Six-year-old Doubtnut spent Rs 105 Cr to earn Rs 2 Cr in FY21

Edtech startup Doubtnut was in advanced talks with Byju’s in FY21 to get acquired but the deal fell through at the last moment due to differences over valuation. Nevertheless, the fallout didn’t impact Doubtnut and it managed to raise $31 million at a valuation of over $120 million.

While the company pulled off the Series B round easily, Doubtnut hasn’t managed to record high revenues from operations in the last fiscal year. Doubtnut generated Rs 2 crore in revenue during FY21 and all its income came through subscription services, the company’s annual financial statements with the Registrar of Companies (RoC) show.

Even though it's a significant jump in revenue from Rs 8 lakh in FY20, the amount spent to achieve these numbers is unusually high.

The company's total cost was Rs 105.2 crore in FY21, a 3.85X jump from Rs 27.3 crore in FY20.

Employee benefit expenses formed the biggest cost for the six-year-old company. It accounted for 33% of the total expenses which recorded a jump of 4.43X to Rs 34.3 crore in FY21 from Rs 7.75 crore in FY20.

Doubtnut spent around 24% of the total cost on advertisement and business promotion. This cost soared 2.86X to Rs 25.18 crore in FY21 from Rs 8.79 crore in FY20. Importantly, ROAS (return on ads spent) for the company stood at only 7% during the last fiscal year (FY21).

Information Technology (IT) expenses and legal-professional fees also increased 3.24X and 6.67X to Rs 15.90 crore and Rs 16.69 crore respectively in FY21 from Rs 4.90 crore and Rs 2.5 crore in the previous fiscal year (FY20).

Royalty expense also recorded Rs 3.45 crore in FY21 which was nil in the previous financial year and cost for rent increased 43% to Rs 3.82 crore in FY21 from 2.67 in FY20.

On a unit level, Doubtnut has spent 52.35 rupees to earn a single unit of operating revenue. With such high costs, losses of the company also increased 3.89X to Rs 102.32 crore in FY21 from Rs 26.26 crore in FY20.

The surge in expenses also impacted the cash flows of the company which recorded an increase of 3.15X in cash outflow to Rs 95.1 crore in FY21 from Rs 30.1 crore in FY20.