upGrad in FY 23 doubles Revenue - loss remains the same

One of Asia’s largest integrated learning, skilling & workforce development majors upGrad moved to the widely accepted IndAS accounting standard in line with its longer-term listing plans. 

While Gross Revenue came in at INR1530 Crore - adjusted for IndAS upGrad recorded a revenue of INR 1,194 Crore for FY23, a 96% jump from the previous financial year of INR 608 Crore. On an ARR basis, the Revenue would have been higher as some of the M&As did not consolidate for the full financial year of FY23.  Due to the realignment of revenues, upGrad carried forward a further deferred collected revenue of INR 443 crore into the next year. The adjusted EBITDA loss (operating cash loss) came in at INR 558 Crore, around the same as the previous year of INR 572 Crore.

The Non-Cash expenses in FY23 included accelerated goodwill write-down of INR 410 Crore and depreciation and amortization costs of INR 140 Crore. The finance cost was INR 34 Crore, totalling other non-cash costs of INR 584 Crore. So, the EBITDA loss, the non-cash expenses and finance costs took the total PAT to a loss of INR 1142 Crore, up from INR 648 Crore in the previous financial year. 

Notable changes in the large cost items showed a sharp reduction in Marketing costs to 19% (INR 371 Crore) of total costs vs the previous year's 33% (INR 403 Crore). Employee costs remained the highest contributor at 36% amounting to INR 707 Crore, which also included some non-cash costs for ESOP accounting as per Black Scholes method. Direct costs have soared  1.8x to INR 382 Crore from INR 211 Crore in the previous year as upGrad continues to invest in content development expenses, content delivery costs & university fees, commensurate with the revenue growth.

upGrad is one of the very few new economy companies that did not do material layoffs in the last 12-18 months. The overall learner base of upGrad has crossed 10 million while the paid learners have grown 54% compared to the previous year. upGrad now has a strong enterprise play, having serviced 1110 clients in FY23 and expecting to retain at least 75% of these clients in FY24. The Enterprise arm expanded its global footprint and is projecting a higher share of international revenue of 21% in FY24 compared to 10% in FY23. Delivering outcomes & placements remain at the core focus while servicing consumers and enterprise clients, having helped over 55,000 transitions into better job opportunities in just the last FY. 

“We are in a very strong place as we build upGrad for the world, out of India. While we respect profitable growth, we aim to strike the right balance as we continue to be in Investment mode with a strong eye on the long term as this space of skilling, careers & job placements, formal learning & workforce development will see massive growth & disruption for the next two decades. Our gross margins are close to 80%; we have zero net debt; and have one of the best ROCE (Return on Capital Employed) ratios for a new-age company, having raised a tight $265 million since inception. We are tracking H2 of FY24 and onward to be operationally profitable on an ongoing basis and we will continue to look for organic, linear, and non-linear opportunities for growth both in Asia and around the world,” said Mayank Kumar Co-founder & MD, upGrad while sharing annual accounts for the year gone by.