Softbank-backed higher education and upskilling edtech unicorn Eruditus is targeting a revenue growth of 40 per cent to nearly $560 million in FY24, following 63 per cent growth to $400 million in FY23.
The company is also projecting to become profitable on a full-year basis at about 7 per cent EBITDA (earnings before income tax depreciation and amortisation), or $40 million for FY 2023-24, co-founder and CEO Ashwin Damera told businessline.
FY23 financials
Eruditus’ revenue grew to $400 million in FY 22-23 from about $245 million in FY 21-22. The company managed to achieve a small EBITDA excluding ESOP, of about $3 million in its latest quarter (April-June) on a pro-forma basis, said Damera. The company follows a July-June financial year.
The edtech company has narrowed its loss, before exceptional items like stock compensation and depreciation, to about $40 million in FY 2022-23 from $66 million in FY 2021-22.
“The numbers tell a good story as well, in terms of growth and profitability, which is definitely the key mantra in the current environment. But it also tells a story of a business that, you know, has got its unit economics in place, and is growing well,” he said.
The B2B enterprise business has grown at a rate of 75-80 per cent, contributing to improved margins which is one of the few factors for growth alongwith operating in a relatively higher gross-margin business with margins ranging from 55 to 60 per cent has helped.
Eruditus earns about 80 per cent of its business from abroad while 20 per cent is that from India.
“US is about 35% of our students and revenue, approximately which is number one and India is number two is India with 20%,” he said.
Funding and growth
In FY24 overall, the overall EBITDA is pegged at about 7 per cent of which US and European business will be at about an 18 per cent and the India business will be at about a 2-3 per cent of EBITDA, said Co-founder and CEO Ashwin Damera.
The edtech unicorm sees India as a growing market and would be one the main focus of the company. In the next four or five years, India business could be at par with the US business
“Our India enrolments maybe have grown 80 per cent or maybe even 100 per cent, I don’t have the exact number. So if I look forward to say about four to five years from now, it’s possible that India can be on par, maybe 35 per cent to 33 per cent, maybe US will actually have a percentage reduce, because it’s growing but not as fast as India. So, if I think about our two focus markets, clearly will be US and India,” he said.
The company has started a fund raise process in the tune $100-150 million through a mix of primary and secondary share sales.
“If we raise the primary money there are certain organic things that we can invest in, to grow. So one of our growth team is also enterprise. And for enterprise, you need feet on the ground, it takes about two to three years for going from when you put feet on the ground, till you get to the companies to land and expand and scale up. So we might want to go deeper into certain markets and have feet on the ground there for enterprise, and so on and so forth,” said Ashwin Damera.
Damera also said that Eruditus will be conservative in taking the inorganic route to growth as M&A (mergers and acquisitions) has risen of late.
On edtech industry
The edtech space can be clasified into three segments broadly the upskiling sector, test prep, and K-12. The skiling sector will remain atractive while the K-12 sector will take a backseat said Damera. He said that the higher education and upskilling segment was the least affected because of the reopening of schools, colleges, and physical tuition centers.
“The skilling segment, I think will continue to be very interesting, followed by the test prep, and maybe K-12 people will take a backseat. Yes, there is a broader sense of credibility and concern that maybe investors were not familiar with India, they have some concerns about edtech in India. But the investors who have been in India, who are investing in India for the last four, five years or more, I think they are able to figure out the difference betweensomething that’s happening in a specific instance and broadly what’s happening,” said Damera
“Every sector has had one or two companies in that sector that have had some issues, but there are other companies who may not have the same issues and therefore should not be painted with the same brush,” he added.
Founded by Damera and Chaitanya Kalipatnapu in 2010, Eruditus offers executive-level courses from top universities. Eruditus has raised a total funding of $814 million over seven rounds. It raised its largest round of $650 million in August 2021.