Is the Byju’s hype train derailing?

Byju’s has been around for a long time now. If you have come across their adverts during the pandemic as well, don’t worry, you’re not alone.


In fact, the company has been practically pumping numbers for over 7 years now.

With the kinds of numbers Byju’s has been pushing and with its presence in the Indian markets, it only seems natural that the company would be making big bucks. 


The FY2020-21 didn’t seem favorable ‘enough’ for Byju’s it seems. 


With revenue projections worth ₹4400 Crores, the goals were big. But unfortunately, this revenue got cut in half and the company just made ₹2500 Crores. Yes, we are using the words ‘just ₹2500 Crores’, but for a company this huge, these numbers are kind of disappointing.

This is because the company also faced losses of about ₹4500 crores, which is 20 times more than the FY20. 


But how did it happen?


Let’s understand this equation by first understanding how Byju’s makes money in the first place.


  • Course-selling: A traditional money making method for Byju’s
  • Streaming license: Charging students to access pre-recorded lectures
  • Hardware: Includes tablets and memory cards given to students to access lectures


And even though the revenue streams could be more, the hardware is what we need to consider. This hardware is usually provided to students from low-tier cities that don’t have such access to the online world. These tablets are handed over to students that make a down payment. 


But there’s a catch – what if people don’t pay the rest of the amount on these tablets? What if they default on their payments? How will the revenue be recorded? So does that mean that during the sale you calculate the entire amount or project it over a longer period of time, somewhere in the future?


For Byju’s, it seems to have taken an approach of deferring 40% of the revenue for FY21, which explains the numbers. 


That’s not all…


Right now, Byju’s is also going for a long-term strategy.


See the thing is that when a company spends on marketing, it expects the ROI to tally up in the income sheet. The way Byju’s is spending on its marketing right now, it seems to be a long shot over short-term transactions. And even though this practice is frowned upon by auditors, companies still do it to stay in the game for the long term, something which Byju’s seems to be doing right now.


While the company also planned to go public in the US, truth is that the financial winter seemed a really bad time to do it, considering there’s very less money going around in the markets right now.


The issues of negative feedback and a ruthless sales department aren’t exactly helping Byju’s right now as well.


With a long road ahead of it, it’s only a matter of time before we see a making or breaking move being made by Byju’s.


Till then, check out our previous newsletters.

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