SoftBank-backed Unacademy has sacked another 12 percent of staff or about 380 employees in its fourth official round of layoffs as the unicorn, currently, India's second-most valued edtech startup, looks to make its core business profitable.
"We have taken every step in the right direction to make our core business profitable, yet it's not enough. We have to go further, we have to go deeper," said Gaurav Munjal, co-founder and CEO of Unacademy in a note to all employees on the company's Slack channel.
"Unfortunately, this has led me to take another difficult decision. We will be reducing the size of our team by 12 percent to ensure that we can meet the goals we are chasing in the current realities we face. I did not anticipate I would have to do this again, and I'm very sorry," he added. Moneycontrol has seen a screenshot of the chat.
Unacademy did not immediately respond to queries sent by Moneycontrol. The copy will be updated with the company's comments.
Unacademy's latest round of layoffs comes just four months after the SoftBank-backed edtech laid off 350 employees or about 10 percent of its staff in November. With this round of layoffs, Unacademy's team strength is down to under 3,000 from more than 6,000 as of April 2022.
Munjal, in the note, said that the impacted employees will be getting severance pay equivalent of the notice period and an additional one month's pay along with accelerated vesting of one year for employees who have served the company for at least a year. Munjal said the company would also pay for medical insurance for additional six months, until September 30.
The current round of layoffs is the latest cost-cutting initiative undertaken by Unacademy, which is currently exploring merger talks with Aakash, an offline coaching giant currently owned by Unacademy's biggest rival Byju's. Before this, Unacademy officially laid off close to 1,200 employees.
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.