Edtech platform Extramarks has made a remarkable turnaround in its financials, slashing its losses by over 85%—from Rs 330 crore in FY23 to Rs 48 crore in FY24. Despite this improvement, the Reliance-backed firm’s operating scale contracted significantly, witnessing a 37% decline in total revenue during the fiscal year ending March 2024.
Revenue and Business Performance
Extramarks’ revenue from operations fell by 36.86%, dropping to Rs 233 crore in FY24 from Rs 369 crore in FY23, as per consolidated financial statements sourced from the Registrar of Companies (RoC). The company’s revenue streams are categorized into subscription-based services and one-time product sales.
- Subscription-based services: These include live classes, test series, school partnerships, and corporate training, which collectively grew by 18.54% to Rs 179 crore in FY24. This indicates a positive trend in long-term, recurring revenue.
- One-time product sales: Sales from learning tablets, test preparation kits, and study materials experienced a sharp decline of 75.23%, generating only Rs 54 crore in FY24.
Expense Reduction and Profitability Focus
Extramarks significantly cut its expenses, leading to a drastic reduction in losses.
- Employee benefit expenses fell by 39.75% to Rs 144 crore in FY24. This reduction was primarily driven by the downsizing of over 500 employees and the reported closure of the company’s consumer-facing vertical in September 2023.
- Cost of materials saw an even steeper decline of 78.57%, settling at Rs 34.5 crore, reflecting a shift away from hardware-dependent sales.
- Finance costs, however, rose by 71.43%, reaching Rs 36 crore, indicating increased financial liabilities or borrowing costs.
Overall, total expenses dropped by 46.4%, from Rs 694 crore in FY23 to Rs 372 crore in FY24. This strategic cost-cutting was instrumental in reducing Extramarks’ net losses from Rs 330 crore in the previous year to Rs 48 crore in FY24.
Operational Efficiency and Financial Metrics
Extramarks has also improved its financial efficiency.
- Return on Capital Employed (ROCE) improved to -24.19%, signaling better capital utilization despite remaining in negative territory.
- EBITDA margin improved to -11.63%, reflecting enhanced operational efficiency.
- Cost per revenue earned: The company spent Rs 1.60 to generate every rupee of revenue in FY24, marking an improvement from the previous fiscal year.
Additionally, Extramarks reported total current assets of Rs 190 crore in FY24, which includes Rs 49 crore in cash and bank balances. This financial stability could position the company for future growth if strategic investments are made.
Layoffs and Strategic Shifts
The sharp decline in employee costs is largely attributed to mass layoffs in FY24. Media reports suggest that 300 employees were laid off as the company shut down its B2C operations. This strategic pivot indicates a stronger focus on enterprise and institutional partnerships, which may align with its growing subscription-based revenue model.
Extramarks’ Investment and Funding
According to startup data intelligence platform TheKredible, Extramarks has raised $44 million in funding from Reliance Industries’ Infotel Group. While the exact stake held by Infotel is undisclosed, reports suggest that it acquired a 38.5% stake in 2023.
Future Outlook
Extramarks’ financial restructuring and improved operational efficiency signal a strategic shift toward sustainable growth. Despite a decline in overall revenue, the company’s focus on subscription-based models, cost optimization, and financial discipline positions it well for future profitability. However, its ability to scale revenue while maintaining profitability will be crucial in the coming years.
With Reliance’s backing and a more streamlined business approach, Extramarks may be poised for renewed growth, leveraging its edtech solutions to strengthen partnerships with schools and institutions.