Byju's losses cross a billion dollars in FY22

Edtech unicorn Byju's has filed its FY22 financials on Tuesday, January 23, after a delay of almost 22 months after the reporting period ended.

In a filing with the Ministry of Corporate Affairs, the company said it clocked a 2.18x increase in revenue from ₹2,428 crore in FY21 to ₹5,298 crore in FY22. Losses ballooned 1.8x from ₹4,564 crore in FY21 to ₹8,245 crore in FY22. This translates into an EBITDA loss of ₹8,370 crore in FY22 from ₹4,599 crore in FY21. Expenses went up 2x from ₹7,027 crore in FY21 to ₹13,668 crore in FY22.

The company has said that WhiteHat Junior (WHJ) and Tangible Play (OSMO) dragged its overall performance "significantly.” White Hat Junior continues to bleed, it saw an EBITDA loss of ₹2,692 crore in FY22, and Tangible Play (OSMO) reported losses of ₹924 crore in FY22.

Aakash and Great Learning continue to buoy the group’s revenue. Akash clocked a turnover of ₹1,284 crore in FY22, and Great Learning reported a revenue of ₹221 crore in FY22.

Akash continues to stay in the black with a PAT of ₹90 crore in FY22.

Two weeks ago, on January 12, BlackRock cut the value of its holding in Byju's, slashing the implied valuation of the Indian education tech startup to $1 billion from the $22 billion mark set in early 2022. BlackRock, which owns less than 1% of Byju's, slashed Byju's valuation by 62% to $8.3 billion in May 2023.

In November 2023, Prosus downsized the valuation of the edtech giant to below $3 billion, the Dutch investor revealed in its earnings call. Prosus, which owns a 9.6% stake in the company, has been marking down the valuation of the edtech since the beginning of 2023.

Prosus, in its earnings call, said, "We have reported a markdown in Byju’s carrying value, we do it from time to time reflecting the current circumstances and not the long-term view of the business. We have written down our stake in Byju’s by a further 315 million dollars."

The tech investor had slashed Byju’s valuation to $5.1 billion in March this year. In early 2022, it valued this stake at $2.112 billion, which pegged the valuation of Byju’s at $22 billion. In May 2023, Prosus slashed the value of its 9.6% stake by $1.62 billion to $489.6 million—this pushed the valuation of Byju’s to $5.1 billion. Now, it has slashed the value it assigns to its stake in Byju’s by a further $200 million to around $288 million—a write-down of 86%.

Prosus also said Byju's is a more challenged business and is confronting several headwinds, and Prosus, along with other shareholders, is working with the edtech company to address these issues through daily discussions.

Peak XV Partners had also told its limited partners (LPs), or investors in its funds, on July 26 that it is marking down its investment in the company over a lack of visibility into its audited financials. It, however, did not divulge any details on the value of the holdings that it is likely to cut.

Byju’s was last officially valued at over $22 billion in October 2022, when it raised a $250 million funding round.

In July last year, Prosus’ representative on Byju’s board, Russell Dreisenstock, also stepped down from the edtech company, along with GV Ravishankar of Peak XV and Vivian Wu of Chan Zuckerberg Initiative. The representatives had cited poor reporting and governance structures as reasons behind their exits from the board.

In June, Deloitte also stepped down as Byju’s auditor, citing a delay in its FY22 financials as the reason. Byju's had to appoint BDO MSKA associates as auditors to strengthen "governance.”

Byju’s is amidst a plethora of troubles. In a high-drama annual general meeting (AGM) held on December 20, 2023, investors of edtech giant Byju's grappled with a tumultuous session lasting three hours. The meeting featured a series of resolutions, most notably the approval of the audited FY22 financials, which passed despite shareholder concerns over auditor issues.

The AGM, marred by disruptions and shareholder protests, centered around discussions related to the company's statutory auditor, MSKA and Associates.

MSKA and Associates were notably absent during the initial part of the meeting, fueling skepticism among shareholders.

As previously communicated to shareholders, the agenda included approval of the audited FY22 financials and the appointment of MSKA & Associates as statutory auditors for a five-year term. However, shareholders expressed dissatisfaction and abstained from passing the resolution.

Byju Raveendran, Founder and CEO, reassured shareholders of a subsequent meeting to address their concerns with the absent auditor.

The meeting continued with a senior auditor from MSKA and Associates later joining to discuss the FY22 financials. Shareholders, however, continued to drop out of the online meeting, urging a reconvening of the AGM.

In a statement released on December 20, a Byju's spokesperson confirmed the successful passage of all resolutions, including the approval of FY22 accounts. The spokesperson added that the auditor, BDO, addressed shareholder questions in the interactive three-hour meeting.

“Think and Learn, the parent company of BYJU’s, held its annual general meeting (AGM) today with close to 60 shareholders in attendance. All the resolutions were passed, including the accounts for FY22. BDO was re-appointed as the statutory auditors of the company. Founder Byju Raveendran opened the AGM with an account of the state of business and its challenges. Nitin Golani, Chief Financial Officer-India, briefed on the audit, while India CEO Arjun Mohan provided business updates and plans. The auditor, BDO, later answered all questions from shareholders before the company wrapped up the interactive three-hour-long meeting,” the spokesperson said.

Despite the eventual passage of the resolutions, auditor Manish Makhija raised critical concerns during the AGM. Makhija highlighted an ongoing concern regarding the company's ability to continue operating in the foreseeable future due to a "significant gap" between its assets and liabilities. He emphasised the continuing cash burn and obligations concerning Term Loan B as contributing factors.

The challenges have led to the departure of investor board members, citing differences with CEO Byju Raveendran.

In a bid to achieve profitability, the company in September 2023 undertook an exercise to reduce the workforce by about 3,500 and end duplication in roles across the organisation. The current job cuts will impact staffers at the manager and vertical leaders’ levels.

BYJU’S has previously taken a number of cost-cutting initiatives, particularly on the employee front. Since late 2022, the edtech giant has let go of more than 2,500 employees. The most recent job cuts came in June this year, when it laid off 500–1000 employees. The company’s headcount has come down from 50,000 in December 2022 to 37,000 at present.

The move came after BYJU’S announced Arjun Mohan as BYJU's new India CEO on September 20, who has been tasked with completing the restructuring process to steer a revamped and sustainable operation ahead. The edtech major has set a target to become profitable by March 2024 on account of the consolidation and restructuring of the organisation and settlement of a $1.2 billion loan.

In addition, the Enforcement Directorate (ED) confirmed on November 21 it issued a show-cause notice to Byju’s, alleging Foreign Exchange Management Act (FEMA) violations amounting to ₹9,000 crore. CNBC-TV18 has reported about this earlier.