SoftBank-backed Unacademy lays off 600 employees in cost-cutting drive

That's nearly 10% of the company's workforce and comes in the aftermath of the pandemic; the move follows termination if 100 staffers from PropLadder team in March

Edtech unicorn Unacademy has laid off about 600 employees comprising nearly 10 per cent of its workforce in a move that is being seen as a focus on profitability as well as consolidation and cost-cutting drive in the space amid the pandemic, according to the sources.

The SoftBank-backed firm which has a workforce of 6,000 has laid-off full-time employees, contractual workers and educators across the organisation. A spokesperson of Unacademy confirmed the development.

However, media reports contended that the magnitude of layoff was closer to the 1,000-mark and that the figure quoted by the company might have been just the number of people let go this week.

“We have discussed and parted ways with the identified people, in accordance with their respective contracts. Further, the company has in good faith ensured they receive certain additional benefits and a generous severance,” said an Unacademy spokesperson. “We value everyone’s contributions at Unacademy, and we wish all of them the best of luck and thank them for all their efforts at Unacademy.”

Based on the outcome of several assessments, Bengaluru-based Unacademy said a small subset of employee, contractor, and educator roles were re-evaluated due to role redundancy and performance, as is common for any organization of our size and scale.

“The vast majority of roles impacted have been a result of that process, and the efficiency we aim to drive in the broader business,” said the spokesperson. “Unacademy is built on a culture of high performance and transparency, and a key aspect of that is the transparency and objectivity with which we conduct our annual appraisal process.”

In March, Unacademy had laid off over 100 employees from its PrepLadder team amid “restructuring” of the organization.

The firm achieved a valuation of $3.44 billion last year after it raised $440 million in a funding round led by Temasek and General Atlantic, Tiger Global, and Softbank Vision Fund pitching in as other participants. The firm has raised a total funding of about $880 million.

The firm was started in 2015 by  Gaurav Munjal (CEO), along with his friends Dr.Roman Saini and Hemesh Singh (CTO), and Sachin Gupta. It was initially started as an initiative on YouTube in 2010. Unacademy is now India’s largest learning platform with a growing network of over 60,000 registered Educators and over 62 million Learners. It is imparting education in 14 Indian languages to learners across 10,000 cities.

Unacademy Group comprises Unacademy, Graphy, Relevel and CodeChef.The company was looking to expand its Relevel division -- which is a test platform for private jobs -- to global markets. It is looking to make its core business of test prep profitable in the next 12 months. The company had plans to double down on more distribution channels for the test prep business.

“We are extremely bullish about our core test-prep business and in the growth of our Group companies Relevel, PrepLadder, and Graphy. Our test-prep business is growing over 50 per cent year-over-year and our EBITDA percentage is also getting better,” said the Unacademy spokesperson. “Relevel has witnessed unprecedented growth in the number of users and candidates placed. Currently, there are over 1.8 million registered users on the Relevel platform. However, the most remarkable achievement is that Relevel has delivered $2 million worth of total offers to candidates who have passed the Relevel Test.”

Unacademy said as an organization it is focussed on becoming profitable by the end of Q4 CY2022 in its core business while investing for growth in its Group companies.

Unacademy saw its loss widen by 494 per cent for the March ending 2021. It clocked a loss of Rs 1,537.4 crore in FY21 in comparison to Rs 258.6 crore it posted in FY20. However, the company saw its total revenue rise by 350 per cent in FY21 in comparison to FY20. The firm clocked a total income of Rs 464 crore in FY21 as compared to Rs 103 crore it clocked in FY20. Unacademy’s expenses rose by 349 per cent for FY21. It posted a total expense worth Rs 2,029.9 crore in FY21 as compared to Rs 452 crore it incurred in FY20. One of the major reasons behind Unacademy’s rise in expenses is because of the significant rise in their employee benefit expense. The startup posted Rs 748.4 crore in employee benefit expense in FY21 as against Rs 119.7 crore it clocked in FY20.

The edtech sector has been witnessing consolidation over the last 12 months amid the pandemic.  In February edtech startup Lido Learning shut operations. This led its employees to seek help via social media platforms. Many employees and vendors complained about not getting salaries for nearly two months and delayed payments on professional networking platforms and social media.