BYJU’S Edges Towards Restructuring Amidst Challenges in EdTech Landscape

• ByStartupStory     |    November 14, 2023

BYJU’S, the Bengaluru-based edtech startup founded by Byju Raveendran in 2011, is undergoing a moment of introspection amidst challenges faced in the past year. Industry experts emphasize the need for a long-term strategy, urging BYJU’S to focus on its core online offerings and shed ventures that have become burdensome.

The K-12 edtech platform gained early recognition for its technology-driven approach to learning, offering a diverse range of educational courses and content, spanning kindergarten to higher education. However, concerns arise as the company’s core online business is not growing at the anticipated rate for its size and scale.

In FY21, BYJU’S reported a decline in revenue, attributing it to a change in revenue recognition method. The available FY22 data shows a 130% rise in total income from its core business to Rs 3,569 crore. Despite these figures, challenges persist, notably in Customer Acquisition Cost (CAC), contributing to losses.

BYJU’S ventured into offline tutoring, aiming to set up 500 centers across India with a $200 million investment. However, the expansion faced setbacks due to lower-than-expected business generation and higher operational costs. Industry experts highlight the historical low-margin nature of offline education and recommend BYJU’S to refocus on its online business, aligning with its foundational strengths.

To address financial challenges, BYJU’S is contemplating the sale of assets like Epic and Great Learning, acquired in 2021 for $500 million and $600 million, respectively. Cost restructuring efforts, including job cuts affecting over 5,000 individuals, are underway, with Arjun Mohan leading the business restructuring.

The acquisition of Aakash Educational Services Limited (AESL) for $1 billion in January 2021 poses strategic considerations. Aakash, termed BYJU’S’ cash cow, holds significant debt, and recent developments, including the potential return of Aakash Chaudhry as CEO, signal a complex financial landscape.

BYJU’S is advised by industry insiders to adopt a frugal approach, rebuild confidence among stakeholders, and reevaluate its business strategy. The company, having spent over $3.5 billion on acquisitions, faces the challenge of streamlining operations and determining its core business for sustained growth. As BYJU’S navigates these complexities, industry experts stress the importance of avoiding overextension and concentrating on core areas of expertise for long-term success.

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