LEAD’s Loss Widens 200% YoY To INR 397.1 Cr In FY22, Operating Revenue At INR 133.2 Cr

Edtech unicorn LEAD’s net loss surged 200% year-on-year (YoY) to INR 397.1 Cr in the financial year 2021-22 (FY22) due to a sharp increase in its promotional and employee benefit expenses. 

The startup, which turned unicorn in FY22 after raising $100 Mn in its Series E funding round led by WestBridge Capital and GSV Ventures, had reported a net loss of INR 126 Cr in FY21.

LEAD’s bottom line was hurt in FY22 despite a 2.3X rise in its operating revenue to INR 133.2 Cr from INR 57 Cr in FY21. 

As a school edtech platform that operates at the intersection of technology and pedagogy to provide an integrated teaching and learning system, LEAD generates a majority of its revenue from sales of products, including books, teaching aids and devices. 

The startup earned INR 112.1 Cr in revenue from product sales in FY22 as against INR 56.4 Cr in FY21. Meanwhile, LEAD’s revenue from sale of services stood at INR 20.7 Cr during the year, a massive 30X jump from the previous year.

After entering the unicorn club last year, LEAD had said that it would utilise the fresh funds primarily towards product and curriculum innovation. It also spoke about hiring more talent across the country to support that growth.

In line with the announcement, LEAD’s expenditure towards employee benefits jumped almost 160% to INR 258.7 Cr in FY22 from INR 99.6 Cr in the previous fiscal year. The startup spent INR 225.1 Cr on salaries and wages as against INR 96 Cr in FY21.

It also spent INR 19 Cr on employee stock option scheme and employee stock purchase plan during the year as compared to INR 4.2 Lakh in the previous year.

Employee benefit expenses constituted over 48% of the edtech platform’s total expenses of INR 538.7 Cr in FY22. Total expenses jumped 2.8X from INR 186.6 Cr in FY21.

However, it is pertinent to note that entering FY23, LEAD started restructuring to cut costs and laid off 100 employees in August 2022. Continuing the cost-cutting measures, LEAD laid off another 60 employees earlier this week.

LEAD saw one of its biggest expense jumps in advertising and promotional activities in FY22. Its promotional expenses grew 300% YoY to INR 76.5 Cr from INR 19.3 Cr in FY21. 

Besides, LEAD also spent INR 95.9 Cr in FY22 towards the purchase of stock-in-trade, registering a 3.3X rise from the previous year.

Miscellaneous expenses, which include professional fees, administrative expenses, provision for doubtful security deposit, and intangible assets under development written off, among others, increased about 137% to INR 54.9 Cr in FY22.

The startup also spent INR 22.9 Cr during the year on provision for bad debts on accounts receivable as against INR 4.7 Cr in FY21. 

Despite being saddled with losses, like most other edtech platforms including BYJU’S, Vedantu, Unacademy, and upGrad, LEAD continues to raise more funds. It recently raised INR 160 Cr in debt from financial institutions and venture debt firms, including Alteria Capital.

Recently, it also acquired the London Stock Exchange-listed education group Pearson’s K-12 learning business in India. 

Founded in 2012 by Sumeet Mehta and Smita Deorah, LEAD claims that its integrated system is currently available to schools in over 400 towns and cities across India, and reaches over 1.2 Mn students and more than 25,000 teachers.

The edtech sector has been one of the worst hit by the ongoing funding winter. As per Inc42 data, Indian edtech startups raised a total funding of $2.6 Bn in 2022 as against $4.7 Bn in 2021. Hurt by the funding crunch and reopening of schools post pandemic, edtech startups laid off over 7,500 edtech employees in 2022, as per Inc42’s layoff tracker.