In FY24, ShareChat aims to reduce operational losses by a third

According to Manohar Singh Charan, chief financial officer of Mohalla Tech, which owns the vernacular social media platforms ShareChat and Moj, the company hopes to reduce its operational losses in FY24 to around a third of what they were the year before while increasing revenue by 45–50% annually. With a topline of Rs 540 crore, the firm reported losses of ~4,064 crore in FY23.

“Since we finished the purchase of MX TakaTak precisely two years ago, we have almost doubled in sales and cut our losses by over 90%. While corporate and SG&A expenditures need to be recovered, we anticipate operating profitably this month. In a conversation with Fe, he said, “We want to reach financial break-even in the next 12 months.

The Temasek-backed company has tightened its purse strings in the last two years as it works toward profitability. It has done this by laying off at least 800 employees, drastically lowering marketing expenses and the cost of bringing on a new user, and more than half a million dollars less in user service costs. With 350 million users on both platforms as of right now, it depends on organic user growth.

Like their Western counterparts, businesses in low-ARPU or low-ticket size markets cannot afford to have inflated cost structures, according to Charan. “As players in Asian regions have to go beyond simply advertisements, which is what we’ve done with our microtransactions feature, which accounts for about half of our revenue now, players in Western markets can be substantially lucrative from advertising alone,” he said.

Through a virtual giving feature that enables users to give digital gifts to content producers, ShareChat leverages microtransactions to enable consumers to pay content creators directly. The creator receives the remaining earnings as payment for being on the platform, with a percentage going to the corporation.

In the financing boom of 2021 and early 2022, ShareChat’s parent company received more than $1.1 billion. However, since then, in the midst of a global slowdown in investment, the company has struggled to secure further rounds. Convertible debentures helped the firm finance $49 million most recently; the round was headed by Lightspeed, Temasek, Alkeon Capital, and other current investors.

The business expects its short video app Moj to turn a profit by June, although ShareChat, one of its two platforms, has been profitable since October. Because Moj only offers video content and has more sophisticated recommendation algorithms than ShareChat, our cost of providing support to Moj users is greater. As a result, Moj’s break-even threshold is somewhat higher than ShareChat’s, according to Charan.