Cuemath’s losses go past Rs 200 Cr in FY22

Google-backed edtech firm Cuemath grew at a rapid clip during FY21 and FY22 as its scale soared over 6X to Rs 148.05 crore in FY22 from Rs 24.43 crore in FY20. However, losses of the Bengaluru-based company widened 3.9X during the same period.

Cuemath’s operating revenue grew 63.1% to Rs 148.05 crore in FY22 from Rs 90.77 crore in FY21, according to the company’s annual financial report with the Registrar of Companies (RoC).

Cuemath provides Math classes for the K-12 segment and helps students prepare for school and competitive tests. Income from teaching services was a substantial source of collection accounting for 89.5% of the total operating revenue. This income grew 2X to Rs 132.45 crore in FY22 from Rs 64.4 crore in FY21.

Franchisee and teacher's onboarding fees shrank 37% and 56.3% to Rs 12.92 crore and Rs 2.42 crore respectively in FY22. Cuemath also added Rs 26 lakh from the sale of books to the total collections.

The company recorded a non-operating income of Rs 4.88 crore from the gain of the sale of current investments in FY22.

On the cost side, employee benefits formed 34% of the overall expenditure. This cost surged 81.9% to Rs 125.5 crore in FY22 from Rs 68.98 crore in FY21. It includes Rs 17.67 crore in ESOP expenses which were non-cash expenditures.

The cost for legal and professional fees spiked 2.26X to Rs 98.78 crore during FY22 while the advertising cost grew 18.5% to Rs 96.59 crore in FY22 from Rs 81.5 crore in FY21.

Cuemath recorded another Rs 18.43 crore and Rs 8.22 crore on IT and telephone postage which steered its overall expenditure by 64.7% to Rs 369.5 crore in FY22 from Rs 224.3 crore in FY21.

Outpacing its revenue growth, Cuemath’s losses increased 66% to Rs 216.6 crore in FY22 from Rs 130.7 crore in FY21. Cuemath spent Rs 2.5 to earn a single unit of operating revenue. Huge cash burn worsened its EBITDA margin to -139.5% during FY22.

Edtech platform Cuemath has raised $57 million in its Series C round led by Alpha Wave last year. With this, the startup has raised $126 million to date at a post-money valuation of $400 million.

In the k-12 ed-tech space, Cuemath competes with Byju’s, WhiteHat Jr, Codeyoung, Extramarks and Vedantu.

Like almost every edtech in India, Cuemath is increasingly chasing a global footprint to find the answers to its own future. The problem with that model is stickier than usual costs and now, the risks from AI driven tools that threaten some aspects of the market as well. With the firm offering a hybrid model instead of pure online classes, it has a large potential market to address. However, with a thriving market for tutors across India offering one on one or group tuitions, Cuemaths might find returns from richer markets worth chasing, rather than the possibilities in India. 

The firm has done the basics right in terms of focusing on testimonials for instance. However, shying away from declaring the cost of tuition on its site, however indicative without registering or sharing detailed data, is a questionable move, in our view.