Edtech Unicorn Eruditus’ FY22 Net Loss Widens 46% To $386 Mn

Singapore-incorporated Indian edtech startup Eruditus’ consolidated net loss rose 46% year-on-year (YoY) to $386.8 Mn in the year ended June 30, 2022 (FY22) as its marketing expenses more than doubled during the year.

The startup, which turned a unicorn in August 2021, had reported a net loss of $264.2 Mn in the year ending June 30, 2021 (FY21).

Eruditus’ operating revenue jumped 1.8X to $245.2 Mn in FY22 from $131.2 Mn in the prior fiscal year.

As a startup that provides executive education programmes in collaboration with global business schools, Eruditus earns a majority of its revenue from the provision of its educational services. 

Founded in 2010 by Chaitanya Kalipatnapu and Ashwin Damera, Eruditus has associations with institutions such as Harvard Business School, MIT, Columbia, UC Berkeley, and London Business School, among others. It also offers courses from Indian institutions like IIM Kozhikode, IIM Lucknow, and more. 

In FY22, Eruditus’ total expenses jumped almost 80% to $710.4 Mn from $397.3 Mn in the previous year. Total expenses also included a one-time non-operating cost of $115.8 Mn for impairment of goodwill.

Meanwhile, the SoftBank-backed unicorn’s marketing expenses surged 2.1X to $141.6 Mn in FY22 from $67.1 Mn in FY21.

Eruditus spent the highest amount towards employee benefit expenses during the period. With a rise of over 5% YoY, employee benefit expenses accounted for almost 37% of the startup’s total expenses in FY22 at $262.1 Mn.

At $149 Mn, the startup spent the maximum amount towards stock appreciation rights under the employee benefit expenses head. However, this was a decline from $213.8 Mn it spent in FY21. The company’s spending towards salaries, wages, and bonuses jumped over 230% YoY to $107.1 Mn.

Technology expenses rose 16% YoY to $14.3 Mn, while the startup also paid $108 Mn as program fees to business schools in FY22. 

The startup said in its regulatory filing that its incurred acquisition-related costs of over $1 Mn in FY21, which went towards legal fees and due diligence.

Eruditus is also backed by Chan Zuckerberg Initiative, a non-profit organisation headed by Facebook CEO Mark Zuckerberg and his wife Priscilla Chan. 

In May 2021, Eruditus acquired a 100% stake in US-based edtech platform InternalDrive. In December of that year, it also acquired a 100% stake in Florida-based Global Alumni Corp. 

The startup last raised $350 Mn in debt financing from Canada Pension Plan Investment Board (CPPIB) in March 2022 with an aim to ramp up its acquisition plans in overseas markets. 

Meanwhile, the ongoing funding winter and downturn in the edtech space has resulted in startups in the sector laying off almost 9,000 employees since last year. Eruditus also laid off 40 employees in June last year.

A majority of the edtech startups, including BYJU’S, Vedantu, and Unacademy, have also been struggling due to mounting losses. While BYJU’S is yet to file its financial statements for FY22, its FY21 loss widened almost 20X to INR 4,588 Cr against sales revenue of INR 2,280 Cr.

Unacademy’s loss also widened 85% to INR 2,848 Cr in FY22, while its operating revenue stood at INR 719 Cr. Vedantu’s FY22 loss widened to INR 696.2 Cr from INR 616.2 Cr in FY21.

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