Edtech startup Toppr, recently acquired by edtech giant Byju’s, posted revenue growth of 49.5% to Rs 84.3 billion in FY20 – on the cusp of the edtech outbreak in fiscal year – from 56.4 billion. Rs in FY 2019. Investment income also increased 46% in FY20 to nearly Rs 6 billion.
Toppr was founded in 2013 and offers live online courses for students in grades 5-10, programming courses, as well as the school operating system. The company records revenue in the form of subscription fees (minus discounts) from users through its platform.
In terms of spending, employee benefits payments were the biggest expense for the edtech startup, accounting for 52.8% of annual spending. These costs increased 37.1% to Rs 107.5 billion in FY20 from Rs 78.4 billion spent on it in FY19.
Importantly, around 66% of these related party payments were made to Haygot Services Pvt Ltd for Manpower Services. It appears that this company is managing the teaching staff for the edtech company.
Toppr spent 27.5% of total spending on advertising and sales expenses, which increased 24% year over year to Rs 27.5 billion in FY 20. Payments for rent and utilities also increased by 26.8% to 16.1 billion rupees during the fiscal year ended March 2020.
Toppr pays its financing partners to prepay the company for amounts that can be collected from customers through EMIs. As a result, the financing cost doubled to Rs 14.4 billion in FY20.
During the fiscal year, legal fees and recruitment costs remained stable at Rs 10.9 billion and Rs.3.3 billion, while server and communications costs were at Rs 5.7 billion.
The company spent a total of Rs 203.7 billion in FY20, an increase of 31.6% over the total cost of Rs 154.8 billion in FY19. At the unit level, the company spent Rs.241 to generate a single rupee of revenue in FY20, which is slightly better than FY19.
While sales improved in FY20, they couldn’t even cover the eight-year-old company’s staffing costs. Losses during the year increased 20.3% from Rs 94.3 billion lost in FY19 to 113.4 billion in FY20 with an EBITDA margin of -108.75%.
Upon reviewing the audit report, we found that the auditor had given a limited audit opinion on Toppr’s annual financial statements due to non-compliance with section 96 (1), Section 129 (2), Section 137 (1) and Section 44AB of the Companies Act 2013.
The auditor also highlighted “Material Uncertainties” in the going concern assumption due to the complete erosion of the Company’s net assets due to continued losses. Toppr had outstanding losses of Rs 339.2 billion as of March 31, 2020.
Toppr’s numbers reflect the story behind the buyout. As losses piled up and competition with Byju’s became fierce in terms of growth and funding (over $ 93 million in total raised), Toppr was eventually acquired by competitor Byju’s earlier this year. It was Byju’s 14th acquisition after being acquired in a cash stock deal for a company valuation of $ 150 million.