Sharechat is out with a press release on FY24. It says it did revenues of ₹718 Cr at an "adjusted EBITDA" loss of ₹793 Cr.
Normally, "adjusted EBITDA" is a finance equivalent of "Adjusted Six Pack Abs". Adjusted for what? A huge, round, flabby pot belly which looks like someone is 8 months pregnant. But this is a press release, so it's posted with an eloquent "33% rise in revenues", "67% reduction in "adjusted EBITDA loss", amongst other "details".
Now usually an "adjusted EBITDA loss" greater than the revenue of of a company isn't something to be celebrated. But this is Sharechat, a company which made cumulative losses of over ₹7500 Cr at a revenue of ₹960 Cr in the last three years alone. So even though it's written that the company's net loss in FY24 came out to be ₹1898 Cr, it's probably progress?
The company says it made ₹403 Cr from Livestreaming, and ₹315 Cr from advertising. And while it's saying it has "reduced the server cost per user by 50%", the exact number has not been revealed. For perspective, this cost was ₹1022 Cr last year, when the company did a total revenue of about ₹540 Cr.
Moreover, the company's employee expense has been quoted as ₹580 Cr, with advertising, legal, travel, and other overheads taking the overall operating expenses to ₹1540 Cr. All while the revenue is at ₹718 Cr. So at a very basic and uncomplicated level, it's still spending 2 bucks to make 1. How good is this news exactly? And looking at how it is, why is it being pushed by coordinated PR?
Because they need new money. Got to feed the monkey!
A very interesting thing to note is that by the end of FY23, despite having raised over $1.3 Billion since its beginning, Sharechat was left with a cash balance of just ₹500 Cr and total assets of only ₹1200 Cr. It was then that the company tried raising equity, but failed, forcing it to raise debt instead. The company took on a debt of $65 Million (about ₹550 Cr) in the last FY, and has now come out with this "press release" instead of filed financials with the ROC. What lies ahead? It's obvious. They're trying to raise money.
They need it desperately. If they succeed, they might just be able to sail through some more time. But if they fail, it'll be another Pharmeasy, or Byju's.
Not enough can be said about Sharechat and the VC stupidity it exemplified. If there's an example of a VC led Ponzi scheme, it's Sharechat. If someone wrote fiction, and said that a company with revenues of $52 Mil (and losses of $400 Mil) will be valued at $5 Bil, while its closest competitor (Meta India) doing revenues of $2 Bil (profitably) is valued at $6 Bil, it would be called bad fiction. Devoid of any logic or "suspension of disbelief". It'd be equated with cringe Bollywood thrillers of the 90s, in which the hero breaks into a dance sequence right after closing a "business deal". Everyone would make fun of the writer, and they'd be right.
Yet, all this happened in real life and the act is still on. Can you see through it?
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