CEO Gaurav Munjal cited the edtech major’s focus on profitability and growth as the reason behind the move
Unacademy to go for an IPO only after being profitable for at least four quarters
Unacademy’s three cofounders withdrew salaries of INR 4.6 Cr in FY22
After sacking more than 1,500 employees last year, edtech major Unacademy is now planning to skip paying cash appraisals to its employees this year. Instead, the company said it would offer stock options to employees based on their performance.
“… we have decided to not do any cash appraisals this year. Instead we will reward stock options to everyone based on their performance,” chief executive officer and cofounder Gaurav Munjal said in an internal message to employees. Inc42 has reviewed the message.
Munjal cited the edtech major’s focus on profitability and growth as the reason behind the move. He added that the edtech player would go for an initial public offering (IPO) only if it has at least four quarters of profitability behind its back.
“I know this is disheartening to hear after putting (in) a lot of hard work but I want you all to understand that this is a phase… So trust this process because I am very confident that we will come out of this phase as a much stronger organisation… And I believe that we will have a lot of wins in 2023. I want you all to have faith in the process, it’s painful, but it will be rewarding,” Munjal said in his internal message to employees.
The Unacademy CEO also claimed that the company’s burn rate was down ‘significantly’ while revenues ‘grew’ during the course of the year. Munjal said that the EBITDA margins of the startup had improved ‘a lot’, adding that Unacademy was supposedly slated for a ‘lot of wins’ this year.
While many employees will have to let go of their cash appraisals this year, regulatory filings accessed by Inc42 revealed that Munjal took home a salary of INR 1.7 Cr in the financial year 2021-22 (FY22). Other cofounders Hemesh Singh and Roman Saini were compensated INR 1.5 Cr and INR 1.4 Cr in remunerations, respectively, in FY22. Curiously, this does not include employee stock options and other benefits available to these top executives.
In total, the three cofounders were paid INR 4.6 Cr as just salaries during the course of the fiscal year.
The news of no appraisals comes at a time when the edtech major has been plagued by mass layoffs at the company. As per Inc42 layoff tracker, the edtech major fired around 1,540 employees across multiple subsidiaries last year amid heavy cash burn and mounting losses.
Earlier this month, it was reported that Unacademy-owned Relevel would lay off 40 employees, or nearly 20% of its workforce, as the group cited pivot to test product business.
The Bengaluru-based company reported a consolidated loss of INR 2,848 Cr in FY22, up 85% year-on-year (YoY) from INR 1,537 Cr in FY21. However, revenue from operations surged more than 80% YoY to INR 719 Cr during the period under review.
While capital-fueled growth appeared to be the company’s hallmark for most of 2021, 2022 put screeching brakes on this. As global macroeconomic pressures mounted and as market volatility raged on in 2022, the company resorted to cutting corners and undertook layoffs to increase cash flow. Critics have also pointed out that profitability and unit positive economics continue to elude the unicorn.
