Extramarks Sees Significant Loss Reduction in FY24

Extramarks, an innovative Edtech platform, has successfully achieved a remarkable decrease in its losses, cutting them by more than 85% – from Rs 330 crore in FY23 down to Rs 48 crore in FY24. Nonetheless, during the fiscal year that ended in March 2024, the operating scale of the Reliance-backed company decreased by 37%.

In this article, we will delve into the expense trends that contributed to this substantial reduction in losses later. For now, we will explore the revenue of Extramarks and its diverse streams.

As outlined in its consolidated financial statements obtained from the Registrar of Companies (RoC), Extramarks’ operational revenue fell by 36.86%, coming in at Rs 233 crore in FY24 compared to Rs 369 crore in FY23.

Extramarks’ Revenue Overview

Founded by Atul Kulshrestha, Extramarks is known for offering tailored learning solutions for schools, students, and educators. One of its key offerings is Smart Class Plus, a resource aimed at revitalising conventional teaching approaches in educational institutions.

The company primarily generates revenue through subscription services, which include live classes, test series, partnerships with schools, and corporate training. This segment saw growth of 18.54%, reaching Rs 179 crore in FY24. Conversely, one-time product sales, encompassing learning tablets, test preparation kits, and study materials, experienced a sharp decline of 75.23%, dropping to Rs 54 crore.

Cost Management and Expense Reduction

The largest segment of company costs, employee benefit expenses, fell by 39.75% to Rs 144 crore in FY24. This significant reduction was largely due to a streamlined workforce, where over 500 employees were let go and the consumer-facing division was reportedly closed in September 2023. Additionally, the cost of materials experienced an even steeper decline of 78.57%, settling at Rs 34.5 crore. However, it should be noted that finance costs rose significantly, increasing by 71.43% to Rs 36 crore.

The reduction in employee-related expenses appears to have been influenced by widespread layoffs during FY24. Reports indicate that 300 employees were laid off as part of ceasing the B2C segment of the business.

Overall, total expenses declined by 46.4%, reducing from Rs 694 crore in FY23 down to Rs 372 crore in the latest fiscal year.

Financial Performance and Metrics

Through effective expense management, Extramarks has successfully lowered its losses, reporting a net loss of Rs 48 crore in FY24, signifying an 85.45% improvement from Rs 330 crore in FY23. Moreover, the company enhanced its Return on Capital Employed (ROCE) to -24.19% and improved its EBITDA margin to -11.63% during the fiscal year.

On a per-unit basis, Extramarks spent Rs 1.60 for every rupee earned in revenue during FY24. The Noida-based organisation reported current assets totalling Rs 190 crore for FY24, which included a cash and bank balance of Rs 49 crore.

Funding and Stakeholding

Based on various sources from startup data intelligence platforms, Extramarks has attracted a total of $44 million in funding from Reliance Industries’ Infotel Group. While the exact current stake held by Infotel in the company remains unclear, it was reported that the group acquired a 38.5% share in Extramarks in 2023.