upGrad in talks to acquire controlling interest in Udacity
Due to a significant contraction in operations, Udacity is now open to selling, which would result in a substantial decline in its value compared to its peak as a unicorn, said a report.
Edtech major is reportedly in discussions to acquire US-based edtech firm , which has been up for sale for a few months, and is contemplating a majority stake sale through an equity swap.
A report by The Economic Times said that Udacity is now potentially valued at over $100 million and recent discussions indicate a valuation range of $100 million - $120 million.
Udacity's declining customer retention rate, with around $100 million in revenue, raises concerns about the long-term sustainability and valuation of the company, even in the context of an equity swap, the report added.
YourStory could not independently verify the report. While upGrad issued a denial on this development, queries sent to Udacity did not elicit a response.
“We issue our denial on this. We are a private company and do not need to clarify our plans in media, we continue to have conversations with companies around the world for potential acquisitions and at the right time will share developments as we choose,” upGrad said in response to YourStory's queries.
US-based Udacity joined the unicorn club after raising $105 million in a Series D round in 2015. It has raised a total funding of $238 million over five rounds, according to Tracxn.
However, due to a significant contraction in operations, Udacity is now open to selling, which would result in a substantial decline in its value compared to its peak as a unicorn, the report noted.
Founded in 2012 by David Stavans, Sebastian Thrun, and Mike Sokolsky, Udacity is headquartered in Mountain View, California, and maintains an Indian base in Bengaluru. It is a global online training platform that offers industry-relevant skills through programmes covering disciplines such as AI, machine learning, data science, cloud computing, cybersecurity, digital marketing, and product management.
Earlier this month, upGrad announced its intention to expand into the Pacific region by establishing a medical institute in the Republic of Vanuatu. In March, upGrad raised Rs 300 crore through an internal rights issue, with the involvement of existing shareholders and founders, highlighting its commitment to both organic and inorganic growth across multiple verticals of formal education.
upGrad has 31 offices across India, the USA, the UK, the Middle East, Singapore, and Vietnam. The company has made 16 acquisitions, as per Tracxn.
The acquisition of Udacity will contribute to upGrad's revenue growth, and it is currently an opportune time for buyouts as assets in the US are available at more favourable prices compared to India, said the report by The Economic Times.
Industry experts recently told YourStory that edtech companies are expected to make more strategic investments in the future, despite having capital, as the edtech sector transitions into a phase of cautious mergers and acquisitions.
(The copy was updated with a statement from upGrad.)
Edited by Megha Reddy