upGrad net loss increases as ad spend doubles in FY21

The net loss of educational technology company upGrad Education Pvt Ltd, led by Ronnie Screwvala, nearly tripled in 2020-21 (FY21) as the company doubled its advertising and promotion spending during the year.

The company reported a consolidated net loss of 211 crores for FY21, compared to a net loss of 78 crore for 2019-20 (FY20), company filings with the Ministry of Corporate Affairs (MCA) show. The company spent 205 crores in advertising and promotion in FY21, against a total spend of 95 crores a year earlier. Company benefits costs also doubled to 161,000,000 of 89 crores a year earlier.

On an individual basis, the company reported a net loss of 202 crore for the year under review against a loss of 78.89 crore in FY20.

upGrad’s consolidated revenue nearly doubled to 302.26 crore in FY21 due to pandemic-induced restrictions on the movement of people, which led to increased demand for online education. A year ago, the consolidated turnover of the edtech firm amounted to 162.57 crores.

The shift to online tutoring is helping edtech companies like upGrad, and so many companies are also expecting strong revenue growth for 2021-22 (FY22). In a recent interview, upGrad Co-Founder and Managing Director Mayank Kumar told VCCircle that the company is on the way to doubling its turnover for FY22. Eruditus, the SoftBank-backed edtech unicorn, is also waiting double its revenue in FY22.

Edtech companies are aggressively taking the inorganic route to expand their product offerings or to reach new geographies, which further helps them increase their revenue.

In FY21, upGrad acquired Transforming Higher Education GATE Academy Pvt Ltd and Rekrut India Pvt Ltd. upGrad has investments of 4.03 crore in possibly convertible debentures of Transforming Higher Education GATE Academy and also made loans in the amount of 65 lakh to the company as of March 31, 2021, the company said in regulatory filings. Last month, it announced the acquisition of an online higher education company Talentedge Education Ventures Pvt Ltd.

During the current financial year, the company has already acquired no less than five companies. In July, the company said it was spending $250 million on mergers and acquisitions.

upGrad also recently announced the merger of its three subsidiaries – upGrad Campus (formerly Impartus), upGrad Jeet (formerly The GATE Academy) and upGrad KnowledgeHut (formerly KnowledgeHut) – into a single parent unit with the aim of executing an integrated strategy.

The company, which joined the coveted unicorn club in August last year after raising $185 million from International Finance Corp, IIFL Group and Temasek, earlier this month appointed chief executive. Inside Sales at Erudus Education, Vikram Vyas, as Vice President of International Sales Growth.

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