SoftBank-backed edtech unicorn Unacademy will not offer cash appraisals to employees this year, co-founder and chief executive officer (CEO) Gaurav Munjal said in an internal email reviewed by VCCircle.
The company has instead decided to award stock options based on individual performance. The reason cited for the lack of cash appraisals is to focus on profitability.
"We must continue to focus on profitability because when Unacademy does an IPO, it should do it with at least 4 quarters of profitability, ' Munjal said in an internal note issued today.
Unacademy's announcement comes shortly after its larger peer Byju's fired close to 1,500 staff in a bid to inch closer towards profitability.
Unacademy was last valued at around $3.4 bn in August 2021 when it raised $440 million from investors including Temasek and Softbank.
Munjal added that Unacademy's burn has significantly come down and expects 2023 to be a good year for the company. Its new businesses, especially offline centres, are expected to show a lot of growth, he said.
“I know this is disheartening to hear after putting in a lot of hard work, but I want you all to understand that this is a phase. We have built great products. We have been great at adapting to market conditions. We launched new businesses and did not decline when everyone else did. And our Ebitda (earnings before interest, tax and ammortization) margin has improved a lot,” Munjal noted.
An email sent to Unacademy did not elicit a response.
The development comes after Unacademy’s upskilling product Relevel shifted focus from the education business to the tests product app, resulting in the layoff of 40 employees.
The unicorn, itself, fired about 10% of its workforce or about 350 employees in November last year, in its last round of layoffs during the year, crushing under the edtech sector’s woes amid a reopening of schools, weak macroeconomic conditions and a funding winter.
During its earlier round of layoffs in June 2022, when it fired about 150 employees, the firm’s chief executive Gaurav Munjal assured that the edtech company won’t conduct any more layoffs during the year. However, in November, the CEO said, “the market challenges have forced us to re-evaluate our decisions. Funding has significantly slowed down and a large portion of our core business has moved offline.”
In April last year, it sacked about 600-800 employees from its sales and marketing team, along with a few contractual staff and educators or tutors. It had also sacked about 100 employees from PrepLadder team amid a restructuring of the organization.