As edtech proliferates into the lives of Indian learners, the topline of edtech companies is seen improving in FY20 as compared to the preceding fiscals. Unacademy’s operating revenue jumped 5.3X to Rs 86 crore in the last fiscal and now Mumbai-based upGrad has recorded a 90% leap in its total income.
upGrad managed to enrol 12,930 paid learners during the fiscal ended in March 2020 and posted revenue from operations of Rs 162.3 crore.Its operating revenue stood at Rs 85.1 crore the previous year. During FY20, the edtech platform saw its registered user base increase by 48% to 370K in FY20 from 250K users at the end of FY19.
upGrad paid a pretty penny for this growth as evident by its expense sheet, which totalled to Rs 241.5 cr in FY20, leaping by 88% as compared to the total expenditure of Rs 128.6cr incurred in FY19.
A large increase in these costs was due to higher marketing spends and payroll costs. upGrad doubled its advertisement costs to Rs 94.2 crore in FY20, ballooning from Rs 45 crore spent on the same during FY19. These expenses stood out as the single biggest cost factor, accounting for 39% of the total expenses.
upGrad also increased its employee base extensively to harness the growth of scale, almost tripling from 404 employees in FY 19 to over 1,110 employees by the end of FY20. As a result, employee benefit expenditure grew by 89% from Rs 47.5 crore in FY19 to nearly Rs 90 crore during FY20.
Further, cost of materials consumed also grew by 57.5% to Rs 32.2 crore in FY20 from Rs 20.5 spent in FY19. Other operating expenses including rent, legal, IT etc totalled to Rs 18 crore during FY20.
However, the leap in cash burn in search of scale eroded the company’s capital completely and upGrad’s balance sheet sported shareholder funds of -Rs 111.6 crore. Losses shot up by 82% from Rs 43.4 crore in FY19 to Rs 79 crore during FY20 and EBITDA margins stood at -45.6% for the same period.
The company did not raise any equity capital during FY20 and issued debentures worth Rs 57 cr to fuel its operations. With outstanding losses amounting to Rs 182.6 crore at the end of FY20 along with a heavily leveraged balance sheet, upGrad is in urgent need of fresh capital to move forward.
Founded in 2015, upGrad had recently claimed to touch a million registered learners. The company also claimed that Q3 FY21 was its best financial result in a quarter. On the lines of other edtech companies, upGrad has been witnessing a surge in users due to disruption triggered by the Covid-19 pandemic. While upGrad’s financial performance in FY20 doesn’t seem healthy, the company is likely to improve its financial performance in the ongoing fiscal.