SUMMARY
The edtech unicorn’s bottom line took a hit despite an over 2X rise in operating revenue to INR 679.2 Cr from INR 327.1 Cr in FY21
upGrad’s total expenses jumped 2.5X to INR 1,300.6 Cr in FY22 from INR 513.7 Cr in FY21, largely due to surge in advertising spend and acquisition costs
The edtech platform, which offers undergraduate, postgraduate and upskilling courses to college graduates and working professionals, entered the unicorn club in August 2021
In line with the performance of most Indian edtech startups, Ronnie Screwvala’s upGrad reported a widened consolidated net loss of INR 626.6 Cr in the financial year 2021-22 (FY22) as against INR 211.1 Cr in the prior fiscal year as its expenses surged.
The edtech unicorn’s bottom line took a hit despite an over 2X rise in operating revenue to INR 679.2 Cr from INR 327.1 Cr reported in FY21.
As an edtech platform offering undergraduate, postgraduate and upskilling courses to college graduates and working professionals, upGrad earns a majority of its operating revenue from sale of services, which stood at INR 676.6 Cr in FY22. Unlike last year, upGrad also earned INR 2.6 Cr from the sale of its products in the reported year.
upGrad’s revenue sources include income from its online program fees, offline degree/ diploma courses, income from contracts with universities, income from placement services, among others.
Founded in 2015, upGrad entered the unicorn club in FY22 after raising $185 Mn from Temasek, International Finance Corporation, and IIFL at a valuation of $1.2 Bn in August 2021. It also acquired several companies during the year, including KnowledgeHut, Talentedge, and Global Study Partners.
While upGrad’s standalone loss stood at INR 568.6 Cr in FY22 as against INR 202.4 Cr in the previous fiscal, KnowledgeHut, with a loss of INR 24.3 Cr, was one of the major single contributors to its widened consolidated loss during the year.
upGrad forayed into the short-term upskilling and reskilling segment with KnowledgeHut’s acquisition in August last year.
On the back of the cost of its acquisitions and increase in advertisement spend, upGrad’s total expenses jumped 2.5X to INR 1,300.6 Cr in FY22 from INR 513.7 Cr in FY21.
Advertising and promotional expenses more than doubled to INR 424 Cr in FY22 from INR 205 Cr in the previous year, contributing 32.6% to the startup’s total expenses. It is pertinent to note that upGrad roped in veteran Bollywood actor Amitabh Bachchan as its brand ambassador in FY22.
upGrad also spent INR 383.2 Cr on employee benefits during the year as against INR 161.5 Cr in FY21. A majority of this increase was due to the rise in salaries and wages, which increased 140% to INR 352.2 Cr in FY22.
upGrad also spent INR 9.6 Cr on employee stock option scheme and employee stock purchase plan (ESOP) during the year as against INR 7.6 Cr in FY21. The edtech major also increased its ESOP pool by 28% to 22,25,810 options from 17,25,810 options in FY21.
Total employee benefit expenses contributed to over 29% of upGrad’s total expenses during the year. Meanwhile, the startup’s cost of materials consumed grew 3X to INR 259.8 Cr from INR 85.5 Cr in FY21.
On the other hand, its miscellaneous expenses, which included GST write-off, sponsorship fees, brokerage, office expenses, payment gateway charges, and more in FY22, jumped over 384% to INR 30.7 Cr.
However, it is pertinent to note that despite the increase in its loss, no layoffs have been reported in upGrad so far despite its rivals like BYJU’S, Unacademy, and Vedantu firing thousands of employees in 2022 so far.
As per Inc42’s layoff tracker, edtech startups in India have so far laid off over 7,000 employees in 2022 owing to the funding crunch in the overall startup ecosystem and a major blow to the industry, particularly after reopening of schools post the pandemic.
Though most edtech startups continue to be saddled with losses, unicorn PhysicsWallah reported an over 14X YoY jump in net profit to INR 97.8 Cr in FY22. PhysicsWallah’s total revenue also rose to INR 234.1 Cr in the year from INR 24.6 Cr in FY21.
Despite the rise in loss, upGrad is on an acquisition spree. Two of its latest deal announcements include acquiring Harappa Education for $38 Mn and a further investment of around $40 Mn in the company and the acquisition of Centum Learning. As per reports, upGrad also plans to hire 1,400 new employees by March 2023.
