Byju’s announces Rs4,500 crore net loss for FY21
Byju’s India’s largest and most valuable Edtech company announced its annual results for FY21 after a long gap. Eventually, the Ministry of Corporate Affairs (MCA) had to pull up Byju’s for the inordinate 18-month delay in the announcement and filing of its annual results. Byju’s is a private limited company so it has 7 months to declare its annual results. But the 18-months delay was too long even by the rather relaxed standards set for private limited companies. For the full year FY21, the net loss stood at a scary Rs4,588 crore.
In a sense it was almost like an anti-climax. Byju’s delayed its results under the pretext that they had made a slew of acquisitions in FY21 and all that had to be consolidated, which was taking time. That argument had looked specious in the first place and now the real reason for the delay is apparent. For FY21, the total sales revenues saw a marginal yoy growth of 3.32% to Rs2,428 crore. Net losses had surged from a mere Rs231.69 crore in FY20 to a scary level of Rs4,588 crore in FY21 a new 20 times expansion in net losses.
The auditors of Byju’s Deloitte Haskins & Sells, have given an unqualified report. However, investors and observers have a lot of question to ask the company. Byju Raveendran has justified the spike in losses as an accounting adjustment. According to Raveendran, the huge jump in losses during FY21 was on account of deferral of 40% revenues to subsequent years. However, costs were front-ended and incurred and booked in FY21. Raveendran has expressed confidence that the situation should improve substantially in FY22.
In FY21, Byju’s expenses spiked by 144% to Rs7,027 crore. There were 2 major items in this spike in expenditure. Firstly, employee benefit expenses surged by over 300% to Rs1,943.30 crore. The other major header was business promotion expenses which surged by 150% to Rs2,250.94 crore. According to Raveendran, the year FY21 had the highest number of courses that were sold via EMI options compared to previous years. In EMI sales, such revenues are recognized only after significant collection has been completed from users.
That means only a part of the revenues were reported in FY21 and the rest would be reported in FY22. Byju’s has pointed out that many of Byju’s acquisitions across segments had witnessed substantial growth. Aakash and Great Learning, in the higher education segment, had doubled revenues since the acquisition. Even the US acquisitions made by the company like, Osmo and Epic had scaled up rapidly in terms of adoption and engagement. In FY22, they expect the international business to contribute 25% of total revenues.
Explaining the reason for the inordinate delay in the declaration of annual results for FY21, Raveendran admitted that this delay can be attributed to COVID, slew of acquisitions and the change in the method of booking revenues. He admitted that there may still be a delay in declaring the results for FY22, but it would not be as bad as FY21. In fact, the company is confident of meeting the 6-month deadline given by the MCA for private limited companies to fulfil these requirements. One really hopes such delays are not repeated.
All these factors have had an impact on the valuations of Byju’s. Till date, Byju’s has raised close to $5 billion in capital and is currently valued at over $22 billion. It has also used equity as currency to further its inorganic reach. But now there is a lot of scepticism in the Edtech sector and valuations are under question. People are no longer learning from homes and want to get back to school. That is where the hybrid Edtech model would get tested. For now, the hope is that the combination of inorganic buys and the offline experiment really work for Byju’s. It is also important for the start-up ecosystem in India.
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