News Update

No cash bonus to employees this year: Unacademy CEO

• ByStartupStory     |    February 3, 2023

Unacademy, the SoftBank-backed edtech unicorn, will not offer cash bonuses to employees this year, according to co-founder and CEO Gaurav Munjal, reported VCCircle.

Instead, the company has decided to grant stock options based on individual performance. The lack of cash appraisals is attributed to a focus on profitability.

“We must continue to focus on profitability because when Unacademy does an IPO, it should do it with at least 4 quarters of profitability, ‘ Munjal said in an internal note issued today.

Unacademy’s announcement comes shortly after its larger peer Byju’s laid off nearly 1,500 employees in an effort to move closer to profitability.

Unacademy was last valued at around $3.4 billion when it raised $440 million from investors including Temasek and Softbank in August 2021.

Munjal also stated that Unacademy’s burn rate has significantly decreased and that the company expects 2023 to be a good year. Its new businesses, particularly offline centres, are expected to grow rapidly, he said.

“I know this is disheartening to hear after putting in a lot of hard work, but I want you all to understand that this is a phase. We have built great products. We have been great at adapting to market conditions. We launched new businesses and did not decline when everyone else did. And our Ebitda (earnings before interest, tax and ammortization) margin has improved a lot,” Munjal noted.

The news comes after Unacademy’s upskilling product Relevel shifted its focus from education to testing, resulting in the layoff of 40 employees.

The unicorn fired about 10% of its workforce, or about 350 employees, in November last year, in its final round of layoffs for the year, as the edtech sector struggled amid school reopenings, weak macroeconomic conditions, and a funding winter.

During its earlier round of layoffs in June 2022, when it fired about 150 employees, the firm’s chief executive Gaurav Munjal assured that the edtech company won’t conduct any more layoffs during the year. However, in November, the CEO said, “the market challenges have forced us to re-evaluate our decisions. Funding has significantly slowed down and a large portion of our core business has moved offline.”

It laid off 600-800 employees from its sales and marketing teams, as well as a few contractual employees and educators or tutors, in April of last year. It also laid off about 100 people from the PrepLadder team as part of an organisational restructuring.

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