Unacademy's road to profitability!

Hey there,

Unacademy is known for posting HUGE losses year after year. However, this time Unacademy has posted only about 50% of the losses it incurred last year!

Does this mean Unacademy is finally on the right track?

Let's look at some quick context first: Unacademy is currently India's 2nd most valued edtech platform that helps students prepare for & and crack all kinds of competitive exams. It offers 200+ educational goals for students.

Due to high expenses related to marketing campaigns, cloud infrastructure, and salaries for its expert teachers, Unacademy has frequently made headlines for its huge losses.

According to the company's financial statements, here is a look at Unacademy's losses over the last few years:

FY21 - 🔻 Rs 1,537 crore
FY22 - 🔻 Rs 2,848 crore
FY23 - 🔻 Rs 1,678 crore

The significant ~41% reduction in losses from FY22 to FY23 is a positive sign. But how did Unacademy manage to pull this off?

1/ Layoffs: Unacademy laid off ~2,000 employees in the 2022-2023 session. Though difficult, this move helped increase organizational efficiency by eliminating redundant roles.

With a leaner workforce, Unacademy could concentrate more on generating higher revenue per employee.

2/ Increased Offline Focus: Unacademy increased its focus on offline coaching centers over the last year. Though this led to a 30% degrowth in its online business, the offline expansion resulted in an 87% improvement in EBITDA.

3/ Diversification and Profitable Subsidiaries: Unacademy has been acquiring companies ever since its inception for two key reasons: eliminating competition and adding complementary business lines.

For example, Graphy by Unacademy recently acquired other companies like Spayee and Scenes by Varun Mayya.

These acquisitions help Graphy better support content creators, which ultimately benefits Unacademy's overall business. Additionally, Graphy itself is nearing profitability as an individual business unit due to this diversification.

4/ Improved Cash Flow Management: By reducing cash burn by 60% in 2023, Unacademy has extended its runway or available cash reserves to 4 years. The company aims to further optimize its cash burn rate to extend this runway to 8 years.

In addition to cost-cutting, Unacademy also expanded its learner base 5x from 6,000 in 2022 to 32,000 in 2023. More learners translate into higher revenue, strengthening the top line.

The strategic measures undertaken in 2023, and the focus on continuing them in 2024, indicate that Unacademy is on the right path toward profitability. These efforts provide confidence in the future outlook of Indian edtech, with Unacademy leading the way.

✏️ Jargon of the day

Top Line:

The top line refers to a company's total revenue or sales. It is the money a business brings in by selling its products or services before taking out any costs or expenses.

A higher top line means more sales and revenue for the company. Growing the top line typically involves selling more units or increasing prices. The goal is to boost overall revenue at the top of the income statement.

Loved this edition? Or have some thoughts to share? We'd love to hear from you

Cheers,
Karthik