Vedantu, a prominent Bengaluru-based K-12 edtech startup led by Vamsi Krishna, witnessed a notable development in its financials for the fiscal year ended March 31, 2023. While the company managed to narrow its consolidated net loss significantly, it also experienced a decline in revenue from operations.
Loss Reduction and Revenue Decline
In a positive stride, Vedantu’s consolidated net loss for FY23 decreased by a substantial 46%, amounting to INR 372.6 crore compared to INR 696.2 crore in the preceding fiscal year. However, this achievement was juxtaposed with a downturn in its operating revenue, which stood at INR 152.5 crore, marking an 8% decrease from INR 166 crore in FY22.
Revenue Sources and Performance
Vedantu’s primary revenue stream, derived from tuition fees for its online courses, witnessed a decline of 13%, reaching INR 144.3 crore in FY23 from INR 166 crore in the previous fiscal year. When factoring in other income, the company’s total revenue experienced a decline of 9%, totaling INR 174.7 crore compared to INR 191.8 crore in FY22.
Expenditure Dynamics
The reduction in Vedantu’s loss can be primarily attributed to a significant drop in its expenditure during FY23. The company’s total expenses decreased by 38%, amounting to INR 553 crore from INR 888 crore in the preceding fiscal year.
Breakdown of Expenses
Employee Benefit Expenses: Vedantu’s largest expenditure component, employee costs, saw a notable decline of 36% to INR 313.5 crore in FY23 from INR 489.2 crore in FY22. Notably, the company underwent multiple rounds of layoffs in 2022, as reported by Inc42’s layoff tracker, affecting around 1,000 employees.
Advertising Expenses: Marketing expenditures also experienced a significant decline, plummeting by 58% to INR 76 crore from INR 182 crore in FY22.
Strategic Moves and Expansion
In an effort to bolster its offline presence, Vedantu acquired a majority stake in Karnataka-based test preparation platform Deeksha for approximately $40 million in 2022. Additionally, the company expressed its intention to further strengthen its offline footprint by launching 30 additional offline centers for JEE and NEET preparations across India.
Investment and Competition
Having raised approximately $300 million across multiple funding rounds, Vedantu achieved unicorn status in September 2021 after securing $100 million in Series E funding from Temasek-backed private equity firm ABC World Asia, along with participation from existing investors Coatue Management, Tiger Global, GGV Capital, and WestBridge.
In the competitive landscape of the K-12 edtech sector, Vedantu faces competition from established players like BYJU’S, PhysicsWallah, and Unacademy.
Industry Landscape
It’s noteworthy that the majority of Indian edtech startups continue to grapple with losses. While Unacademy reported a loss of INR 1,687 crore in FY23, BYJU’S, amidst its challenges, is yet to disclose its financial performance for the fiscal year. PhysicsWallah, however, maintained profitability, albeit with a significant 91% decline in profit to INR 9 crore in FY23.
