The multifaceted platform Substack has been gaining momentum slowly, however, its financial health has been a secret for a long time. To put an end to this the financial result of Substack is here and there are 3 key takeaways from it.
Before we dive right into it let us clarify the fact that the results we are about to look at are from 2020 and 2021. So with that out of the way, we can now focus on the company’s financial health and other important aspects that present a well-rounded view of things to come.
Firstly Substack raised a lot of money in 2021 which was for investing in its platform as well as for growing its user base. This means that in 2021 the company was growth-oriented.
User metrics show strong engagement as the company saw its paid subscribers go up from 250k in 2020 to 500k in 2021. This means in a year the user base of paid readers doubled up.
Going further these paid readers spend no less than 3.5 newsletters a week and spend an average of 21 minutes per day on their platform.
This demonstrates that the company has a loyal customer base that values the content the company is offering, however, even with the financial health of the company being good the cash needs are high.
In 2021 generated 8.2 million dollars in net revenue and they have so far also raised 80 million dollars in funding. The company is set to raise more funds from a new funding round at a valuation of 1 billion dollars.
While the exact figure that the company expects to raise remains undisclosed the guess would be that they would be looking to raise a significant sum and the question is why?
The financial result of Substack is here and there are 3 key takeaways from it. Its growth is expensive as the company is pumping a lot of money into sales and marketing in a bid to acquire new customers as well as to keep a hold of the old ones.
Moreover, they have also made moves away from newsletters as they have launched Substack Reader as well as acquired Cocoon. For stuff like this investment is required for which the company will keep needing cash.
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So without giving away much the financial report has given away some crucial details and if anything it paints a good image of the company’s growth and financial health. However, at this stage that is about it, and only a similar report for 2022 would tell if the people are correct in assuming the company’s health is still great, are right or not.
The company’s growth model is expensive, its customers are loyal, and the company’s cash needs are high and so that leaves us with the conclusion that the company will need to raise a significant amount of funding if they want to continue making investments in growth initiatives.
Source: Substack Official Release
