Edtech unicorn Upgrad’s losses widen on rising costs
- ByStartupStory | November 11, 2022
UpGrad, an edtech firm founded by Ronnie Screwvala, recorded a net loss of Rs 626.61 crore on a consolidated basis in FY22, a significant increase from the loss of Rs 211.1 crore the year prior. According to upGrad’s regulatory filings, which were gathered from market intelligence platform Tofler, the losses grew as the company’s employee benefit costs increased by over 2.4 times in FY22. Employee benefit expenses for the company increased significantly from Rs 161.5 crore in FY21 to Rs 383.16 crore in FY22. On a consolidated basis, upGrad reported a rise in FY22 revenue nearly two times, at Rs682.21 crore. On a combined basis, upGrad’s other costs, which include marketing and advertising expenditures, increased over 2.5 times to just over Rs 616 crore in FY22 from 247.6 crores in FY21.
According to the papers, upGrad’s overall revenue increased significantly from Rs 302.87 crore to Rs 519.39 crore in FY22. Due to its expenses more than doubling to Rs 1,064 crore, the company reported a net loss of Rs 568.62 crore for FY22 on a standalone basis.
Despite experiencing a rise in income for FY22, the second year of the Covid-19 pandemic that gave edtech companies a boost due to stay-at-home limitations, upGrad joins SoftBank-backed Unacademy in reporting a growing loss. Due to rising employee benefit and ESOP (employee stock ownership plan) expenditures, Unacademy recorded a loss of Rs 2,848 crore for FY22 in October, virtually doubling the deficit the SoftBank-backed edtech unicorn had experienced in FY21. However, upGrad hasn’t actively sought to reduce costs so far this year, unlike Unacademy and the majority of other edtech organisations. One of only two unicorn edtech companies, upGrad will not lay off staff in 2022. More than 8,800 people were laid off by edtech companies in 2022, with Byju’s and Unacademy, two of the most valuable edtech companies in India, being the most responsible.
The company has also been on an acquisition binge, buying more than 10 other businesses. Mayank Kumar, Managing Director and co-founder of upGrad, stated in an interview from August that upGrad might become profitable by the end of the current fiscal year (FY23) if it does not introduce a new stream or does not engage in any additional mergers and acquisitions. Additionally, upGrad recently disclosed that it would spend $30 million to launch 10 international institutes under the new name UGDX in the upcoming year. In one of the largest fundraising rounds for Indian edtech businesses this year, upGrad raised $210 million in August.
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