Fintech company Douugh (ASX: DOU) touts itself as a responsible financial “super app” dedicated to financial wellbeing but they may ironically need to consider their own financial health after reporting a loss of $11.6 million, blaming wasted marketing spend and employee benefit expenses. 

While they managed to generate $600k in revenue from their super app, Douugh spent $4.4 million on advertising and marketing costs to establish a user base in the US, and it spent a further $5.2 million on employee benefits expenses. The Company recorded a loss after tax of $11.6 million. 

With its cash in hand limited to $3.27 million at the end of FY22, Douugh is speeding towards its launch in Australia in late 2022, which will replace the current ‘Goodments by Douugh’ share trading offering.

Citing its promotional activities in the US, the Company noted that it had to shift its resources to Australia, which impacted marketing activities in the US in the second half. According to its report, the lack of advertising in America resulted in fewer people using the app and subsequently boosting revenue with their $4.4m marketing spend essentially just becoming cash burned. The Company anticipates that revenue will build once the platform is launched in Australia.

Douugh’s Founder and CEO Andy Taylor detailed, “Since our IPO in October 2020 and following the acquisition of Goodments in Australia. The Company has invested heavily in R&D to engineer our technology platform, Al-powered data engine and consumer facing mobile applications, whilst simultaneously launching and validating the service with US customers and preparing for our AU launch.”

“Our learnings and market research across the US and Australia has shown that leading with a marketing message and product architecture that requires customers to sign up and fund a Douugh bank account in order to unlock key features (closed loop) creates unnecessary friction.”

Based on reverse enquiries and the growing market for seamless financial experiences, Douugh is assessing enterprise partnerships to boost customer growth in the US and Australia. It is also exploring B2B offerings.

The Company also aims to depart from paid marketing activities and rely on organic channels of growth. It wants to remove the barriers to entry for customers to onboard and activate, whilst reducing our reliance on paid marketing channels by building a supportive community of loyal customers to foster viral growth. 

However, seeing how the Company blamed lowered marketing activities for lower app usage in the US, it might be presumptuous to depend solely on organic growth. 

For its Australian launch, Douugh is learning from the mistakes it made in the US and attempting to come up with a better strategy for the live offering. Taylor noted that, in Australia, the Company will be focusing on providing services to a more affluent customer base with wealth management solutions rather than being led by banking, budgeting and payments.