Edtech unicorn LEAD narrows losses, revenue nearly doubles in FY23

Sumeet Mehta, co-founder and CEO, LEAD

Westbridge-backed school edtech LEAD narrowed its FY23 (2022-23) loss, as the company's revenue nearly doubled, showing some relief from a post-pandemic headwinds.

The company’s co-founder and CEO Sumeet Mehta told Moneycontrol that LEAD's revenue has approximately doubled from about Rs 133 crore a year ago, effectively crossing Rs 250 crore in FY23.

Mehta added that the company's EBITDA margins have also improved over the past year. However, LEAD is yet to officially file its FY23 results.

“In FY22, EBITDA was -275 percent of revenue. In FY23, we are at -120 percent. We aim to achieve a very low double-digit negative in FY24 and become profitable in the following fiscal,” he said.

According to Mehta, the EBITDA improvements are a function of scale for the company. “We have 3,000 schools now, next year with 4,500 schools - more contribution is going to flow in to cover fixed costs, which will help us become EBITDA positive,” he said.

Founded by Mehta and Smita Deorah in 2012, LEAD works with more than 9000 schools in towns and cities including partner schools of its latest acquisition Pearson’s K-12 India business, to make classroom learning technology-enabled.

This involves tracking teacher and student progress, managing school operations on the cloud, and providing digital resources to make learning more engaging. Other prominent backers of the company include GSV Ventures and Elevar Equity.

Over the past year, LEAD conducted two rounds of layoffs, letting go of nearly 200 employees, as previously reported by Moneycontrol.

The LEAD chief added that the company had to take these steps to adjust cash flows as many schools it catered to suffered with stressed balance sheets post-pandemic.

"In some cases, pre-covid schools that had an estimated 400 students, now have only 70-80 left because a lot of students have gone to their native place, others changed schools and so on, which essentially meant that we had to now reassess our cash flows," he said.

Last fiscal year, LEAD's losses more than tripled to Rs 397.1 crore, up from Rs 126.1 crore in FY21, according to filings with the Ministry of Corporate Affairs (MCA).

This came as the company's employee costs surged over 2.5 times during the year. In FY22, LEAD spent about Rs 258.8 crore on employees, compared to Rs 99.6 crore the previous year. Apart from employee benefit expenses, LEAD's overall operational costs and other expenses, including advertising and marketing expenses, also surged by more than 100 percent during the year.

Mehta added that since January schools have started showing signs of recovery. Over a quarter into FY24, the husband-wife duo-led school edtech company is aiming to double its revenue again as it is set to enter new segments of schools.