After prolonged audit delay, Byju’s reports $575 million losses in 2021

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After months of delay, Indian education company Byju’s has finally made its audited financial statements public. However, the revelations are unlikely to end the swirl of controversy surrounding the nation’s most valued startup. 

As it increased spending to support growth, the company’s losses increased 13-fold in the year ending in March 2021, to 45.7 billion rupees ($575 million). However, sales, at 24.3 billion rupees, barely moved from the previous year. 

Byju’s attributed the performance to modifications to its accounting procedures that caused it to postpone revenue to later years. Additionally, it disclosed unaudited financial results for the year ended March 2022 and the succeeding four months, which showed a huge increase in revenues.

Investors who had been watching Byju’s over the previous two years as it acquired a number of businesses—possibly too many—were disturbed by the spiralling losses. 

According to Saurabh Daga, an analyst with London-based consultancy GlobalData Plc, the firm needs to get rid of non-core assets to reduce the number of its consumer-facing services and keep expenses in check without turning to layoffs. 

Given its leadership position and the longer-term potential of online education in a geographically dispersed country, he said Byju’s should weather the slump just fine if it takes those steps.

“Byju’s will likely have to undergo a massive rejig of its business,” Mr Daga said. It “will have to initiate strong measures related with streamlining its product offerings, shedding off the businesses or apps which do not align with its core offerings, as well as overhauling its current business development and sales processes.”

After missing a deadline for submitting financial statements by several months, Byju’s has been under regulatory pressure to do so. 

After a worldwide technology crash affected valuations, the company also had delays in collecting further finance and finalising a planned merger with a blank-check company in the US. 

The startup’s financial challenges have reignited worries about India’s consumer technology sector, where big competitors’ public valuations, including those of Zomato Ltd. and Paytm, have fallen precipitously this year. 

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This year, Byju Raveendran invested $400 million in his business in an effort to persuade other investors of its development potential.

Byju’s now records income upon the actual submission of periodic payments from customers as opposed to ahead, according to Raveendran’s accounting modifications. 

According to unaudited figures, sales for the fiscal year ending in March 2022 more than doubled to nearly 100 billion rupees. The following four months saw a rise in revenue to 45 billion rupees, and this year, sales are expected to increase by more than 50 per cent, according to Raveendran. 

Following a decline in technology valuations, the company’s plan to list on a US stock market through a merger with a special purpose acquisition company is “on complete pause”, he added.

The company has failed to finish a planned $800 million investment round because committed capital from investors Sumeru Equity Partners and Oxshott Capital Partners totalling almost $300 million hasn’t arrived, according to Raveendran, who added that he wasn’t sure if the funds will materialise. 

The most recent estimate given by market analyst CB Insights for Byju’s was $22 billion.

( with inputs from agencies)

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