Unacademy founders, senior leadership to take pay cuts in FY24 in latest cost-cutting initiative

Unacademy's senior leadership team, including founders, will be taking pay cuts for FY24.

SoftBank-backed Unacademy's senior leadership team, including founders, will be taking pay cuts for FY24 (2023-24), in the latest cost-cutting initiative undertaken by the edtech unicorn, which is currently hit by a double whammy of slow growth and drying venture capital funding.

"The salary cut will depend on the current salary of the leader, their scope and performance," said Gaurav Munjal, co-founder and CEO, Unacademy in an internal note to all employees on Slack.

"The salary cuts can go up to 25 percent. These cuts are permanent and salaries will be revised in April 2024," Munjal added in the note. Moneycontrol has seen a copy of the note.

Unacademy declined to comment on the matter.

The latest of the cost-cutting initiatives comes just a day after the SoftBank-backed edtech unicorn, currently, India's second-most valued edtech startup, laid off close to 380 employees, or about 12 percent, of its staff, taking the total count of layoffs to over 1,500 since April last year, to cut costs with an aim to achieve profitability, at least at the core level.

Unacademy's move to announce pay cuts for founders and senior management comes at a time when the edtech is exploring merger talks with Aakash, an offline coaching giant currently owned by its biggest rival Byju's.

The SoftBank-backed firm has also cut down on its advertising spends significantly and had brought its monthly burn rate down to Rs 50-60 crore, Moneycontrol reported in September.

In July last year, Munjal told employees in an internal communication, that it would undertake pay cuts for founders and management, place travel restrictions on employees and stop complimentary meals and snacks at its offices.

He further said that the company had new goals of being ‘cash flow positive’ and achieving profitability and advised his employees to embrace ‘frugality.’

In another internal email in July, Munjal had told employees that the company would not exercise any further layoffs and would rather shuffle ‘redundant’ employees within teams to focus on increasing cost efficiencies, however, the company has sacked at least 700 staff since then. In February, Unacademy also said that it would not do cash appraisals in 2023 and would rather compensate with stock options based on employees' performance.

Founded in 2015 by Munjal, Roman Saini and Hemesh Singh, Unacademy provides an online learning platform for preparation of various competitive tests. The company has raised $877 million in funding to date and was last valued at $3.4 billion, when it raised $440 million from Temasek, General Atlantic, and others in August 2021.

In FY22 (2021-22), Unacademy reported operating revenue of Rs 719.3 crore, and a loss of Rs 2,847.9 crore, making it one of the biggest loss-making unicorns in India.

The company is also anticipating slower growth in the current financial year, which may put pressure on its valuation, especially as one of its direct competitors, PhysicsWallah, is eyeing 6x growth this year, and is looking to raise at least $250 million at a valuation of $3.3 billion. PhysicsWallah is eyeing revenue of about Rs 1,200 crore, which will be more than Unacademy's anticipated revenue of about Rs 1,100 crore.