Unacademy’s Loss Rises 6x To Rs. 1,474 Crore, Vedantu’s Loss Rises 4x To Rs. 604 Crore

India’s top ed-tech companies had been firing employees en masse in recent months, and the reasons for the alacrity in cutting costs is slowly becoming apparent.

Two of India’s top ed-tech companies had seen their losses soar in FY21. Unacademy reported losses of Rs. 1474 crore in FY 21, which was nearly 6x more than its loss of Rs. 257 crore in FY 20. Vedantu, on the other hand, reported losses of Rs. 603 in FY 21, which was 4x higher than its losses of Rs. 150 crore in FY20. Both companies have fired large numbers of employees in recent months to help reduce their burn rates.

While Unacademy’s losses grew, so did its revenues – Unacademy’s revenue from operations from Rs 65 crore in FY 20 to Rs. 337 crore in FY 21. Employee expenses rose from Rs. 621 crore to Rs. 658 crore. Like Unacademy, Vedantu’s revenues grew too — its revenue from operations rose from Rs. 25 crore in FY20 to Rs. 97 crore in FY21. Vedantu’s employee benefit expenses increased 4.6x from Rs. 88 crore in FY20 to to Rs. 407.4 crore in FY21.

It’s perhaps these ballooning employee expenses which have caused both Unacademy and Vedantu to lay off employees in recent months. In April, it had been reported that Unacademy had fired as many as 1,000 people including educators and employees across business, sales and other functions. Just last week, Unacademy had again fired 150 employees in a second round of layoffs. Vedantu, for its part, had first fired 200 employees in the first week of May, and had then fired another 200 a couple of weeks later.

These layoffs perhaps mark the return to rationality in India’s ed-tech space. Ed-tech companies had rapidly scaled up operations when the Covid pandemic had first struck, hoping that with students confined to their homes, there would be a greater demand for their products. Their premise had initially appeared correct — these companies had seen a spike in usage, and this had helped these companies raise funds are exponentially higher valuations. But as the pandemic has ebbed away, ed-tech firms have found that not only were their growth forecasts overly optimistic, but some students have begun returning to offline centers once again — this has prompted Unacademy to set up offline learning centers in places like Kota. Unacademy and Vedantu have both responded to the changed realities by firing employees and cutting costs. It remains to be seen how the future of India’s ed-tech players plays out, but with ballooning losses and layoffs, it’s clear that ed-tech companies are struggling to cope in a post-corona world.