Unacademy’s FY22 Losses Shoot Up To INR 2,848 Cr Despite 80% Higher Revenue

Bengaluru-based edtech unicorn Unacademy saw its consolidated losses widen to INR 2,848 Cr in the financial year 2021-22 (FY22), up 85% year-on-year (YoY) from INR 1,537 Cr in FY21. 

However, consolidated revenue from operations surged more than 80% to INR 719 Cr in FY22, compared to INR 398 Cr in the previous financial year. 

The losses witnessed an uptick on account of the rise in expenses outpacing revenue growth  during the year. Total expenses jumped 82.4% to INR 3,703 Cr in the year ended March 2022, versus INR 2,030 Cr in FY21. 

On a standalone basis, Unacademy’s revenue from operations grew 77% YoY to INR 596.7 Cr in FY22, while losses fell close to 83% YoY to INR 2,693 Cr in the period under review. Total standalone expenses for the year ended March 2022 rose 80% to INR 3,411 Cr, up from INR 1,894.5 Cr in FY21. 

Employee benefits were responsible for a majority of the expenditure, accounting for 43% or INR 1,618.9 Cr in the period under review. This mostly comprises salaries and other ESOP grants that the startup earmarks for its employees.

Incidentally, Unacademy has laid off a sizeable portion of its workforce in 2022, with the overall rally over 1,100 employees. 

Among other notable expenses on the employee benefits side were the slew of stock options that Unacademy rolled out to retain talent. The move weighed heavily on Unacademy as non-cash ESOP costs grew 2.5X to INR 1,235 Cr in FY22, up from INR 481 Cr in the previous year.

In FY21, Unacademy gave $40 Mn in stock options to teachers and followed it up with a buyback worth $10.5 Mn. 

However, in FY23 much of the news coming from the company has been around cost-cutting and reshuffling teams. 

Marketing costs also grew 33% to INR 549 Cr, up from INR 411 Cr in the previous financial year.

A brainchild of Gaurav Munjal, Hemesh Singh, and Roman Saini, Unacademy was founded in 2015. The startup offers courses for competitive exams such as JEE, NEET UG and civil services exam. It claims to have more than 50,000 registered educators teaching 62 Mn+ learners in 14+ languages across 5,000 cities. 

Profitability Eludes Unacademy

Unacademy appears to be suffering from issues emblematic of the overall edtech ecosystem. The Gaurav Munjal-led company has so far laid off more than 1,100 employees, or 19.2% of its total workforce, this year including on-roll employees and contractual educators.

Citing cost-cutting measures, Unacademy has shelved many of its major expansion plans and has consolidated operations. Earlier this year, India’s second-largest edtech company shut down its K-12 business, despite incurring heavy investments in acquiring two related startups, mastree and swiflearn. 

The ongoing purported funding winter, high cash burn and no clear path to profitability have also complicated matters for the edtech giant. Despite cutting corners to conserve cash, Unacademy appears to have not learnt its lessons. Earlier this year, it launched its physical coaching centres in Kota and spent astronomical salaries to poach staff from Allen.

Unacademy has also been known for tinkering with startups it has acquired over the years. The acquisition of Rheo TV, PrepLadder, Spayee, CodeChef, and TapChief saw the launch of new products under the umbrella group, but, subsequently, many of them failed to take off. 

Edtech Space In A Slump

The overall edtech space continues to be marred by the funding winter which has disproportionately affected the ecosystem. 

Hovering close to 2020-levels, the funding raised by Indian edtech startups in the first nine months of 2022 stood at $2.2 Bn. In contrast, the sector had raised $3 Bn in the entirety of 2020. 

This year, so far, funding has failed to keep pace and has fallen over successive quarters. From $1.4 Bn in Q1 CY22, funding fell steeply to $537 Mn in Q2 CY22 and subsequently plummeted to $289 Mn in the quarter ended September 2022. 

Unacademy’s peers too have been feeling the heat of the slowdown. BYJU’S losses grew nearly 20X in FY21 to INR 4,588 Cr while revenue from operations tanked 3.3 % to INR 2,428.3 Cr. 

On similar lines, Vedantu’s net loss also grew more than 4X to INR 601.2 Cr in FY21, up from INR 150.1 Cr in FY20 amid soaring expenses.

Both BYJU’S and Vedantu have gone on a layoff spree, firing a big chunk of their total workforce. The two players have also been streamlining operations and cutting costs, sans any clear path to profitability.

As many as four edtech players namely Lido Learning, Crejo.Fun, Udayy, and SuperLearn have also had to shut operations, as funding winter chill grips the entire sphere. With the winter expected to get harsher going forward, it remains to be seen how Unacademy navigates the twists and turns of the new normal.