Edtech startup Simplilearn is one of the growth stage startups which got the momentum after its fundraising, but they continually lost on their fundamentals during the last two fiscal years: with losses racing past the revenue numbers.
The thirteen-year-old startup grew 1.89X to Rs 480 crore in FY22 from Rs 253 crore in FY20 while the losses increased to Rs 150 crore in FY22, whereas the company was profitable with Rs 1.35 crore in FY20, according to consolidated financial statements filed with the Registrar of Companies.
Simplilearn is a digital upskilling platform that provides training in cyber security, cloud computing, project management, digital marketing, and data science, among others. The courses offered are the sole source of revenue for the Bengaluru-based company which grew 40.8% to Rs 480 crore in FY22 from Rs 341 crore in FY21.
Simplileran also has other financial income which grew 2.6X to Rs 13 crore in the last fiscal year from Rs 5 crore in FY21.
Moving on to the cost side, advertising and promotion expenses emerged as the largest cost center for Simplilearn, forming 36.3% of the overall expenditure. This cost surged more than 2X to Rs 233 crore in FY22 from Rs 107 crore in FY21.
Employee benefits was the next major expense followed by the advertisement cost which spiked 85.4% to Rs 191 crore in FY22. This also included Rs 27.16 crore as ESOP expenses (non-cash). The cost of materials for programs increased 39% to Rs 139 crore during FY22.
The company added another Rs 12 crore and Rs 16 crore against subscription fees and legal & professional fees which pushed the overall expenditure by 82.9% to Rs 642 crore in FY22 from Rs 351 crore in FY21.
Outpacing the revenue growth, losses for the company skyrocketed 26.3X to Rs 150 crore in the last fiscal year from Rs 5.7 crore in FY21. With the surge of 82.9% in the cost, cash outflow from operations turned negative with Rs 85 crore during FY22.
On the ratios side, the ROCE and EBITDA margin were registered at -48.39% and -27.99% in FY22. On a unit level, it spent Rs 1.34 to earn a single unit of operating revenue.
Founder and chief executive Krishna Kumar said in November 2022 that the year prior they “lost money after a long time” because of some of their experiments after Blackstone joined their board. That explains the staggering loss numbers, but even then Kumar is optimistic and aims to reach net profitability by FY24. In that case, the company will have to deliver a quick turnaround.