BYJU’s nears profitability with 3X jump in revenue in FY19

Several consumer internet companies in India have claimed to turn profitable in FY19. However, those tall claims did not come through when we studied their annual financials. One such case was used cars marketplace Droom that missed its profitability timeline.

Another such case is India’s biggest edtech company — BYJU’s.
Regulatory filings with the Ministry of Corporate Affairs show that the company recorded a loss of Rs 8.8 crore on a consolidated basis during FY19.

That said, the firm’s financial health improved drastically during the same time. Its revenue from operations increased almost threefold to Rs 1,306 crore in FY19 from Rs 471.2 crore in FY18.

BYJU’s primary revenue is generated from the sale of tablets, which allow streaming educational courses and sale of supporting study material. Out of the total revenue, the sale of products amounted to 90.5% or Rs 1,181 crore in FY19 growing 2.8X from sales of Rs 428 crore in FY18.

Importantly, the export of goods (primarily tablets) also witnessed a 61.4% increase to Rs 176.4 crore. The company also generated Rs 125 crore through the provision of education support services, rising 3X from Rs 43.2 crore in FY18.

Another Rs 61.05 crore revenue generated by the Bengaluru-based company came through finance income.

Advertising and promotion accounted for about 32.8% of overall expenses incurred by BYJU’s in the 12 months ending March 2019. These expenses grew 2.4X to Rs 451 crore from Rs 188.5 crore in FY18.

Purchases of stock in trade, primarily the Android-based Lenovo tablets that the company sells as part of its educational products grew 2.6X to Rs 238 crore in FY19 from Rs 61.2 crore in FY18. Another Rs 25.3 crore was spent on legal aid in FY19 along with unexplained miscellaneous expenses of Rs 138.7 crore which grew 4X from Rs 35.5 crore in FY18.

Total expenses grew 2.6X to Rs 1,376.5 crore in FY19 from Rs 537.4 crore in FY18. This increased spending on growth was made possible due to the influx of Rs 2,455 crore through issue of shares during FY19. Besides, it also borrowed Rs 75 crore in the last fiscal.

Post the issue of shares, the total assets of the company grew almost five folds to Rs 4,383.2 crore in FY19 from Rs 913.7 crore in FY18, and BYJU's held nearly 60% of its total assets invested in various current financial assets. Its most important assets, the self-generated intangible asset of the educational content it produces, witnessed a growth of 3.3X and was valued at Rs 727 crore at the end of last fiscal.

During the last couple of years, the company had executed multiple acquisitions. In the previous fiscal it took over Tangible Play Inc for Rs 257 crore. The tangible play had revenues of Rs 186.4 crore with a loss of Rs 81.2 crore in FY19. The acquisition had paved the entry of BYJU’s in the North American edtech market.

Due to business combinations like these, the company’s goodwill ballooned 57X to Rs 580.2 crore in the last fiscal.

While most companies are not able to control their cash-burn after raising significant capital and end up increasing their losses. In contrast, BYJU's has managed to control its losses by 76.3% to Rs 8.8 crore during FY19 as compared to Rs 37 crore it last during FY18. In fact the parent entity of Byju's, Think & Learn Pvt Ltd posted standalone profits of Rs 20.16 crore during the year ended March 2019.

Importantly, while its assets have grown 5X during FY19, the assets turnover ratio of .49 is not far off from figure of .56 it had during FY18 as efficiency levels have been maintained amidst the 3X growth in scale which is quite a feat in itself.