Edtech platform PlanetSpark raised $13.5 million in a Series B round led by Prime Venture Partners, including Binny Bansal, Deep Kalra, Ashish Gupta, Gokul Rajaram, and Shirish Nadkarni in December 2021. The fundraising indeed helped the company boost its scale which surged 6.5X to Rs 30 crore in FY22 but at a high cost.
The revenue from operations for the Gurugram-based company grew 6.5X to Rs 30 crore in FY22 from Rs 4.61 crore in FY21, according to the consolidated financial statements filed with the Registrar of Companies.
PlanetSpark offers live 1:1 classes in public speaking, creative writing, storytelling, debate, podcasting, stand-up comedy, and poetry for the K8 generation. Subscription from these services is the sole source of revenue for PlanetSpark.
On the expense side, employee benefits were the latest cost center for the company forming 44.7% of the overall expenditure. This cost surged 9.7X to Rs 62.4 crore in FY22 from Rs 6.45 crore in FY21. This also includes Rs 1.42 crore as ESOP expenditure.
The company spent a huge amount of CAG (advertising and promotion), which surged 25.3X to Rs 46.64 crore during FY22 from Rs 1.84 crore in FY22. As the scale rises, cost for teachers payment increased 9.9X to Rs 23.1 crore in the last fiscal year.
The company added another Rs 2.23 crore and Rs 1.5 crore as legal/professional fees and payment gateway charges which catalyze the overall expenditure to Rs 139.5 crore in FY22 from Rs 12.35 crore in FY21.
Outpacing the revenue growth, overall cost for PlanetSpark grew 11.3X in the last fiscal year, as a result, losses for the company mounted 14.2X to Rs 109.4 crore in FY22 from Rs 7.72 crore in FY21.
Moving to the ratios, the ROCE and EBITDA margin of the company registered at -1064.1% and -361.7% respectively in FY22. On a unit level, PlanetSpark spent Rs 4.65 to earn a single unit of operating revenue.
In February 2022, PlanetSpark said it had over 2,100 teachers on the platform and were also looking to recruit more than 10,000 English teachers during the last year. The firm plans to strengthen its presence in India, the US and the Middle East, and also to enter new geographies such as Europe and SouthEast Asia.
PlanetSpark has a relatively eclectic mix of offerings, selling as it does more of ‘confidence’ to get ahead rather than learning like most edtechs. It also continues to establish the pattern of smaller edtechs with ‘large’ funding rounds struggling to match the size of the rounds with actual performance, even as the really large ones went the inorganic acquisition route to deliver revenue growth. The high spends on advertising and promotion are just one indicator of the high cost of acquisition for paying users, with competition coming from numerous free sources. Other than the market for English language skills, the other offerings are truly niche, and have limited upside in our view. PlanetSpark is direly in need of that one offering which will spark real growth for it and its investors. Perhaps even building massive national level competition properties in some of those niches offers higher revenue and visibility opportunities than the advertising it is doing currently.