ShareChat’s Strategic Cutbacks


ShareChat, the prominent social media unicorn, has recently announced a significant workforce reduction of 200 employees, representing approximately 15% of its total staff. This move, the second such downsizing within the year, aims to curtail costs and pave the way for achieving profitability within the next four to six quarters.


In a statement released on December 20, ShareChat outlined this strategic restructuring as a part of its annual planning for 2024. The decision reflects the company's commitment to streamlining its cost structure while striving to achieve profitability within a defined timeline.


This latest action follows a prior downsizing earlier in the year, where approximately 600 employees were laid off as co-founders Bhanu Pratap Singh and Farid Ahsan stepped down from their roles.


The duo recently garnered $3 million in seed funding for their robotics startup General Autonomy from leading venture capital firms like India Quotient, Elevation Capital, and several high-profile angel investors.


ShareChat, valued at $5 billion in its previous funding round, boasts an impressive roster of investors, including X (formerly Twitter), Google, Lightspeed, and Temasek. Despite a commendable 59% revenue surge to Rs 553 crore in FY23, the company's financial report reveals a stark reality – a staggering 72% spike in net losses, reaching Rs 5,144 crore in the same fiscal year.


The ballooning losses can be attributed to various factors, including increased server rents, financing costs, and foreign exchange losses. However, a company source revealed that the headline loss for FY23 is inflated due to notional cost entries and one-time expenses, such as amortization of goodwill from acquisitions, which amounted to Rs 1,903 crore. These entries, including forex losses and accrued interest on debentures, might not necessarily translate into actual cash outflow as they will convert into equity shares later.


In its financial filings, ShareChat reported growth in advertising revenue, surging from Rs 212 crore to Rs 255 crore in FY23. The sales of its Chatroom service also exhibited robust growth, escalating from Rs 120 crore to Rs 285 crore during the same period.


The company's major customers, Meta-owned Facebook and Google, showed a shifting trend in contribution to ShareChat's revenue stream. While Google and Shine Agency became the primary revenue drivers for FY23, Facebook's contribution dwindled, hinting at evolving dynamics between the entities.


Amid these financial moves, ShareChat made strategic decisions, such as discontinuing its gaming platform, Jeet 11, and reportedly laying off 100 employees in December 2022.


ShareChat's recent restructuring underscores the challenges faced by the company in its pursuit of profitability while adapting to evolving market dynamics and aligning with shifting revenue drivers. These strategic maneuvers are pivotal in shaping ShareChat's trajectory as it navigates through a competitive social media landscape towards its profitability objectives.