Growth in Live Streaming and Advertising Contributes to Robust Performance
Mohalla Tech, the parent company of the popular vernacular social media platform ShareChat and short video app Moj, has reported a 33% increase in revenue for the fiscal year ending March 2024. The company’s revenue from operations hit Rs 718 crore, up from Rs 540 crore in FY23, demonstrating significant growth despite the challenges posed by the competitive market and a fluctuating economy.
One of the key drivers behind this surge was ShareChat’s success in live streaming, which now accounts for over half of its total operating income. The live streaming segment grew by 41.4%, bringing in Rs 403 crore in FY24. Advertising, a secondary revenue stream for ShareChat, also performed well, with a 23.5% year-on-year growth to Rs 315 crore in the same period.
This growth was complemented by non-operating income of Rs 29 crore, largely from interest and financial asset gains, bringing the total revenue to Rs 747 crore for the year. Despite these gains, ShareChat’s adjusted EBITDA losses saw a remarkable reduction of 67%, falling to Rs 793 crore from Rs 2,400 crore in FY23, signaling improved cost management.
Strategic Cost-Cutting Measures and Operational Efficiencies
In addition to revenue growth, ShareChat’s cost-cutting efforts played a critical role in improving its financial health. Server costs, historically a significant expense for the company, were reduced by 50% in FY24. This was a crucial development as server expenses had previously been a major burden on the company’s bottom line.
Furthermore, ShareChat also managed to reduce employee benefits costs by 17%, bringing down total employee-related expenses to Rs 580 crore. Of this, Rs 126 crore was attributed to employee stock ownership plans (ESOPs), a non-cash item that helped in managing actual cash flow. Despite these cost reductions, the company’s overall operating expenses dropped to Rs 1,540 crore in FY24, down significantly from Rs 3,119 crore in FY23.
While ShareChat has made notable progress in cutting down operational costs, it still posted a net consolidated loss of Rs 1,898 crore in FY24, though this was a sharp improvement from Rs 5,143 crore the year before.
Growing User Base and Future Outlook
Despite its ongoing challenges, ShareChat remains one of India’s largest social media platforms. The company claims to have over 325 million monthly active users (MAUs) across its services, with Moj, its short-video app, boasting a sizable user base of 160 million MAUs.
This large and engaged user base presents a significant opportunity for future growth, especially in the areas of advertising and content monetization. However, ShareChat has also faced challenges on the financial front, including a significant reduction in its valuation. During its last funding round in June 2022, the company saw its valuation drop from $5 billion to under $2 billion. This came alongside the company’s decision to lay off around 700 employees in 2023, as part of broader cost-reduction measures aimed at stabilizing the business.
As part of its latest funding initiatives, ShareChat has raised a $65 million debt round, which includes an infusion of $16 million from Singapore-based EDBI. The company has raised about $1.8 billion in total, backed by investors such as Google, Temasek Holdings, and Tiger Global.
Challenges and Strategic Shifts Ahead
While the company has made strides in streamlining its operations, its future success will depend on its ability to continue scaling its user base while controlling costs. The platform will need to further diversify its revenue streams, particularly in advertising, which still remains a small part of its overall income compared to live streaming. Moreover, the company’s struggle with high losses, despite revenue growth, signals that it may face difficulties in turning a profit in the short term.
The tech industry’s competitive landscape, along with the unpredictability of the social media market, suggests that ShareChat will need to remain agile and focused on its cost management and user acquisition strategies.
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