WhiteHat Jr spends Rs 2,175 Cr to earn Rs 484 Cr in FY21

FY21 has turned out to be a momentous fiscal year for WhiteHat Jr which sold out to edtech juggernaut Byju’s for a whopping $300 million in August 2020. While the company’s backers Nexus Venture, Omidyar Network, Owl Ventures and its founder Karan Bajaj hit paydirt in the acquisition, the company’s revenue and losses skyrocketed during FY21.

Under new owner Byju's, WhiteHat Jr’s revenue from operations surged 25.5X to Rs 483.9 crore during the financial year ending March 2021 from Rs 19 crore in FY20, its annual financial statements filed with RoC show.

WhiteHat Jr focuses on developing coding skills among students in the age group  6 to 18 years by providing 1:1 online classes. The company offers coding, math, music, animation, and video courses for different age groups and earned nearly 99% of its operating revenue from course fees which ballooned 25X to Rs 478.3 crore in FY21 from Rs 19 crore in FY20.

The firm generated Rs 3.36 crore via sale of course materials and Rs 2.27 crore as other operating revenues during FY21. The company also earned Rs 74 lakh as interest income during the fiscal.

The edtech platform made 46.7% of its revenues from Indian markets which jumped 14.8X to nearly Rs 226 crore in FY21. USA was found to be the second-largest market for the company, contributing 40.8% of its revenues at Rs 197.2 crore during FY21.

The company earned Rs 12.34 crore and Rs 11.07 crore from the Australian and the UK markets, contributing to 2.5% and 2.3% respectively of the total operating revenue with Rs 37.32 crore coming from the rest of the world.

On the expenses front, employee benefits emerged as the largest cost centre for WhiteHat Jr contributing 42.9% of the total expenditure. This cost jumped over 27X to Rs 932.4 crore during FY21 as compared to Rs 33.5 crore in the previous fiscal year (FY20).

To expand its market reach, the company has spent extensively on advertising and promotional expenses during FY21. Contributing 41% of the total expenditure, these costs rose 43.6X to nearly Rs 891 crore in FY21 from Rs 20.42 crore in FY20.

The Mumbai-based startup spent Rs 110.5 crore on support services during FY21 which ballooned 48.5X from Rs 2.28 crore in FY20.  IT and communication costs including payment gateway charges surged over 30X to Rs 81.4 crore in FY21 from Rs 2.7 crore in FY20.

Legal, professional and recruitment fees surged 11.6X and 14.7X to Rs 44.23 crore and Rs 39.76 crore respectively. While the company saw a huge growth in scale during FY21, its total expenditure also jumped over 31X to Rs 2,175.2 crore in FY21 against Rs 69.7 crore spent in FY20.

With the 30X increase in expenses, the annual losses of WhiteHat Jr soared 34.5X to Rs 1,690.5 crore in FY21 from Rs 48.95 crore recorded in the preceding fiscal year. On a unit level, the company spent Rs 4.49 to earn a single rupee of operating revenue during FY21.

While the company spent more during the fiscal year ending March 2021, its cash outflows shot up 67.7X to Rs 1,474 crore in FY21 from Rs 21.8 crore in FY20. The EBITDA margin also worsened by 103 BPS to -338.31% during FY21 which can be attributed to increase in staff costs, promotional expenses and spending on support services.

The Indian edtech sector is undoubtedly enjoying its time in the Sun, especially with China clamping down hard on edtechs there. Add to that the global orientation of many of these edtechs, thanks to English language proficiency, and you have a case for a very long rope from investors as these firms search for profitability too. As we saw from the numbers for Doubtnut, these edtech companies are still proving that markets do exist, at a very high cost to investors. For WhiteHat Jr, that elusive goal might arrive sooner than most, thanks to the strong footprint in the US, and the experience it has already picked up in its short life so far. Parent Byju’s clearly agrees if we look at its own tryst with a FIFA sponsorship this year. The final exam is still some time away.