Social media unicorn ShareChat has fired 200 employees, around 15 percent of its workforce, in second such move this year, to cut costs and achieve profitability within the next four-six quarters.
“ShareChat today undertook a strategic restructuring as part of its annual planning for the year 2024. The decision reflects the company's commitment to streamlining its cost base and achieving profitability within the next four-six quarters,” the company said on December 20.
“As a result, the organization has moved to a flatter org structure and prioritized product initiatives that resulted in a reduction in team sizes by roughly 15 percent.”
The move comes after the company laid off around 600 employees in a similar cost-cutting move earlier this year, as co-founders Bhanu Pratap Singh and Farid Ahsan stepped down.
The duo recently raised $3 million in seed funding from venture capital firms India Quotient, Elevation Capital and a few high-profile angel investors for their robotics startup General Autonomy.
Mounting losses
Valued at $5 billion in its last funding round and backed by investors such as X (formerly Twitter), Google, Lightspeed, and Temasek, ShareChat’s revenue increase by 59 percent to Rs 553 crore in FY23 from the previous year, the company's annual financial report, sourced from Tofler, shows.
But the social media firm’s net losses shot up 72 percent to Rs 5,144 crore in FY23 on rising server rents, financing costs, foreign exchange losses, etc.
According to a company source, the headline loss number for FY23 is inflated because of multiple notional cost entries and one-time expenses such as amortisation of goodwill from acquisitions (amounting to Rs 1,903 crore), forex losses on account of restatement of USD denominated debentures and accrual of interest on debentures.
In reality, these debentures, along with all accrued interest, would convert into equity shares later and, hence, none of these entries would materialise in actual cash outflow.
In its annual financial filings, ShareChat reported that advertising revenue increased to Rs 255 crore in FY23, up from Rs 212 crore in the previous year.
Sales of the company's Chatroom service grew from Rs 120 crore in FY22 to Rs 285 crore in FY23.
Meta-owned Facebook and Google were the company’s biggest customers in the previous two financial years.
Facebook accounted for Rs 25 crore in revenue in FY21 and Rs 27 crore in FY22, while Google contributed Rs 26 crore in FY21 and Rs 50 crore in FY22 to revenues.
However, Facebook, which is a rival of Sharechat as its short-video platform Moj competes with the global tech giant’s Instagram, is no longer one of the biggest revenue drivers for the Indian startup.
In FY23, Sharechat’s two biggest customers were Google and Shine Agency, both of which brought revenues of around Rs 58 crore.
The firm shut down its gaming platform, Jeet 11, in December 2022 and reportedly fired 100 employees.
Discover the latest Business News, Sensex, and Nifty updates. Obtain Personal Finance insights, tax queries, and expert opinions on Moneycontrol or download the Moneycontrol App to stay updated!
