Google-backed unicorn ShareChat to lay off 5% of workforce
What's the story
Indian social media platform ShareChat, which is backed by Google and Temasek, is preparing to lay off about 5% of its workforce, as per Moneycontrol.
The decision follows an annual performance review and will impact some 20-30 employees across departments. The company's employee count currently ranges between 530 and 550.
A ShareChat spokesperson confirmed the planned reduction in headcount by approximately 4%.
Appraisal impact
ShareChat's annual appraisal cycle and workforce reduction
The spokesperson clarified that the company has only just started its annual appraisal cycle.
"Every performance cycle, as a practice, roughly 3-4% of employees are rated at the bottom of the pyramid in terms of performance. And those people are asked to leave," they explained.
This is part of an ongoing cost-cutting initiative within the company, which could lead to more job cuts, reported Moneycontrol.
Staffing strategy
ShareChat's workforce and performance philosophy
Post-January, ShareChat's employee count will be around 500, a far cry from its peak of nearly 2,800 a few years ago.
The company has a policy of redistributing work or hiring replacements as necessary.
"People who are not pulling their weight, or are not justifying their ROI (return on investment) are asked to leave and we replace them," the spokesperson said.
Past layoffs
ShareChat's history of layoffs and performance reviews
Over the last two years, ShareChat has fired over 850 employees across at least four rounds.
The company trimmed about 5% of its workforce after a bi-annual performance review in August 2024, after raising $16 million in convertible debt.
In December 2023, another 200 employees were fired as part of a cost-cutting exercise.
Earlier that year, over 600 employees were asked to leave the company.
Financial performance
ShareChat's cost optimization and profitability measures
Despite the layoffs, ShareChat has been taking cost optimization measures to increase profitability.
The company's parent firm, Mohalla Tech, posted a 67% decline in adjusted EBITDA losses to ₹793 crore in FY24 from ₹2,400 crore in FY23.
The total loss before tax stood at ₹1,898 crore for the year, 63% lower than a loss of ₹5,143 crore in FY23.
Its livestreaming business witnessed revenues jump 41% on-year to ₹402 crore.
Profitability update
ShareChat and Moj's profitability status
As of October 2024, ShareChat claimed to be fully profitable with an EBITDA margin of over 15%.
Moj, another Mohalla Tech platform, became operationally profitable covering all costs except employee salaries. It is expected to be fully profitable by the end of FY25.
However, the company clarified that the current job cuts are not related to its drive for profitability.