Tiger-Backed Classplus Spent INR 4 To Earn Every INR 1 From Ops In FY23

Continuing its loss-making streak, Delhi NCR-based edtech startup Classplus has reported yet another year of loss.

The Tiger Global-backed edtech soonicorn’s net loss jumped 57% to INR 256.6 Cr in FY23 from INR 163.5 Cr in the previous fiscal year. 

Meanwhile, operating revenue jumped 4X to INR 102.04 Cr in FY23, compared to INR 25.9 Cr in the previous year. Its total income rose to INR 149.1 Cr as against INR 45.4 Cr in the previous year.

On a unit economic basis, the startup spent nearly INR 4 (INR 3.97) to earn every rupee in operating revenue. However, its EBTIDA margin improved from -353.7% in FY22 to  -156.6% in FY23. 

Founded by Mukul Rustagi and Bhaswat Agarwal in 2018, Classplus is a mobile-first SaaS platform that allows educators and content creators to build online presence, digitise their offline tuition centres and sell their courses online. The startup primarily generates revenue by selling subscriptions to online educators.

Valued at over $600 Mn, the edtech startup has raised close to $130 Mn to date and is backed by investors such as Peak XV Partners, Blume Ventures, Alpha Wave Ventures.

Zooming Into ClassPlus’ Financial Report Card

In a year when edtech startups were hit by the reopening of offline education institutions post the pandemic, the edtech soonicorn’s expenses almost doubled. Total expenditure stood at INR 405.2 Cr during the year under review compared to INR 208.9 Cr in the previous fiscal year.

Let’s take a look at key items on which it spent the most:

• Employee Expenses Double: The startup spent INR 228.9 Cr on employee benefits in FY23, which was almost the double of INR 104.4 Cr in FY22. Employee benefit expenses include employee wages, PF contributions, gratuity, among others. As per LinkedIn, Classplus currently has around 806 employees. 
• Advertising Spends Rise: In a bid to increase mindshare amongst potential customers, the edtech startup hiked its advertising spends by 50% to INR 51 Cr from INR 34 Cr in the previous fiscal year. 
• A Cutdown On IT Spends: Unlike advertising or employee expenses, the IT spend of the company came down by almost 21%. It spent INR 40.3 Cr on IT in FY23 compared to INR 51.2 Cr in the previous fiscal year. 

The startup competes against the likes of Testbook and LEAD. 

It must be noted that last year, Classplus was also in talks to acquire Testbook. Alpha Wave-backed Classplus’ board had approved allotting CCPS worth $8.5 Mn (INR 67.8 Cr) to Testbook’s existing investors – Matrix Partners and Pivot Ventures, according to regulatory filings. At that time it was also reported that more investors of Testbook will sell their stake to Classplus. However, there have been no updates since then. 

During FY23, Classplus also made an investment in test preparation platform, Abhinay Maths.

Earlier this year, Classplus faced legal trouble when Saarthi’s cofounder, Chiraag Kapil, and its investors filed a lawsuit against it in the Delhi High Court (HC) for alleged cheating and criminal breach of trust.

As per the lawsuit, Classplus acquired Saarthi in 2022 but the investors associated with the latter are yet to receive their stipulated agreements or the corresponding equity in Classplus they were entitled to post the execution of the deal.