Unacademy-owned software-as-a-service platform Graphy has let go of 20-30% of its workforce, or nearly 50 employees, in the past few weeks, multiple sources privy to the development told Inc42.
Graphy, which offers learning management system services to creators in the edtech space, has been struggling to hit the revenue target, leading to a restructuring within the firm, Inc42 learned from sources.
However, it wasn’t immediately clear whether the restructuring was undertaken across Graphy’s acquired companies — Spayee and Scenes.
Queries sent to Unacademy on the development remained unanswered till the time of publishing this story.
The development comes months after the Unacademy CEO took to social media to praise Graphy, saying that the creators were making approximately $3 Mn a month (INR 24 Cr) by selling courses on Graphy.
“Graphy is now doing almost Rs 25 Cr in monthly GMV (Gross Merchandise Value). That’s 50% of Classplus, which is the market leader with a valuation of $500 Mn. Classplus is definitely overvalued,” Munjal told employees on the company’s internal Slack channel.
In January this year, Graphy CEO Sumit Jain tweeted that the company turned operationally profitable. The firm’s FY22 revenue stood at INR 8.86 Cr against a loss of INR 3.6 Cr.
In the same month, Unacademy’s upskilling-focussed group company Relevel laid off 40 employees after pivoting to a B2B platform, Uplevel, which was projected as a homegrown competitor to the professional networking site, Linkedln.
At the time, Munjal said that 80% of the Relevel workforce will be absorbed by Unacademy.
Notably, the SoftBank-backed edtech giant has announced multiple retrenchment rounds since last year, impacting more than 2,000 employees across all verticals.
In March 2022, the company fired 125 ‘consultants’ at its PrepLadder vertical and followed it up by laying off another 210 educators as part of its cost restructuring drive.
Graphy Fails To Take Off
Munjal envisioned Graphy to be a one-stop shop for creators in the edtech business.
As per sources, Unacademy draws 10% commission from the creators who use its Graphy tool.
However, just like a few other acquisitions of Unacademy, Graphy, too, started catching flak from educators and content creators for high commission rates, lack of customer support, and data ownership concerns, among other things.
The learning management system-based platforms, in general, have faced challenges due to a slump in demand for edtech tools and a decline in the number of students, the founder of an edtech firm, who did not wish to be named, said.
Notably, Graphy’s closest rival Classplus’ FY23 net loss jumped 57% YoY to INR 256.6 Cr.
Moving on, the Unacademy boss had earlier expressed bullishness on Graphy in several internal communications in April this year.
He said Graphy recorded annualised gross merchandise volume (GMV) of $28 Mn in FY23. The SaaS platform’s net revenue retention stood at 113%.
It onboarded nearly 7,500 new creators in the last fiscal year, clocking a 2.6X growth over the past year. With 27,000+ total active courses, Graphy saw 6.61 Lakh new transacting users in FY23.
“Graphy is turning out to be a phenomenal tech business with amazing unit economics,” the CEO said.
The edtech unicorn is keenly concentrating on refining its core business strategies as it prepares to secure additional funding. The company last raised $440 Mn in a Series H round in 2021.
PrepLadder’s Sorry State
Besides Graphy, one of Unacademy’s major bets, PrepLadder, which it acquired for $50 Mn in 2020, is facing lawsuits from former educators fired last year.
Not just this, several media reports indicate that the test platform has been witnessing a month-on-month decline in revenues since last year.
PrepLadder’s FY22 financials also paint a grim picture, as the company reported revenues of INR 155 Cr by incurring a net loss of INR 144 Cr.
Sources said that Unacademy’s Prepladder has seen intense competition from Allen and Physics Wallah this year, piling up challenges for the edtech firm.
Do Unacademy’s Offline Centres Hold The Key To Recovery?
Fortunately, Unacademy’s offline business has continued to flourish, thanks to the company’s early-mover advantage in the offline space and a handsomely paid workforce.
Earlier this year, the Unacademy CEO said that the company was eyeing scaling its offline coaching vertical considerably from 10 centres at the end of December 2022 to 58 offline centres at the end of the current year.
The startup was also looking at the number of learners at its tuition centres surging 5.5X to 55,000 at the end of 2023 from 10,000 in 2022.
In an interesting poaching battle, Inc42 had earlier reported that the Munjal-led Unacademy lured the top teachers from Allen Career Institute (in the UPSC/ IIT-JEE/ NEET preparation segments) with paycheques as fat as INR 1 Cr-1.5 Cr a month.
Since then, Unacademy has been scaling its offline business. As per internal projections by Munjal and his team, the company’s offline centres are expected to generate INR 400 Cr in revenues in 2023, a major jump from INR 53 Cr in 2022. Meanwhile, analysts believe that the company’s projections for its offline business, which contributes more than 50% to Unacademy’s total revenues, are not overestimated.
In FY22, Unacademy saw its consolidated losses widen to INR 2,848 Cr, up 85% YoY. However, consolidated revenue from operations surged more than 80% YoY to INR 719 Cr in FY22.
Employee benefit expenses accounted for 43% (INR 1,618.9 Cr) of the company’s total expenses during the period under in the period under review.
Meanwhile, Inc42’s queries regarding the filing of Unacademy’s FY23 financial results remained unanswered.
With Uncademy handing out pink slips in bulk since FY22, it remains to be seen if the company’s back-to-back retrenchment strategy to cull losses will help it embrace profitability or just backfire.
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