Byju's, India's most valued startup, will not renew its branding partnerships as the edtech titan looks to cut costs in order to achieve profitability as early as next fiscal year, a target it set after reporting a loss of more than Rs 4,500 crore in FY21 (2020-21).
Byju's currently has three large branding partnerships with the BCCI (Board of Control for Cricket in India), ICC (International Cricket Council), and FIFA (Federation Internationale de Football Association) that will be up for renewal, but the company will not renew any of them, according to co-founder and CEO Byju Raveendran.
The move will save the company millions of dollars, as it spent approximately $30-40 million on the FIFA sponsorship and reportedly $55 million on the BCCI sponsorship.
“The biggest optimisation that you will see over the next few months is that you will see us significantly cutting down branding because we think we have achieved the kind of brand awareness which is required for the segment as well as for the company. So you will see us exiting some of those branding contracts,” Raveendran told Moneycontrol in an exclusive interview on the sidelines of the World Economic Forum in Davos.
“We won’t renew some of the partnerships. We have multiple partnerships with BCCI, ICC, and FIFA and by taking out these branding initiatives by not renewing them, that’s where you will see a lot of improvement,” he added.
Byju’s has been looking to cut costs aggressively since last year after it reported a net loss of Rs 4,589 crore in FY21 (2020-21), the largest by a startup in India for that year. In October last year, the company laid off over 2,500 employees, or about 5 percent of its workforce across departments, in order to reduce "redundancies" and turn profitable for the current fiscal year FY23 (2022-23).
However, Raveendran said that the company will only be able to achieve profitability on a consolidated level by the end of this quarter or early next quarter and that Byju's will only be profitable for the entire fiscal year in FY24 (2023-24).
“At the company level, with a clear focus towards efficient growth and sustainable growth, by the end of this quarter or by early next quarter, our aim is to achieve profitability. Most of the subsidiaries have already turned positive,” Raveendran said.
Byju's had a terrible 2022, as the startup was plagued by controversies ranging from alleged mis-selling to accounting discrepancies. The company also reported a surprising, albeit marginal, drop in revenue for FY21 (2020-21), which was otherwise a banner year for Indian edtech companies. However, the company attributed the decline in revenue to changes to its revenue recognition methods. Raveendran and his wife and co-founder of Byju's, Divya Gokulnath, are optimistic that 2023 will be "much better."
“2022 has been a tough year for us. So 2023 we can only be better for us. We are fast moving towards sustainable long-term growth, with strong fundamentals. So 2023 is going to be a much much better year for us in terms of both India as well as some of the core segments which we have started scaling in other markets,” Raveendran said.