Social-media unicorn, ShareChat has recently undergone a significant workforce reduction. The company has terminated 200 employees, constituting approximately 15 per cent of its total workforce. This marks the second workforce reduction within the year.
The move is said to be a part of its strategy to cut costs and achieve profitability in the coming four to six quarters. On 20 December, 2023, ShareChat announced a strategic restructuring aligned with its annual planning for 2024. As a result, ShareChat has transitioned to a flatter organisational structure and prioritised specific product initiatives, leading to this reduction.
This move follows an earlier cost-cutting initiative earlier in the year, where the company laid off approximately 600 employees. The move coincided with the departure of its co-founders, Bhanu Pratap Singh and Farid Ahsan.
ShareChat, valued at $5 billion in its last funding round and supported by investors such as X (formerly Twitter), Google, Lightspeed, and Temasek, experienced a 59 per cent increase in revenue to Rs 553 crore in FY23. However, the company also faced a considerable rise in net losses, soaring by 72 per cent to Rs 5,144 crore in FY23, attributed to various factors such as server rents, financing costs and foreign- exchange losses.
A detailed examination of ShareChat’s financials reveals that the *headline loss number* for FY23 is inflated due to multiple notional cost entries and one-time expenses. It also included the amortisation of goodwill from acquisitions and forex losses.
Additionally, the company underwent changes in its portfolio by discontinuing its gaming platform, Jeet 11, in December 2022. This move reportedly led to the termination of 100 employees associated with the platform.