There seems to be no end in sight to the pains at BYJU’s.
India’s most valued edtech and also its biggest loss-making unicorn, on Wednesday, said it is letting go of 2,500 employees from its umbrella of companies, weeks after reporting mounting losses for FY21.
The company said it has eliminated 5% of its workforce across multiple departments and is cutting its marketing budget as it looks to improve its finances and achieve profitability by end of March 2023.
According to Atul Thakkar, director-investment banking, Anand Rathi Advisors, there could be more layoffs lined up at the company. “This is cost rationalisation and an attempt to achieve positive free cashflows. Especially given the overlap in sales staff of the various companies BYJU’s has acquired,” Thakkar said.
BYJU’s has spent $2.5 billion acquiring smaller firms in the past two years, including Blackstone-backed Aakash Educational Services, WhiteHatJr, Great Learning, and Toppr.
“There will be multiple such layoffs before things settle,” Thakkar added.
BYJU’s, which is backed by high-profile investors including BlackRock, Tiger Global, UBS, Prosus Ventures, Sequoia India, and Lightspeed Venture Partners, said it will also be “retargeting the marketing budget” towards more efficient growth.
“Since significant brand awareness has been created in India over the past few years, there is a scope to optimise marketing budgets locally and prioritise spending to increase brand awareness in overseas markets,” the company said in the statement.
Until a year back, BYJU’s was the poster child of edtech companies in India, garnering praises from investors all over the globe for lifting the fortunes of the entire sector. However, it is now seen as an overvalued company caught in the crosshairs of widening losses, flat revenue, rising expenses, and regulatory hurdles, among other challenges.
The company filed its FY21 results in September. Its revenue fell 14% year-on-year to Rs2,428 crore ($305.8 million) on a consolidated basis and it reported a net loss of Rs4,500 crore in the year ended March 31, 2021— nearly 17 times the Rs 262 crore loss of FY20.
The results were also published after a delay of 18 months prompting many experts, including popular Indian investor Shankar Sharma and edtech firm upGrad’s founder Ronnie Screwvala, to question the silence of BYJU’s investors on its accounting practices.
Without taking the company by name, Screwvala, at a fireside chat during DealStreetAsia’s Asia PE-VC Summit 2022 in Singapore on Sept. 27, said investors of India’s most valued edtech company have to take equal accountability along with the founders when fire-fighting on a range of issues.
“At a time like this, the biggest disservice that has happened to edtech in India is that investors in the same company have not spoken up. If they know everything is fine, we haven’t heard all the early investors who took billions of dollars off in secondary valuations in that company actually go out there and speak in favour of the company. So I think that’s where founders are left high and dry,” Screwvala said.
Under pressure from not only its investors and customers but also from the media, BYJU’s co-founder and CEO Byju Raveendran recently admitted in interviews that the last six months have been difficult for the company and that he has had sleepless nights as a result of all of the critical media reports that have raised many concerns about its operations.