Toppr saw revenues grow to Rs 84 Cr in FY20, but losses piled on

Edtech startup Toppr, which was recently acquired by edtech behemoth Byju’s, saw its operating revenues grow by 49.5% to Rs 84.3 crore during FY20 — at the cusp of edtech breakout — from Rs 56.4 crore earned in FY19. Its income from financial assets also grew by 46% to nearly Rs 6 crore during FY20.

Launched in 2013, Toppr offers live online classes for students of class 5-10, coding courses as well as its school operating system. The company books revenues in the form of subscription fees (net of discounts) from the users across its platform.

When it comes to expenses, payment towards employee benefits was the largest cost for the edtech startup, making up 52.8% of annual expenses. Such costs increased by 37.1% to Rs 107.5 crore in FY20 from Rs 78.4 crore spent on the same during FY19.

Importantly, around 66% of these payments were made to related party Haygot Services Pvt Ltd for “ Manpower Services.” It appears that this firm handles the teaching staff for the edtech firm. 

Toppr spent 27.5% of the total expenses incurred on advertising and sales costs which grew by 24% YoY to Rs 27.5 crore during FY20. Payments towards rent and utilities also increased by 26.8% to Rs16.1 crore during the fiscal ended in March 2020.

Toppr pays its financing partners for making upfront payments to the company, for amounts recoverable from the customers over EMIs. As a result, its finance costs doubled to Rs 14.4 crore during FY20.

During the fiscal, costs incurred on legal fees and recruitment remained stable at Rs 10.9 crore and Rs 3.3 crore while server & communications expenses amounted to Rs 5.7 crore.

The company spent Rs 203.7 crore in total during FY20, registering a 31.6% increase as compared to aggregate costs of Rs 154.8 crore in FY19. On a unit level, the company spent Rs 2.41 to earn a single rupee of revenue during FY20 improving marginally as compared to FY19.

While the revenue did show improvement during FY20, it couldn't even cover the employee cost of the eight-year-old company. Losses during the year grew by 20.3% from Rs 94.3 crore lost during FY19 to 113.4 crore in FY20 at an EBITDA margin of -108.75%.

Going through the audit report we found out the auditor has given a qualified opinion on Toppr’s annual financial statements due to non-compliance with Section 96(1), Section 129(2), Section 137(1) and Section 44AB of the Companies Act 2013.

The auditor also highlighted “Material Uncertainty” regarding the going concern assumption due to complete erosion of the company's net worth due to continuous losses. Toppr sported outstanding losses of Rs 339.2 crore as of March 31, 2020.

Toppr’s numbers reflect the story behind its buyout. As losses piled on and competing with Byju’s became tough with respect to both growth and funding (it raised over $93 million in total funding), Toppr was eventually acquired by its competitor Byju’s earlier this year. It was the 14th acquisition by Byju’s after it was acquired in a cash stock deal for an enterprise valuation of $150 million.