Toppr’s scale shrinks 40% in FY21 while losses increase 13%

Last fiscal year (FY21) was phenomenal for edtech companies in India as their usage skyrocketed due to the pandemic. As a result, edtech startups raised record funding with multifold growth in their income. However, Toppr (now a part of Byju’s) stood out as an anomaly. The company’s revenue plunged by 40% in FY21.

Eight-year-old Toppr operates with two companies: Toppr provides the learning platform for students and Haygot Services acts as a support service provider, facilitating educators for the company. During the fiscal year ending in March 2021, Toppr’s revenue from operations dropped by 40% to Rs 50.6 crore as compared to Rs 84.32 crore in FY20, according to the company’s annual financial statement filed with the RoC.

The company saw its net operating cash outflow grow 6.2X from Rs 20.74 crore in FY20 to Rs 128.07 crore during FY21.

Moving over to the expenses sheet, we observed that the employee benefit expense was the largest cost centre for the company, accounting for 61% of the annual costs. Incidentally, these payments dropped by 5.3% to Rs 109.31 crore during FY21 from Rs 115.5 crore in FY20.

Advertising and marketing expenditure was the second biggest line item on the expenses sheet, making up 8.7% of annual costs, remaining stable around Rs 15.56 crore during FY21. Interestingly, server maintenance and SaaS costs incurred by Toppr surged by nearly 94% to Rs 12.2 crore during FY21 as compared to Rs 6.3 crore in FY20 even with 40% reduction in scale.

Further, Toppr also spent  Rs 12.22 crore and Rs 3.81 crore on legal professional costs and recruitment respectively during FY21. Overall, the firm spent Rs 179.2 crore in total during FY21, 12% less as compared to Rs 203.7 crore in FY20.

On a unit level, Toppr spent Rs 3.54 to earn a single rupee of revenue, 46.3% more as compared to Rs 2.42 spent to earn the same during FY20.

Annual losses grew by 13.1% to Rs 128.3 crore during FY21 from Rs 113.42 crore in FY20. EBITDA margins worsened from -108.76% in FY20 to -234.34% during FY21 and outstanding losses mounted up to Rs 467.5 crore by the end of March 2021.  

Toppr is now a part of Byju’s after being acquired by the country’s most valued startup for $150 million. Entrackr was the first to report about the deal in February. In terms of financial performance in FY21, it is evident that Toppr failed to save its scale in FY21 and its acquisition also appears to be driven by its inability to scale and raise follow-on capital.