Edtech giant BYJU’S faces a significant setback as it plans to raise $100 Mn to $200 Mn via a rights issue at a substantially reduced valuation of $2 Bn. This marks a staggering 90% decline from its peak valuation of $22 Bn in 2022, raising eyebrows and concerns within the industry.
Contradicting the bleak valuation picture, BYJU’S India CFO Nitin Golani paints a more optimistic scenario, stating that the company aims to secure capital in the range of $7 Bn-$8 Bn during its upcoming rights issue in February. Golani attributes this confidence to a significant increase in core business revenue and the enhanced valuation of various subsidiary brands within the BYJU’S ecosystem.
FY22 Financial Results Unveiled
The revelation comes in the wake of BYJU’S unveiling its financial statements for FY22 after a prolonged delay of 22 months. However, the financial report brings disconcerting news as losses surged by a staggering 81% YoY to INR 8,245.2 Cr, despite a robust 120% YoY increase in revenues, reaching INR 5,014.6 Cr.
BYJU’S justifies the revenue surge by highlighting the success stories of strategic acquisitions, such as Aakash and Great Learning. Aakash, in particular, saw its profit grow by 82% YoY to INR 79.5 Cr, while Great Learning increased its bottom line to INR 900 Cr – 1,000 Cr from INR 400 Cr at the time of acquisition. However, the company also acknowledges the challenges posed by less fruitful acquisitions, such as WhiteHat Jr and OSMO, which have contributed significantly to the overall losses.
BYJU’S: Subsidiary Woes and Auditor Concerns
Auditor concerns arise as subsidiaries, including WhiteHat Jr and OSMO, borrowed substantial sums from the parent company, Think & Learn, despite mounting losses. The auditor also flags non-compliance with the Companies Act, 2013, and loans at rates below market standards. BYJU’S faces a complex financial landscape, with due receivables of INR 3,800 Cr at the end of FY22.
BYJU’S: Valuation Hits Rock Bottom
Adding to BYJU’S woes, BlackRock and Dutch VC firm Prosus have slashed the company’s valuation to less than $1 Bn and less than $3 Bn, respectively. This downward spiral in valuation comes after three external board members resigned in June 2023 over concerns regarding $1.2 Bn Term B loan payments and delayed financial statement filings.
The company’s mounting losses have triggered a mass restructuring effort, resulting in layoffs and shelved expansion plans. Over the past two years, BYJU’S has laid off more than 5,000 employees, according to Inc42’s layoffs tracker. The restructuring aims to navigate the financial challenges and position the company for future growth.
Despite the financial turmoil, BYJU’S CFO Nitin Golani expresses confidence in the company’s ability to rebound. He states that the focus is on filing FY23 results before the proposed rights issue, suggesting a commitment to transparency and a potential turnaround strategy.
BYJU’S, once a beacon of success in the edtech landscape, now grapples with a significant downturn in valuation and financial health. As the company seeks capital infusion through a rights issue, the road to recovery appears challenging. The strategic importance of acquisitions and the pitfalls of less successful ventures highlight the complexities within BYJU’S diverse portfolio. The company’s ability to address auditor concerns, rebound from valuation cuts, and execute a successful restructuring plan will be crucial for its future in the competitive edtech sector.
