Indian edtech giant Byju’s reveals widening losses in delayed accounts

    Education technology giant Byju’s, India’s most valuable start-up, has revealed that it spent almost three times the revenue it brought in during the financial year ending in March 2021.

    The $22bn Chan Zuckerberg Initiative-backed company has become a bellwether for the fortunes of the edtech sector, which was boosted by school and college closures during the coronavirus pandemic but is now fighting to justify its elevated valuation as students return to classrooms.

    With operational revenue of Rs24.28bn ($305.5mn) set against expenses of Rs69.92bn ($879.6mn), Byju’s registered a loss of Rs45.64bn ($574.2mn) for its 2021 financial year, according to filings obtained by the Financial Times on Wednesday.

    Those losses were 13 times greater than the previous financial year’s, which were Rs3.6bn ($45.3mn). Neither Byju’s nor founder and chief executive Byju Raveendran responded to questions about the filings, which were presented 18 months late.

    Byju’s “got given money like it was water, so they spent it”, said Deepak Shenoy, founder and chief executive of research consultancy Capitalmind. For highly capitalised start-ups such as Byju’s, “spending is a key deliverable”, he added.

    Fuelled with venture capital from investors including Tiger Global, Silver Lake and Owl Ventures, who have collectively ploughed nearly $6bn into the start-up, Byju’s acquired 10 companies in 2021. It has bought other edtech companies to expand its international presence and dominate the market in India.

    Its marketing costs also skyrocketed in 2021, the filings showed.

    “The problem with Byju’s,” added Shenoy, “is it’s done this for too long”. When a company such as Byju’s is aiming to list on public markets, “you need to be showing your losses are narrowing”, he said. Byju’s was considering a listing in the US via a blank cheque company late last year.

    “Covid was their biggest boon,” said Shenoy. “If you couldn’t do this great profit during Covid, when will you?”

    But the edtech giant, founded as a testing preparation company in 2011, said that an auditor-advised change in accounting practices for the long-delayed results masked strong growth.

    In a press release on Wednesday, Byju’s claimed “there was significant business growth in [financial year 20]21 over [financial year 20]20”. But it added that “new revenue recognition started because of a Covid-related business model change”, meaning that “almost 40 per cent of the revenue was deferred to subsequent years”.

    Byju’s had previously booked revenues for multiyear education packages upfront, although many clients pay in instalments.

    The company said it had more than 50,000 employees globally and that acquisitions, such as physical coaching colleges Aakash, were boosting revenues. “Recognising tutoring and live classes as the need of the hour,” it added, it has launched physical tuition centres and live classes to complement its app-based video learning packages.

    Accounts for the company were not available from India’s Ministry of Corporate Affairs website by Wednesday evening.

    Indian edtech giant Byju’s reveals widening losses in delayed accounts Republished from Source via

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