Eruditus sets FY24 target: $560M revenue, full-year EBITDA profitability
Eruditus also projected a 7% EBITDA margin of $40 million for FY 2023-24, according to Co-founder and CEO Ashwin Damera, who said that the company achieved a 3% EBITDA, excluding stock compensation, on a pro forma basis during the April-June 2023 quarter.
Eruditus is also projecting a 7% EBITDA margin of $40 million for FY 2023-24, according to Co-founder and CEO Ashwin Damera, who told YourStory that the company achieved a 3% EBITDA, excluding stock compensation (ESOP), on a pro forma basis during the April-June 2023 quarter. The company follows a July-June financial year.
EBITDA, or earnings before interest, taxes, depreciation and amortisation, is a measure of core operational efficiency.
“More than the growth, I am happy that we have hit that profitability metric. That puts us in a good position to go into fiscal year 2024 and be (EBITDA) profitable on a full-year basis,” Damera noted.
Eruditus has not yet made an official filing of its financial results for the fiscal year 2022-2023.
Meanwhile, the edtech company has narrowed its loss, before exceptional items like stock compensation and depreciation, to about $40 million in FY 2022-23 from $66 million in FY 2021-22. In FY22, its operating revenue increased 87% to $245.2 million, making it the second-largest revenue-grossing edtech firm.
According to Damera, the company’s growth can be attributed to a few factors. Firstly, its B2B enterprise business has grown at a rate of 75-80%, contributing to improved margins and EBITDA due to the absence of customer acquisition costs. Additionally, operating in a relatively higher gross-margin business with margins ranging from 55% to 60% has helped.
The edtech company has been very careful about not adding more cost this year by maintaining a consistent headcount, Damera said, adding that certain roles that were previously performed in the US or Europe have been shifted to India, resulting in significant cost reductions for those specific positions.
“Next 12 months, we will continue to build on the same path,” Damera remarked.
Fundraising and growth
Speaking about growth, both organic and inorganic, Damera said, “At this point in time, we are being cautious.” While Eruditus remains open to exciting opportunities that may arise, its focus primarily revolves around organic growth.
Last week, the company started a fundraising process which will include both primary and secondary components, according to the Eruditus chief.
Eruditus has raised a total funding of $814 million over seven rounds, as per Tracxn. It raised its largest round of $650 million in August 2021. Last March, it also received $350 million in debt financing from CPP Investments.
“We don't need that much money,” Damera said, referring to the 2021 funding. “The secondary component may be around $60-70 million, so the round may be about 100-150 million,” he added.
The fundraise will help the company’s organic growth, Damera noted, adding, “We have a growth strategy focused on organic expansion, and within that strategy, there are specific elements that we can supercharge.”
For instance, the edtech platform may expand its course offerings by creating more courses and exploring new markets such as Brazil for Portuguese courses, Japan for Japanese courses, and Indonesia for Bahasa courses.
Founded by Damera and Chaitanya Kalipatnapu in 2010, Eruditus offers executive-level courses from top universities. It has collaborated with universities across the US, Europe, Latin America, Southeast Asia, India, and China.
A majority (about 80%) of the company’s revenue comes from outside India. However, as India, its fastest-growing market, continues to advance significantly, the country's contributions are set to rise, Damera explained.
He added that looking ahead over a three- to five-year timeframe, the proportion of growth attributed to the market outside India could potentially decrease from 80% to approximately 60-65%, while India's share is expected to represent around 35% of its overall growth.
“I am bullish about India and upskilling,” Damera said. He elaborated that in today's job market, certain skills have become essential requirements, leading to a significant demand for upskilling and reskilling among working professionals. This trend is a global phenomenon, driven by the ongoing disruption of traditional jobs and the emergence of technology-enabled roles. The rise of AI has further amplified the need for reskilling.
Edited by Kanishk Singh