Mohalla Tech, which owns vernacular social media platforms ShareChat and Moj, expects to bring down its operating losses in FY24 to about a third of what it was in the preceding year, while driving its revenue up by 45-50% on year, according to its chief financial officer Manohar Singh Charan. In FY23, the company had posted losses of `4,064 crore on a topline of Rs 540 crore.
“From the time we had completed the acquisition of MX TakaTak, which was exactly two years ago, we’ve reduced our losses by over 90% and our revenue has almost doubled. This month, we are expecting to be operating profitable, while corporate and SG&A costs are still to be recovered. We’ve set a goal to get to cash break-even within the next 12 months,” he said, in an interaction with Fe.
In the last two years, the Temasek-backed company has tightened its purse strings on its path to profitability, by reducing headcount by at least 800 employees, significantly cutting down marketing spends and the cost of acquiring a new user, while also reducing its cost of servicing a user by more than 50%. It currently has a user base of 350 million across both platforms, and is relying on adding new users organically.
“Businesses in low-Arpu or low-ticket size markets cannot afford to have inflated cost structures like their Western counterparts,” Charan said. “While for Western players, advertising alone is big enough for them to be meaningfully profitable, players in Asian markets have to think beyond just ads, which is what we’ve done with our microtransactions feature, that accounts for roughly half of our business today,” he added.
ShareChat uses microtransactions to allow users to pay content creators directly, through a virtual gifting feature where they can send digital gifts to creators. While a portion of this earning goes to the company, the rest is given to the creator as a financial incentive to be on the platform.
ShareChat’s parent had raised more than $1.1 billion during the funding boom of 2021 and early 2022, but since then, it has struggled to raise further rounds, amid a broader downturn in funding across the globe. Recently, the company managed to raise $49 million via convertible debentures, in a round led by existing investors Lightspeed, Temasek, Alkeon Capital and more.
Among its two platforms, ShareChat has been profitable since October, while the company is expecting its short video app Moj to be profitable by June. “Our cost of servicing a Moj user is higher than that of a ShareChat user, because Moj is video-only and the recommendation engines are heavier. Therefore, the break-even point for Moj is slightly higher than what it is for ShareChat,” Charan added.
