We will be cashflow positive by March quarter: Byju Raveendran

How will you add up to your FY21 income?

Although there has been good business growth from FY20 to FY21, about 40% of that revenue got deferred due to the recognition change. Because of this validation change, you will not see any growth from FY 2011. The revenue was pushed from FY 2011 to subsequent years, even as we have already accounted for the full cost to businesses. While our business was profitable since FY20, last year and (for the last two years), we have made fast-growing but loss-making acquisitions which have impacted revenues. This, along with pushing out revenue, has increased the deficit. 4,500 crores. I want you to understand, you know, that 40% is downgraded.

What about FY22? And what about the revenue run rate so far?

We have seen huge growth from FY21 to FY22. Therefore, there is no Covid pullback in any of our businesses. Byju’s has grown 150%, and Aakash and Great Learning have more than doubled since their acquisitions. Great learning is less talked about, but it is quietly growing. WhiteHat Jr. has underperformed, although the product is very strong. And like all customer research, we see a very high NPS (Net Promoter Score) provider in this. But we have to address the (high) cost of acquisition.

But what is the reason for this inordinate delay in declaring your results?

It is a difficult question to answer, but without blaming anyone for it, I would say that the first one to three months was because of covid. The second reason, and I’m talking in terms of timing, not necessarily in terms of timing, was due to additional acquisitions of both pre-pandemic and post-pandemic. Even there has been some delay. Over the past eight, or nine months, due to this revenue recognition change, streaming revenue and credit sales revenue were delayed during product consumption or during significant collection of EMI sales. It took a long time because it was such a huge recognition change. So, he did extra work. But now, we have an unqualified report (by the auditors) which puts all the worries to rest.

But we heard that the auditor had two notable comments.

Auditability is a very scary thing. So there is no qualification. This is an inappropriate report. What is one opinion on control and the other on revenue recognition.

Can you specify what you mean by internal control?

There is an unfavorable opinion on control. But it is very common. Because when there is so much delay, it is only because of these credit sales (sales made through loans). These things have to improve the control and finance function, and we have already started to improve. In fact now we have a global CFO (Chief Financial Officer). We will also significantly strengthen our finance function as we prepare to go public.

Can you clarify what were management’s revenue projections for fiscal year 2011?

About 40% of total revenue was pushed out.

What is the current revenue run rate?

By July 2022, we did 4,500 crore in revenue in this financial year. And last year, that number was about .10,000 crores.

What are your fundraising plans?

There are two rounds that we’re looking at, which we’ll announce once it’s closed anyway. So, there’s a straight equity round at par, which is $22 billion. And there’s also a converter that we’re looking at, which will convert to an IPO at a 20% discount. So, in these two discussions we’re having with a number of investors. While some investors would prefer to convert, there are investors who prefer to get into equities directly.

Can you talk about unit economics? How long will you be profitable?

At a consolidated level, we will be cash flow-positive by the fourth quarter of this year or the first quarter of next year. And on a consolidated level, I’m talking about cash flow-positive. Even before this the business will be Ebitda positive.

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