Of INR 154.1 Cr operating revenue, Gradeup earned INR 119.3 Cr from “business support services” provided to Think & Learn Pvt Ltd, the parent company of BYJU’S, in FY23
Gradeup also borrowed an additional INR 3 Cr from Think & Learn in FY23 and it owed INR 99 Cr to BYJU’S at the end of the year, over 6X of its net profit
Lodha & Co, the startup’s auditor, flagged concern about its ability to continue as a going concern basis
BYJU’S-owned Gradeup turned profitable in the financial year ended March 31, 2023. The exam preparation startup reported a net profit of INR 15.2 Cr in the financial year 2022-23 (FY23) as against a net loss of INR 133 Cr in the previous fiscal year.
The edtech startup’s operating revenue surged 214% to INR 154.1 Cr in FY23 from INR 49.1 Cr in the previous fiscal year.
GradeUp’s overall expenses fell 24% to INR 139 Cr during the year from INR 182.5 Cr in FY22.
Is Gradeup Even Profitable?
However, there’s a caveat in the rise in its operating revenue. For one, the company generated revenue of INR 34.7 Cr from education and related activities, which was 29% lower than INR 49.1 Cr it generated in the previous fiscal year.
At INR 119.3 Cr, a majority of the edtech startup’s revenue came from “business support services” provided to Think & Learn Pvt Ltd, the parent of BYJU’S. Revenue under this bucket was nil in FY22.
Gradeup explained business support services as, “Recovered from Holding Company against cost incurred by the company (with a markup of 10%) towards business support services in the field of education and related activities.”
Without “business support services”, Gradeup incurred a loss of INR 104 Cr in the year.
Besides, GradeUp also borrowed an additional INR 3 Cr from Think & Learn during the year under review. As of March 31, 2023, the startup owed INR 99 Cr to BYJU’S, over 6X of its net profit during the year.
Where Did GradeUp Spent?
Of all the costs disclosed by the startup, employee benefit expenses accounted for the biggest chunk.
Employee Benefit Expenses: The startup’s employee benefit increased 19% to INR 89.4 Cr as compared to INR 75.4 Cr in FY22.
Advertising Expenses: The other big cost for the startup was advertising expenses, however, it declined 64% to INR 19 Cr from INR 53.2 Cr in FY22.
Meanwhile, the startup’s auditor flagged concern about its ability to continue as a going concern basis.
“The company has significant accumulated losses which has resulted in erosion of its entire net worth as at March 31, 2023. Further, current liabilities exceeds current assets by Rs 11,117.74 Lakhs… These conditions indicates that a material uncertainty exists that may cast significant doubt on the Company’s ability to continue as a going concern basis,” auditor Lodha & Co said.
“Company’s ability to continue as a going concern depends on generation of the expected cash flows to be able to meet its obligations as and when arises. In view of continued financial support of Think and Learn Private Limited and merger application with Think and Learn Private Limited filed with NCLT Bengaluru, management considers it appropriate to prepare these financial statements on a going concern basis,” it added.
It is pertinent to note that Gradeup was BYJU’S eighth acquisition in 2021, when the edtech decacorn was on an acquisition spree and splurged over $2 Bn. As per reports, BYJU’S had spent $40 Mn to $50 Mn for the acquisition of GradeUp from Times Internet.
Post the acquisition of Gradeup, BYJU’S rebranded it to BYJU’S Exam Prep.
The financial numbers come at a time when BYJU’S is fighting multiple fires, including delay in filing financial statements, debt repayment issues, an ongoing ED investigation, and other legal cases.
Great Learning, another company of BYJU’S group, reported a net loss of INR 357.3 Cr in FY23.
Meanwhile, BYJU’S last month disclosed select FY22 numbers for its standalone operations. After multiple delays, the startup has convened an annual general meeting (AGM) on December 20 to seek approval for its financial statements for FY22.
