Mumbai-based edtech startup Testbook’s loss surged 2.7X year-on-year in the financial year ending March 31, 2023. The government job test preparation startup reported a 130% increase in its net loss to INR 129.8 Cr in the financial year 2022-23 (FY23) from INR 48 Cr in FY22 as expenses ballooned.
Testbook’s revenue from operations rose 59% to INR 56.1 Cr in FY23 from INR 35.2 Cr in the previous fiscal year.
The startup primarily earns revenue by selling online courses. Including other income, its total revenue stood at INR 56.9 Cr in FY23 as against INR 36.1 Cr in the previous financial year.
However, Testbook’s expenses rose a whopping 2.2X to INR 186.7 Cr during the year under review from INR 81.4 Cr in the previous year.
At 51%, employee benefit expenses accounted for the biggest chunk of expenses in FY23. The Mumbai-based edtech startup spent INR 95 Cr on employee benefits during the year, an almost 200% jump from INR 31.8 Cr in FY22. Employee benefit expenses comprise employee salaries, PF contributions, gratuity, among others.
The edtech startup spent INR 30.4 Cr on advertising expenses in FY23, a 104% increase from INR 15 Cr in the previous fiscal year. It also spent INR 37.5 Cr under the head miscellaneous expenses, however, it didn’t give its breakdown.
On a unit economics level, the startup spent INR 3.3 to earn every rupee from operations. EBITDA margin deteriorated to -192.5% in FY23 from -85.9% in FY22.
Founded in 2014 by IIT Bombay alumni Ashutosh Kumar, Narendra Agrawal, Manoj Munna, Praveen Agrawal and Arpit Oswal, Testbook helps students crack government competitive exams. The startup has raised close to $13 Mn in three rounds of funding to date.
It raised $4 Mn in its Series A round led by Matrix Partners in 2017. In 2020, it raised $8.3 Mn in a round led by Iron Pillar. Testbook competes against the likes of Adda247 and Unacademy.
Last year, Delhi NCR-based edtech startup Classplus initiated the acquisition of Testbook via a share swap deal. However, there has been no update on the acquisition since then.
Prior to this, in July last year, publishing giant S Chand, one of the shareholders of Testbook, sold its entire stake in the startup and claimed it earned 7.8X return on its investment of INR 2.3 Cr. However, S Chand didn’t disclose the names of the buyer.
Classplus, which enables educators and creators with online coaching business, has raised over $170 Mn in funding to date.
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