Decoding ShareChat’s financial performance in FY24

Mohalla Tech, the parent entity of the vernacular social media platform ShareChat and short video entertainment app Moj, recently claimed 33% year-on-year growth in FY24. However, the Bengaluru-based firm didn’t disclose the net losses and showed adjusted EBITDA instead.

Entrackr has sifted through the financial statements of the company to decode the complete financial details and other important aspects.

ShareChat’s revenue from operations grew 29.9% to Rs 718.1 crore during the fiscal year ending March 2024 as compared to Rs 552.73 crore in FY23, according to its consolidated financial statements filed with the Registrar of Companies.

Mohalla Tech is engaged in the business of operating mobile software applications bearing the name and style ‘ShareChat’ and 'Moj', for the creation, consumption, and sharing of various quotes, videos, images, news, and other content by users.

Revenue from live streaming or chatroom contributed 56.1% of the company's total operating revenue and grew by 41.4% to Rs 403 crore in FY24. Revenue from advertising went up 23.5% to Rs 315.37 crore.

Last year, the entity generated Rs 12.52 crore via online fantasy sports platform Jeet 11 which shut down in December 2022.

Additionally, the company also cornered Rs 28.98 crore from interest and gains on financial assets, taking the overall revenue to Rs 747.08 crore during FY24.

See TheKredible for the revenue breakdown of all segments.

On the cost side, employee benefits emerged as the largest cost center, accounting for 21.9% of the overall expenditure. This cost fell 16.8% to Rs 580.39 crore in FY24 from Rs 697.96 crore in FY23. The cost also counts an ESOP expense worth Rs 131.95 crore in FY24. In 2023, the firm put several cost-cutting measures and sacked 700 employees across two phases. This cost is expected to be reduced further in FY25 as the company laid off 5% of its employees in August 2024.

Notably, spending on server rent dwindled 45.3% to Rs 559.57 crore in FY24. Being a financially leveraged company, ShareChat paid heavy interest on debts, as a result, its finance cost rose 50% to Rs 510.57 crore during the period.

The company also booked Rs 402.56 crore under the provision for doubtful assets and loans in FY24, which jumped 102% compared to FY23. Overall, its total expenses declined 33.2% to Rs 2,644.71 crore in FY24 from Rs 3,958.75 crore in FY23.

Check TheKredible for the detailed expense allocation.

Caveat: We have excluded the cost of Rs 1,903 crore against the amortization of intangible assets (non-cash) while calculating the expenses and losses for FY23. This was due to the balance being written off in optionally convertible debentures for MX TakaTak.

Followed by a sound reduction in expenses and a decent growth in scale, ShareChat’s losses shrank 41.4% to Rs 1,898.94 crore during FY24 against Rs 3,240.83 crore in FY23.

While the company’s adjusted EBITDA loss strengthened to Rs 777.84 crore in FY24 from Rs 2,342.11 crore in FY23. This excludes finance cost, depreciation, amortization, ESOP cost, provision of doubtful assets, and foreign exchange loss.

Additionally, ShareChat's outstanding losses mounted to Rs 12,438 crore in FY24.

Operating cash outflows of the firm also improved by 68.3% to Rs 964.96 crore during the period. The EBITDA margin of the company bettered to -183.50% in FY24. On a unit level, it spent Rs 3.68 to earn a rupee of operating revenue.

At the end of FY24, the company had Rs 36.2 crore in cash and bank balances, and the total current assets were worth Rs 128.96 crore. In 2024, it raised $65 million in debt across two tranches. ShareChat has raised around $1.3 billion from investors including Twitter (now X), Alkeon Capital, Moore Strategic Ventures, and Tencent, among others.

Borrowings increased marginally, with non-current liabilities rising from Rs 4,810.17 crore in FY23 to Rs 5,401.44 crore in FY24, indicating continued reliance on external funding. The company also had outstanding dues from creditors and micro-enterprises and small enterprises worth Rs 357.78 crore during the financial year.

With these losses, heavy debts, and less cash at hand, the company will have to rely on external funding for working capital requirements.