With a noteworthy 25% increase in gross revenue for FY24, Upgrad has proven to be a spectacular performer during the difficult year that the global edtech sector underwent. The company showcased its strategic focus on product diversification, international expansion, and enterprise solutions with a sharp increase in topline to ₹1,715 crore ($204 million) from ₹1,366 crore ($162 million) in FY23. With so many edtech companies struggling financially, having to lay off employees, and seeing a decline in demand, Upgrad’s remarkable performance provides crucial hints about what can happen if it makes certain strategic choices.
Credits: Business Standard
The Strength of Upgrad’s Enterprise Segment
The company’s revenue growth has been largely attributed to Upgrad’s enterprise segment, which goes by the name Upgrad Enterprise. This area alone generated all of the company’s revenue in FY24, demonstrating the growing need for corporate and executive training initiatives. With businesses placing an increasing emphasis on upskilling their staff to stay competitive, Upgrad has established itself as a prominent provider of these training solutions.
The company’s increased EBITDA margin, which increased from a negative 19% in Q4 FY23 to a positive 4% by the end of FY24, is indicative of Upgrad Enterprise’s performance. This development indicates not only a stronger financial position but also the enterprise offerings of Upgrad are profitable and scalable.
International Expansion: A Strategic Move
The recent success of Upgrade has also been significantly attributed to its global activities. Due to the company’s aggressive global expansion efforts, foreign revenues increased from 15% of total income in FY23 to 21% in FY24. Considering the difficulties many edtech companies encounter when expanding their operations internationally, this increase is quite noteworthy.
This expansion has been made possible by Upgrad’s collaborations with esteemed universities in the US, the UK, and Australia. Through these partnerships, Upgrad is able to provide professionals and students with access to top-notch education from some of the top universities in the world while also enhancing its brand credibility. Upgrad is lessening its dependency on the home market and diversifying its revenue streams by capitalizing on the rising demand for international education.
Diversification: Beyond University Partnerships
Additionally, Upgrad has taken the initiative to broaden its products outside conventional collaborations with universities. Undergraduate and graduate programs in in-demand subjects including data science, digital marketing, product management, and technology management are now part of the company’s broader offering. Furthermore, Upgrad’s “Study Abroad” program seeks to help students navigate the challenges of being accepted into international universities in order to capitalize on a profitable market niche.
Moreover, Upgrad is strategically penetrating the offline education space. The organization operates a medical training center in Vanuatu and a campus for skill-based programs in Mumbai.
Competitive Landscape and Challenges
Even with its impressive results, Upgrad faces intense competition in its industry. Leverage Edu is a competitor in the foreign education guidance sector, while competitors in the online education space include Eruditus, Udemy, Coursera, and Udacity. The quick uptake of AI in education also presents a risk since it has the ability to upend established edtech business models and change the nature of industry competition.
However, Upgrad’s strategic initiatives—focusing on enterprise solutions, going global, and diversifying—have allowed it to maintain a competitive advantage. The company’s $1.9 billion valuation, which came about as a result of a $40 million financing round in March 2023, shows that investors were confident in its potential for long-term growth.
The Broader Impact of Upgrad’s Success
The robust performance of Upgrade has various further ramifications for the edtech industry. It first emphasizes how crucial it is to diversify sources of income rather than depending entirely on a single good or service. Second, it highlights the increasing need for upskilling and corporate training—a trend that edtech businesses may take advantage of to spur expansion. Last but not least, Upgrad’s offline projects and global expansion imply that a hybrid approach to education—combining online and offline components—might be a successful strategy in the post-pandemic environment.
