Toppr revenue jumped 2.5X in FY19; marketing expense balloons 2.6X

Edtech segment has been one of the rare sectors to have had a positive impact during the Covid-19 pandemic. Companies such as BYJU’s, Unacademy, Toppr, and Vedantu have been gaining up to a 3X surge in usage since the first phase of lockdown.

Since usage has increased, these firms are expected to have an improved topline this financial year. While BYJU’s had turned profitable on a consolidated basis in FY19, the topline and losses of both Unacademy and Vedantu jumped in the year ending March 2019.

Toppr’s financial health also improved in FY19 with its operating revenue recording 2.5X jump to Rs 56.4 crore from Rs 23 crore in FY18. The jump in revenue was driven by subscription income from cities outside the top 10 cities.

The company had doubled down on pushing sales after raising $35 million in December 2018 in its series C round led by Kaizen Private Equity, venture debt firm Alteria Capital and The Times Group’s investment arm Brand Capital. The fundraise came as a savior for Toppr which was facing a liquidity crunch towards the end of FY18 with negative equity posted on the balance sheet due to erosion of capital.

Even as fresh capital came in handy to achieve scale, the firm’s expenses also increased by 81% to Rs 154.4 crore in FY19 from Rs 85.5 crore in the previous fiscal.

Expenditure on employee benefits constituted the single biggest cost element for the edtech company, making up almost 52% of the total expenses during FY19. These expenses grew by 75% from Rs 45.8 crore in FY18 to Rs 8o crore in FY19 as Toppr employed more educators and operational staff to harness growth.

The pursuit of growth of scale also pushed the inflation of sales and marketing expenditure incurred by Toppr during the last financial year. These expenses blew up 2.6X from only Rs 8.7 crore in FY18 to Rs 22.2 crore in FY19.

At the end of Fy19, Toppr’s balance sheet also presents outstanding debentures worth Rs 37 crore carrying interest rates as high as 14.5%, which explains the finance costs of Rs 7.2 crore incurred by the company during the fiscal ended in March 2019

While the firm burned significantly more cash during FY19 as compared to FY18, it managed to more than double its subscriber base and revenues. It spent Rs 2.74 to earn a single rupee of revenue in FY19, improving by 26.3% from Rs 3.72 it spent for the same in FY18.

Toppr lost Rs 93.45 crore in FY19, increasing from Rs 59.86 crore in Fy18 and the total outstanding losses pushed to north of Rs 225 crore by the end of last fiscal.

According to Fintrackr, BYJU’s financial health was better than peers while Vedantu lost 3X more money than its revenue in FY19. The company had incurred an expense of Rs 39 crore for operating revenue of Rs 10 crore. On the other hand, Unacademy’s financial performance was deep into losses. The Gaurav Munjal-led firm had spent Rs 112 crore for a topline of Rs 12 crore.