Byju's FY22 Results: Losses soar to Rs 8,245 crore; company mulls slashing valuation by 90% for fresh funds
A substantial portion of Byju’s losses, approximately Rs 3,800 crore, is attributed to stressed assets, including the acquired entities Whitehat Jr and Osmo. Nitin Golani, the CFO of Byju’s, openly acknowledged the underperformance of these businesses, constituting 45% of the total losses.
Think & Learn, the parent company of Byju’s, has recently submitted its audited financials for the fiscal year 2022 to the Registrar of Companies (RoC). In FY22, the reported operating revenue amounted to Rs 5,014 crore, accompanied by losses reaching Rs 8,245 crore. Regulatory filings indicate that Byju’s total revenue was nearly Rs 5,300 crore. Notably, Byju’s experienced a robust growth of 119% in operating revenue in FY22, while losses concurrently increased by 80%, as outlined in an ET report.
A substantial portion of Byju’s losses, approximately Rs 3,800 crore, is attributed to stressed assets, including the acquired entities Whitehat Jr and Osmo. Nitin Golani, the CFO of Byju’s, openly acknowledged the underperformance of these businesses, constituting 45% of the total losses. Golani emphasized that strategic measures have been implemented to enhance the company's financial position, including the downsizing of these businesses to mitigate losses.
“While we are happy that our total income has grown 2.2 times, we are also aware of our underperforming businesses like Whitehat Jr and Osmo which contribute to 45% of the losses. We have taken various measures to improve our operating financial conditions,” he was quoted as saying.
The financial results of Byju’s for the fiscal year 2022 were first shared with investors during an annual general meeting held in December. BDO, the auditor, has raised concerns about the ongoing situation linked to a $1.2 billion term loan. Nevertheless, the auditor also highlighted that the company's management is proactively engaged in securing essential funding through asset sales to meet debt obligations.
The audited financial statements for FY22 further emphasized the management's optimistic outlook on the future sustainability of the company. Currently, the audit for the financials of FY23 is in progress and has not yet reached completion.
Byju's Seeks to Raise Funds at a 90% Discount, Significantly Reducing Valuation from $22 Billion
Meanwhile, Byju's is reportedly seeking to secure funds at a substantial discount of over 90% from its previous funding round in an effort to address its financial challenges. The distressed education provider is making a request for over $100 million from current investors through a forthcoming issuance of new shares scheduled for the next month. The proposed valuation of the company in this new round is set at less than $2 billion, marking a significant decrease from its previous valuation of $22 billion in the late 2022 round.
According to a Bloomberg report quoting people familiar with the matter, Byju Raveendran is set to engage in the upcoming share sale with the aim of preserving his ownership stake. Amidst enduring financial constraints over the past few months, the company reportedly intends to utilize the funds generated from the share sale scheduled for the next month to settle outstanding payments to vendors and restore stability to its operations.
Raveendran has been exhaustively employing various strategies in his determined effort to sustain the company and alleviate its financial challenges. The company is currently in the midst of negotiations for the sale of its US-based children's digital reading platform, anticipating a transaction valued at approximately $400 million. Simultaneously, the company finds itself entangled in a legal dispute with creditors concerning a missed interest payment on a $1.2 billion term loan.
Following the share sale, the company is likely to direct its efforts towards revitalizing its core business and intensifying recent endeavours to embrace the latest trend in education: generative artificial intelligence for what is known as hyper-personalized learning.
Under the backing of the Chan Zuckerberg Initiative, General Atlantic, and Prosus NV, Byju's successfully raised substantial funds, amounting to billions of dollars, to support its global acquisition initiatives before encountering challenges amidst a worldwide decline in tech funding. It is anticipated that numerous stakeholders in the company will partake in the upcoming share sale.