India’s edtech startup flunks the growth class

Children recite the preamble to the Constitution of India during an assembly at a school in Mumbai
Children recite the preamble to the Constitution of India during an assembly at a school in Mumbai, India, January 27, 2020. REUTERS/Francis Mascarenhas

MUMBAI, Sept 16 (Reuters Breakingviews) - India’s most valuable startup is not growing much at all. Education technology giant Byju’s, once valued at $22 billion, this week released some details for its performance in the full year to March 2021. A two-page press release claims “significant business growth” while noting Deloitte advised the subscription company to recognise revenue in a different way; as a result, “40% was deferred to subsequent years”.

A leaked earnings filing shows the full damage. It reveals the company’s top line shrunk 3% to $304 million while losses ballooned around 14 times to roughly $570 million. Byju’s says there was a Covid-related “business model change”. The filing also confirmed that the company, which has grown aggressively through acquisitions, has yet to fully settle the outlay for its largest deal to date – the $950 million purchase of Aakash Educational Services agreed in August 2021.

Byju’s is a private company so the embarrassment here, if any, rests squarely with its investors including Prosus (PRX.AS), Tiger Global and BlackRock (BLK.N). But the endless controversy around the Indian company is also ammunition for those calling for more regulation of the red hot-industry. (By Una Galani)

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(The author is a Reuters Breakingviews columnist. The opinions expressed are their own.)

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Editing by Robyn Mak and Thomas Shum

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