Homegrown social media unicorn Mohalla Tech, which operates ShareChat and the short video platform Moj, reported a 33% year-on-year revenue growth, reaching Rs 718 crore in FY24, up from Rs 540 crore in FY23. Consolidated losses before tax in FY24 stood at Rs 1,898 crore. In FY23, the social media company recorded a net loss of Rs 5,144 crore, primarily due to the write-off associated with the MX TakaTak acquisition.
The company is targeting an IPO within the next 18-24 months after achieving overall profitability, which it expects by the end of this fiscal. Commenting on the financial, Manohar Charan, chief financial officer, ShareChat, said: “Our first target is to achieve overall profitability. The usual practice is to prove at least two quarters of profitability before starting IPO preparations.”
The app turned profitable in October, posting a 15% positive Ebitda margin, while its short video platform Moj is expected to achieve profitability by the end of the current fiscal, Manohar added. “We are now burning Rs 5 crore per month and are already at a revenue run rate of Rs 800 crore for FY25. We will head into FY26 with a fully profitable P&L statement.”
Manohar attributed the improved financial performance to a combination of revenue growth and cost optimisation, which included a 50% reduction in server-side costs. To achieve this the company has rewritten two-thirds of the company’s code base, cleaned up accumulated technical debt, and made its server architecture more efficient.
“The cost of tech infrastructure is almost like the cost of material for any manufacturing company. If you pick an FMCG company, if the cost of manufacturing a sachet of shampoo goes down by 50%, their ability to generate profit goes up by that much.” he said. The company expects additional savings of Rs 70 crore to come from further optimisations by the end of FY25.
During FY24, its marketing expenses were negligible with customer acquisition costs almost down to nil, but the company plans to increase spending in the next two fiscals to support user acquisition as it approaches profitability, according to a company statement. “Now, whatever money we spend to acquire a user generates returns in the form of profits within three to four months. So it makes sense to invest it back into marketing,” Manohar said.
Despite the revenue growth, the company fell short of its FY24 revenue target of Rs 800–900 crore, which Manohar attributed to challenges in the advertising segment. “The advertising segment has been facing challenges, as a large part of the revenues were driven by fantasy gaming and crypto companies in 2021-22, which stopped advertising,” he said, adding that advertisers often do not create ad copies for short video platforms, which limits ad spend. “Short video as a surface still has a catch-up to do. Advertisers are spending more on social media platforms, as they see it as a more established category.”
Advertising revenue in FY24 grew 23% to Rs 315 crore, while live streaming revenue increased 41% to Rs 402 crore. On advertising, the company’s gross margin is more than 90%, while on live streaming, which involves virtual gifting, where users send tokens to creators or live audio hosts, with ShareChat and Moj taking a platform fee for these transactions, the gross margin is in the range of 35–40%, as a significant portion is paid to creators and payment gateways. The creators earned $40–45 million annually through the platform, the CFO added.
Video continues to dominate as the primary content format on ShareChat and Moj, contributing 65–70% of all views. Festival-related content, vernacular news, and cultural themes are the most popular genres, with Hindi, Tamil, Telugu, Kannada, and Malayalam being the top-performing languages.
Manohar said the company is now exploring acquisitions to drive growth alongside organic expansion. “We are looking at inorganic growth opportunities while also increasing our user base and revenue per user,” he said.
The company which has raised a total of $1.22 billion so far, had its latest round earlier this year with $65 million coming in at a valuation of $1.5 billion, a steep decline from its peak valuation of $4.3 billion in 2022. According to Tracxn, as of March 2023, Touchstone Partners holds 17.8% of the company, Lightspeed Venture Partners 11.9%, SAIF Partners 7.0%, and the founder retains an 11.4% stake. An ESOP pool accounted for 4.2% of equity, as of then.