What's behind Byju's revenue recognition problem?
Sep 20, 06:09

Byju's recorded a surprise fall in its revenue in FY21 when many internet companies saw their incomes rise multi-fold due to a rise in digital adoption. According to the edtech company, this happened because its auditor mandated a deferral of 40 percent of revenues to subsequent years. Firstly, the auditor pointed out that revenue can be recognised in the subscription business model only after the service is delivered. Also, in cases where customers take a loan to pay for its courses, the company acts as a guarantor. This means the company would be liable when a customer defaults on installments. As such, this part of the revenue can't be booked till the installments are paid.