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Lead School’s revenues jumped 4.5X during FY20; losses soared to Rs 36 Cr

Mumbai based edtech startup Lead School has continued with the trend of bettering its revenue growth along with its losses, its financial numbers for the year ending March 31, 2020 show.

The startup, which offers integrated curriculum and technology solutions to private schools, saw its operating revenues surge 4.5X from Rs 6.33 crore in FY19 to Rs 28.61 crore during FY20, according to its annual report. 

Lead School, which claims to have partnered with over 800 schools, had recorded a 3.3X jump in its operating revenues in FY19.

A deep dive of its numbers show that during FY20, 93.5% or Rs 26.74 crore of Lead School’s revenue came from sales of books, teaching aids and devices while the rest Rs 1.86 crore was generated through the provision of consulting and service fees.

Cost of materials like books, teaching aids and devices during FY20 rose 4.4X from Rs 2 crore in FY19 to Rs 8.75 crore during FY20. It spent an aggregate of Rs 14 crore on the procurement of these aids and materials during the last fiscal and this figure is slated to rise significantly as it expands its operations in the country.

Lead School

Expenditure on employee benefits remains the biggest cost component on Lead School’s expense sheet, making up nearly 54% of the total costs incurred by the company during FY20. These expenses grew 4.8X from Rs 7.32 crore in FY19 to Rs 35.31 crore during FY20. 

The expenses on employee and staff welfare will also continue to surge as the company is hiring aggressively across all verticals to increase its presence across India.

Going along with its rapid increase in scale, the company spent significantly more on other expenses such as advertising, promotions and training. Promotional expenses leapt by 18.7X to Rs 3 crore in FY20 from only Rs 16 lakh during FY19 while training costs increased by 13X to Rs 1.34 crore during FY20. Other expenditure, including the above two, rose 4.8X to Rs 21.05 crore in FY20 from Rs 4.4 crore during FY19.

Overall, Lead School’s total expenditure during FY20 shot up by 4.8X to Rs 66.57 crore from around Rs 14 crore FY19. It spent Rs 2.33 to earn a rupee of operating revenue during FY20.

Like any other growth-stage startup, the blitzscaling came at a pretty penny. Losses during FY20 rose 5.7X to Rs 36.4 crore from Rs 7.17 crore during FY19 and outstanding losses piled up to Rs 45.7 crore at the end of last fiscal year.    

Net cash outflow from operations also rose 4.7X to Rs 39.4 crore during as EBITDA margins worsened from -110% in FY19 to around -115.6% during FY20.

Lead School FY20

 Its asset turnover ratio improved by nearly 139%  from 0.36 in FY19 to 0.86 during FY20 while Return on capital employed (RoCE) worsened to -0.50 during the same period.

The eight-year-old firm founded by Sumeet Mehta and Smita Deorah fueled its increasing expenses by raising Rs 35 crore through issue of shares and borrowed another Rs 10 crore during FY20. During the same period, Lead School’s total assets increased by 71.5%, standing at Rs 44.5 crore at the end of FY20. 

In August, Lead school had closed a $28 million Series C round led by Westbridge Capital. As per Fintrackr’s estimates, the post-money valuation of the company stood at around Rs 1,180 crore. 

Even after the Series C round, the founders’ holding in the company was recorded at 41.1%. This is a good indication for a growth-stage startup in India that is expanding rapidly and expected to post improved figures in the next fiscal year.

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