In a rapidly evolving landscape for educational technology, industry leaders like Byju’s are fervently working to crack the profitability code, while competitors such as UpGrad, Unacademy and others brace for potential revenue surges.
The EdTech sector, known for its meteoric rise, is now under scrutiny as market dynamics and competition force companies to reevaluate their business models. As these titans vie for dominance, the industry is at a crossroads, prompting speculation about who will emerge as the true trailblazers in the pursuit of sustainable growth and financial success.
Byju's
Image: Byju's (Representative)
Founded by Byju Raveendran, India's ed-tech giant Byju's, once valued at USD 22 billion in 2022, is facing a rapid decline. Known for online and offline courses, Byju's became a unicorn in 2019. However, recent challenges include cash-flow problems, a toxic work culture, and a USD 1.2 billion loan default in 2021.
In June 2023, investor Prosus slashed Byju's valuation by 75 per cent, resulting in layoffs and financial mismanagement allegations. The parent company, Think & Learn Pvt Ltd., faced suspension by Google and Facebook. By November 2023, Byju's founder mortgaged personal properties for employee salaries, signaling a drastic drop in valuation.
Now, shareholders seek to remove founders, including CEO Byju Raveendran, amid claims of a USD 1-3 billion valuation. Byju's is raising USD 200 million through a rights issue, citing its pivotal role in a successful turnaround and garnering support from multiple shareholders.
upGrad
Mumbai-based edtech unicorn upGrad, co-founded by Mayank Kumar, Ronnie Screwvala, and Phalgun Kompalli, plans to establish 100 offline counselling touch-points and learning centers across India, allocating a substantial Rs 100 Cr corpus for expansion.
Despite the ongoing funding winter in the Indian edtech sector, upGrad, valued at USD 2.2 Billion in June 2022, remains resilient with USD 600 Million raised to date. However, its FY23 net loss surged by 76 per cent to Rs 1,141.5 Crore, attributed to a goodwill writedown of Rs 410 Crore, despite achieving Rs 1,000 Crore operating revenue for the first time.
Moreover, there are media reports that the company is also seeking funds to finance its expansion, with plans to conclude the deal by the end of 2024. The company was reportedly considering the acquisition of Udacity for approximately USD 80 million, slightly lower than the initially mentioned USD 100 million. External investors were expected to contribute around USD 50-60 million, while existing investors would cover the remaining amount.
Since 2020, upGrad has acquired 10 companies, and its 2022 valuation soared to USD 2.25 billion. In 2021, it ventured into the study abroad sector with the USD 16 million acquisition of Australia’s Global Study Partners and acquired video-learning solutions provider Impartus, rebranding it as upGrad Campus. However, its 2022 acquisition of Indian test-prep start-up Exampur fell through due to differences in business lines.
upGrad Co-founder Ronnie Screwvala Reacts to Byju's Turmoil
In response to reports of turmoil within ed-tech giant Byju's, upGrad co-founder Ronnie Screwvala has voiced his support for shareholders seeking a change in the company's management.
Reacting to a LiveMint report, Screwvala, using the X platform, expressed satisfaction, stating, "Finally, someone smelt the coffee." He urged shareholders to persevere, emphasizing the significance of their actions for both India as an investment destination and the credibility of the ed-tech sector, which he referred to as an "otherwise sunrise and sunshine sector."
Unacademy
Image: Unacademy (Representative)
Unacademy, co-founded by Gaurav Munjal, Roman Saini, Hemesh Singh, and Sachin Gupta, reported a remarkable financial turnaround in FY23 as its losses narrowed by nearly 40 per cent to Rs 1,678 crore from Rs 2,847.9 crore in FY22. Regulatory filings revealed a 26 per cent surge in revenue to Rs 907 crore, a reduction of 28 per cent in employee-related expenses, and an overall decline in total expenses to Rs 2,734.22 crore from Rs 3,703 crore in FY22. This performance comes amid a series of cost-cutting measures, including the layoff of over 2,000 employees, undertaken by the edtech unicorn in response to ongoing funding challenges.
Unacademy's financials, with reserves of Rs 1,800 crore, signal a resilient position with a four-year cash runway, which is projected to extend further to eight years as the company continues to optimize cash burn.
Physics Wallah
Physics Wallah | Representative Image
Founded by Alakh Pandey, Physics Wallah (PW), a notable rival to Byju's, has ventured into physical schools, marking a strategic expansion beyond its digital roots. The Central Board of Secondary Education Board (CBSE)-affiliated PW Gurukulam School in Gurugram has officially opened its doors, representing PW's foray into traditional education.
Despite offline locations contributing 40 per cent to PW's revenue in 2023, the Noida-based company has reported a growth in online learning, a 182 per cent increase in paid online course enrollments in 2023 compared to the previous year. In the fiscal year 2022–2023, PW reported an operating revenue of Rs 771.76 crore, a notable ascent from Rs 232.47 crore in the preceding fiscal year. Adjusted EBITDA stood at Rs 127 crore in FY23, in the evolving landscape of education in India.
Eruditus
Eruditus, the SoftBank-backed edtech unicorn | Representative image
Eruditus, the SoftBank-backed edtech unicorn founded by Ashwin Damera and Chaitanya Kalipatnapu in 2010, has achieved a milestone with its revenue crossing the Rs 3,000 Crore mark in the financial year 2022-23 (FY23). The Singapore-based startup reported a remarkable 75 percent increase in revenue, reaching Rs 3,320 Crore, making it the largest edtech player in India based on FY23 financials.
The company's lower expenses resulted in narrowing losses to Rs 1,049 Crore, showcasing an improved bottom line. In FY23, Eruditus served 250,000 students across 80 countries, collaborating with over 80 global university partners and offering 1,000+ courses in various fields. The edtech giant has raised a total funding of USD 814 million from investors including Accel, SoftBank, and Chan Zuckerberg Initiative. Eruditus achieved a valuation of USD 3.2 billion in August 2021 after a financing round led by Accel and SoftBank Vision Fund 2.
The pursuit of profitability and sustainable growth has become paramount. While industry leader Byju's faces a challenging phase with a rapid decline and internal turmoil, competitors like upGrad, Unacademy, Physics Wallah, and Eruditus are navigating their own unique paths. Now, the EdTech sector is at a crossroads, and the outcomes for these giants will shape the future of education technology in India.
