Vedantu spent Rs 39 Cr to earn operating revenue of Rs 10 Cr in FY19

In India, the edtech space is broadly dominated by two-three companies where BYJU’s has a natural lead for being a poster boy for online education. Now, the onus is on these players to keep the momentum going as far as competition is concerned.

Besides BYJU’s, Unacademy, Toppr, Meritnation, Vedantu and some new entrants make the list. In the past couple of years, Toppr and Meritnation have lost some lustre which has allowed the new, and the established firms, to gain momentum.

While Unacademy is among the top three startups that have scored late-stage funding rounds, Vedantu is gradually emerging as the next bet for investors. It recently came in the limelight for a $42 million round led by the New York-based hedge fund Tiger Global.

The Bengaluru-based startup recently filed its financial report for the year ending March 31, 2019, and we got down to check the financial health of the company.

According to the RoC filing with MCA, Vedantu earns revenue mainly by providing education support services and charging a fee for the same. Its revenue from operations saw an increase of 97.35%, growing from around Rs 5.3 crore in FY18 to Rs 10.44 crore in FY19.

To fuel this growth of scale, the company spent a significant amount on talent acquisition and developing infrastructure to support the operations.

The biggest cost factor was employee benefit expenses which make up about 46.5 % of the total expenses incurred by the company during FY19. These expenses grew by 40.3% from Rs 13.05 crore in FY18 to Rs 18.32 crore in FY19.

Notably, Vedantu hires professional teachers to develop their courses and study materials. The company’s spending on teacher’s fees increased by 66.3% to Rs 6.08 crore in FY19 from Rs 3.72 crore in FY18. The company also focussed on training its workforce and in FY19 spent Rs 1.19 crore on the same, seven times more than the training expenditure incurred in FY18.

Further, expenses on advertisement and promotions also increased by 66.46%, amounting to Rs 5.6 crore in FY19 in contrast to Rs 3.3 crore in the preceding fiscal. Moreover, their legal expenses saw a surprising hike of more than 173%, reaching almost Rs 2 crore in FY19 as compared to Rs 73 lakhs the company spent in FY18.

The total expenses ended up growing almost 66% to Rs 39.4 crore in FY19 from Rs 25.31 crore in FY18. The swelling expenses caused the net cash outflow from operations to grow 37.05%, from Rs 19.7 crore in FY18 to around Rs 27 crore in FY19.

The crux: Vedantu spent over Rs 39 crore to earn operational revenue of Rs 10.44 crore in FY19.

In FY19, the eight-year-old startup had recorded a 1.4X increase in losses to Rs 27.31 crore. In contrast, Unacademy had witnessed 3.8X jump in losses to Rs 90.27 crore during the period while its revenue from operations stood at Rs 11.66 crore.

Founded by Vamsi Krishna, Pulkit Jain, Saurabh Saxena, and Anand Prakash, Vedantu generates revenue from selling subscriptions ranging from Rs 100 to Rs 5,000 for live and interactive sessions. The firm provides monthly tuitions, exam preparation for NTSE, PSA, KVPY, IMO, JEE Mains, among others.