UpGrad doubles revenue in FY23; loss remains the same

Mumbai, 29th November 2023: One of Asia’s largest integrated learning, skilling, and workforce development majors upGrad has moved to the widely accepted IndAS accounting standard, in line with its longer-term listing plans.

While gross revenue came in at Rs 1,530 crore, adjusted for IndAS, upGrad recorded a revenue of Rs 1,194 crore for FY23, a 96% jump from Rs 608 crore in the previous financial year. . 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 Rs 443 crore into the next year. The adjusted EBITDA loss (operating cash loss) came in at Rs 558 crore, as compared to Rs 572 crore in the previous year.

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

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

UpGrad is one of the very few new economy companies that did not announce material layoffs in the last 12-18 months. Its overall learner base has crossed 10 million while the paid learners have grown 54% compared to the previous year. The company now has a strong enterprise play, having serviced 1,110 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 and 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 financial year. The October-December quarter tracks 100% YoY growth and has been a breakeven one.

Mayank Kumar Co-founder and MD, upGrad, said they were 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 and job placements, formal learning and workforce development will see massive growth & disruption for the next two decades,” he said.

He added that upGrad’s gross margins are close to 80%; there is zero net debt; and it has 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,” the co-founder said.