Think and Learn Pvt. Ltd., the parent company of edtech decacorn Byju’s total comprehensive loss for the year ending March 2021 widened to Rs 4,588.75 crore from a loss of Rs 231.69 crore incurred in financial year ended March, 2020, the company's results show.
Total comprehensive loss is the sum of company’s total loss and other items such as remeasurement of gains and exchange differences in translating the financial statements of foreign operations.
Calling the blip as a result of the change in financial reporting structure, Byju Raveendran, the co-founder and chief executive of the firm said in an interview with Mint on Wednesday morning that subsequent year’s results will show a stronger financial growth and uptick in numbers.
“There was significant business growth in FY21 over FY20, but since this is the first year where new revenue recognition started because of a Covid-related business model change, almost 40% of the revenue was deferred to subsequent years,” he told Mint.
“The rationalized growth between FY21 and FY20 is a result of the changes made in the way the company recognizes its revenue, as advised by its auditors,” he said.
The company has readjusted its revenue from operations to Rs 2,280 crore for FY21, which is 40% lower than what the management had previously projected.
Mint had reported on 4 August that the company was expecting a downward revision of its FY21 revenue because of a change in its revenue recognition protocol, as mandated by the auditor.
The company’s accounts are audited by Deloitte Haskins & Sells, one of the big four tax consulting firms globally.
Byju’s, which was last valued at $22.6 billion based on an internal estimate, disclosed its audited and unqualified financial earnings report on Wednesday for the financial year ending 31 March, 2021, after a delay of more than 18 months.
The audit report is unqualified. There are two ‘emphasis on matters’ items flagged by the auditor on the company’s revenue recognition methods and retrospectively adjusted numbers for FY20.
The change in revenue recognition is twofold. The revenues from Byju’s ‘streaming services’, which was previously recognized fully on commencement of contract ‘has been adjusted to be recognized rateably over the period of contract.’
Secondly, the interest paid to lenders on behalf of customers is to be calculated net of revenue, without classifying it separately as a finance cost. (The company brokers an interest free loan to its customers via its lenders).
The retrospectively readjusted numbers for FY20 and FY19 are very insignificant and do not materially impact the revenues, according to a person briefed on the report.
As part of audit adjustments, the revenue for FY20 was reduced by Rs 191.77 crore from the previously reported FY20 revenue of Rs 2380.76 crore. Its net losses for FY20 widened by Rs 43.37 crore and net losses for FY19 widened by 80.04 crore.
There is also an ‘adverse opinion’ on the company’s ‘internal controls’, which includes elements of customer collections and revenue recognition.
The company has started the process of adding to its finance team which will improve controls and will be appointing a global chief executive shortly, Raveendran said.
The company also reported a huge uptick in goodwill for FY21, on the back of its acquisitions.
The firm, which has been on an acquisition spree, reported Rs 10,000 crore in gross revenues in FY22, Mint reported on 5 July.
Between April-July 2022, the company logged a revenue of Rs 4,530 crore, Raveendran said.
Over the last 18 months it has acquired companies such as Aakash Educational Services Ltd. (AESL), Great Learning, Epic, Tynker, Scholr, Toppr, Osmo and Gradup among others,
The company is in the process of raising a new funding round of more than $500 million and counts investors such as Chan-Zuckerberg Initiative, Naspers, CPPIB, General Atlantic, Tencent, Sequoia Capital, Sofina, Verlinvest, IFC, Aarin Capital, TimesInternet, Lightspeed Ventures, Tiger Global, Owl Ventures & Qatar Investment Authority on its captable.
Founded in 2011, by Byju Raveendran, Divya Gokulnath and Riju Raveendran, Byju’s is one of the biggest education companies in the country. Today, there are over 200 active centres across India and the company aims to scale it up to 500 centres by the end of this year, the company said.