Newton School Spent Over INR 6 To Earn Every Rupee From Operations In FY23

Edtech startup Newton School’s loss quadrupled to INR 82.7 Cr in the financial year 2022-23 (FY23) from INR 19.8 Cr in the previous fiscal year, as its sales declined and expenses skyrocketed.

The startup’s operating revenue declined 17.5% to INR 16.8 Cr during the year under review from INR 20.4 Cr in FY22.

Founded in 2019 by Nishant Chandra and Siddharth Maheshwari, Newton School offers skill development courses for graduates and professionals. It claims to have enabled placement of more than 3,000 students so far in over 800 companies, including Google, Epsilon, Jio, Lenskart, Razorpay, Target, Flipkart, Zomato, Deloitte, and Meesho.

As per its FY23 financials filing, the edtech startup has three sources of sales revenue – coaching and training services, university program fee, and university registration fee.

Revenue from coaching and training services accounted for the biggest chunk of income but declined a massive 37% year-on-year (YoY) to INR 12.4 Cr in FY23.

Meanwhile, income from university registration fees nosedived 60% YoY to INR 11.1 Lakh. However, Newton School’s revenue from university program fees witnessed over a 900% YoY jump to INR 4.3 Cr in FY23.

Due to a sharp increase in its interest income, Newton School’s total revenue increased 14% YoY to INR 24.4 Cr during the reported year.

It is pertinent to note that Newton School is not the only edtech startup struggling with increasing losses. In the last two years, many big names, including Unacademy, BYJU’S, Vedantu, and upGrad, laid off thousands of employees amid a cash crunch. 

Meanwhile, the likes of DUX Education, LIDO Learning, Udayy, Crejo.Fun, SuperLearn, and Qin1 shut their businesses over the last two years amid the ongoing funding winter. 

At the beginning of FY23, Newton School had raised $24.7 Mn in a funding round led by Steadview Capital, with participation from RTP Global, SAMA Trust, and Nexus Partners. However, it seems the bulk of funding was used to increase spending.

Zooming Into Expenses

Despite a sharp decline in its top line, the edtech startup’s total spending more than doubled to INR 107 Cr in FY23 from INR 41.1 Cr in the prior year. Employee benefit expenses accounted for about 40% of the expenditure.

Employee Cost: Newton School’s spending in this bucket surged 159% to INR 42.4 Cr in the reported fiscal from INR 16.4 Cr in FY22.

In that, the startup spent INR 37.9 Cr on salaries and wages against INR 14.5 Cr spent on the same in FY22.

Besides, ESOP costs jumped 91.5% YoY to INR 2.1 Cr in FY23.

Ad Expense: The startup’s spending towards advertisement and business promotion zoomed over 155% to INR 21.4 Cr during the year under review from INR 8.4 Cr in FY22.

Mentors & Educators Fees: Newton School’s spending in this bucket jumped sharply to INR 18.4 Cr in FY23 from INR 9.9 Cr in the year before.

Subscription Charges: The startup’s spending surged 237% YoY to INR 7.2 Cr in FY23.

Legal Cost: It spent INR 8.9 Cr on legal and professional charges, which was a massive 423.5% surge YoY.

Overall, the startup spent INR 6.4 to earn every rupee from operations in FY23.

Newton School has raised more than $30 Mn (about INR 250 Cr) across multiple funding rounds so far. 

At the end of FY23, Newton School’s cash and cash equivalents stood at INR 16.4 Cr against INR 8.8 Cr at the end of the prior fiscal.