advertising market poses a challenge, acting as a potential drag on profit margins. Overcoming this hurdle stands as the primary challenge for Amagi moving forward, as it strives to maintain its momentum in the dynamic business landscape.
Amagi, a cloud-based media technology firm, achieved a threefold surge in earnings, escalating from Rs 219 crore in FY21 to Rs 680 crore in FY23, amid global expansion and impressive client portfolio of over 700 content brands. Notably, the company allocated 51% of total expenditure towards employee benefits in FY23 and faced substantial losses. Despite this, Amagi achieved unicorn status, securing significant funding and maintaining a global presence. Yet, challenges from shifting broadcast markets and evolving OTT competition, alongside strategic technology investments and a vulnerable advertising market, pose critical obstacles for Amagi’s future growth and profitability.
