ShareChat posts Rs 80 Cr revenue in FY21; losses balloon to Rs 1,460 Cr

FY21 was a milestone year for social media platform ShareChat. At the end of the last fiscal year, the company turned unicorn with the $502 million Series E round. The year also saw the first signs of its revenue plans falling into place.

FY21 was the second year of revenues for ShareChat during which its operating revenue surged by 754.3% to Rs 80.3 crore from Rs 9.4 crore in FY20.

For the six-year-old company which controls vernacular social media platform Sharechat and short video entertainment app Moj, advertising sales remains the revenue driver, collecting 95.8% of its annual revenues. 

Ad sales grew by 764% to nearly Rs 77 crore during FY21 from Rs 8.9 crore in FY20, its annual financial statements show.

The social media company also sells “Sharechat Coin” via in-app purchases for its chatrooms which accounted for 4.2% of its revenues, amounting to Rs 3.4 crore during FY21.

Sharechat had acquired Elanic in February 2020 to boost its social commerce operations but the company had no revenues from this vertical in FY21. The company had also launched its fantasy sports gaming platform Jeet11 in February 2020 which remained a pre revenue vertical in FY21. 

The company has raised over a billion dollars during the last twelve months to develop revenue streams from social/live commerce and advertising sales but its collections from these segments remained limited during the last fiscal.

Business development expenditure which likely includes customer acquisition and technology-related costs was the largest cost centre for the Twitter-backed company making up 39.3% of its annual costs. Such expenses grew by over 93% to Rs 611.5 crore during FY21 from Rs 316.8 crore in FY20.

By the end of  March 2021, monthly active users (MAUs) on both ShareChat and Moj had grown to a claimed figure of 160 million from less than 80 million at the start of 2020.

The growth in userbase and content generation was also reflected in the company’s server rentals which grew by 94.7% YoY to Rs 367 crore from Rs 188.5 crore in FY20. 

This was the second-largest cost incurred by the company, accounting for 23.6% of annual costs. Expenses related to analytics tools also grew by 55.6% to Rs 34.7 crore in FY21 from Rs 22.3 crore spent in FY20.

ShareChat also increased its employee base to harness the growth in scale of operations and had around two thousand employees by December 2021. The employee benefit expenses paid out by the company grew by 121.4% to Rs 177.8 crore during FY21 from Rs 80.3 crore in FY20.

These payments also included share-based payments of Rs 35.1 crore and the company increased its ESOP pool to around Rs 513 crore by the end of FY21.

To enable music backed content on its platforms, ShareChat had entered into a licensing agreement with record labels for the usage of their music catalogue for both ShareChat and Moj. This payment of Rs 42.4 crore pushed total content-related costs to swell by 685.7% to Rs 99 crore during FY21 from only Rs 12.6 crore spent on the same in FY20.

Another Rs 10.8 crores were spent on legal and prefessional fees, pushing the company’s annual expenditure to Rs 1,557 crore during FY21 which grew by 117.8% as compared to Rs 715 crore spent in total during FY20. ShareChat spent Rs 19.4 to earn a single rupee of operating revenue, improving from Rs 76.1 spent to ear the same in FY20.

Its EBITDA margins improved marginally -1500.5% while annual losses have surged by 115.8% YoY to Rs 1,460 crore during FY21.

By tying its revenue plans to an ad-funded model, the firm has picked a tough route to a serious scale, even as it seems to be doing well on the user front. India’s online market remains dominated by Google and Facebook owned properties, with these two picking up over 65-70% of the money spent on digital. The media buying ecosystem is fairly concentrated, making deal-making with the top media buying agencies a key factor for scale. ShareChat faces a massive task getting its sales strategy right, which will take a lot more than just feet on the ground.