Amid Layoffs, Gaurav Munjal Says Unacademy Nearing Group Level Profitability In April 2023

In what seems to be a drastic turnaround at Unacademy, CEO Gaurav Munjal said that the edtech startup has ‘significantly reduced’ its burn rate and will ‘almost generate’ a profit at the group level in April. 

In internal messages sent to employees, which included slides prepared for its board meeting which concluded on April 10, Munjal rubbished claims that Unacademy was ‘not doing well’ and said that 2023 will be the best year for the edtech platform since its inception in 2015. Inc42 has accessed the internal messages sent by Munjal.

Munjal said that the startup recorded ‘167% point improvement’ in EBITDA and 26% ‘growth’ at the group level at the end of March 2023 from December 2021.

He added that the startup had more than INR 2,100 Cr in its bank accounts in March 2023 and would have 116 months (9.6 years) of runway by the end of the current year. 

Noting that the profitability will be the key focus of the company in calendar year 2023, Munjal said Unacademy plans to slash the EBITDA burn of its online test prep vertical by as much as 99% year-on-year (YoY) in 2023. It also expects the digital test preparation business to post profitable numbers between April and December 2023. 

The company sees its monthly average cash burn hovering around the INR 17 Cr mark in the nine month period between April and December 2023. Alongside, the edtech major estimates the rationalisation in cost base to save nearly INR 800 Cr in the year ended December 2023. 

A company spokesperson declined to comment on Inc42’s queries on the development.

As per the startup’s projections, the company’s online test prep vertical could see a 15% YoY decline in revenue to INR 620 Cr in 2023, while the offline coaching vertical revenue could see a growth in excess of 655% to INR 400 Cr at the end of 2023. On similar lines, it also expects PrepLadder to grow by 9% to INR 200 Cr in the period under the review. 

However, Munjal seemed most bullish on the company’s creator-focussed SaaS platform Graphy. He said Graphy recorded annualised gross merchandise volume (GMV) of $28 Mn in the financial year 2022-23 (FY23). The SaaS platform’s net revenue retention stood at 113%.

It onboarded nearly 7,500 new creators in the last fiscal year, clocking a 2.6X growth over the past year. With 27,000+ total active courses, Graphy saw 6.61 Lakh new transacting users in FY23. 

“Graphy is turning out to be a phenomenal tech business with amazing unit economics,” the CEO said.

Unacademy is also eyeing considerably scaling its offline coaching vertical. From 10 centres at the end of December 2022, Unacademy plans to shore up the number to 58 at the end of the current year. The startup also sees the learners at its tuition centre surging 5.5X to 55,000 at the end of 2023 from 10,000 in 2022. 

In a snide comment at competitor BYJU’S, Gaurav Munjal said that Unacademy would soon be the country’s largest edtech company. 

“I have said this before, I will say it again. We will be the largest edtech company soon. We will be the last ones standing. A few rough patches here or there won’t stop us,” he said. 

Is The Tide Turning? 

The development comes as a positive news for Unacademy which has been otherwise mired in controversies. While the startup claims to have revamped its focus on shoring up profitability, the prospective numbers came at a cost.

In four different rounds of layoffs since March last year, the company has shown the door to nearly 2,000 employees, with the most recent instance being in March this year. 

In March 2023, it fired 12% of its staff while it retrenched 10% of its workforce in November last year. It also let go of 40 employees earlier this year at Relevel as it looked to restructure its business.

The edtech major has also raked up massive losses. In FY22, the company’s net loss widened 85% YoY to INR 2,848 Cr. Its volley of acquisitions in the past few years have also not panned out the way it hoped and has seen many of them being subsumed into other verticals. 

Making matters worse has been funding winter which has dried up capital. Besides, the reopening of schools and physical coaching centres post the pandemic has slowed down the growth in online verticals. However, Unacademy has also pivoted to the offline model to cash in on its popularity and was also locked in a public spat over allegations of luring teachers of competitors. 

Overall, the edtech space has been through a rough patch since the beginning of 2022. This was also visible in the sector’s funding numbers, which plummeted to a mere $100 Mn in the first quarter (Q1) of 2023, down 93% from $1.4 Bn in Q1 2022.