Due to higher ESOP costs, Unacademy’s losses nearly double to Rs 2,848 crore in FY22

Unacademy, on the other hand, reported an increase in operating revenue of more than 80% to Rs 719 crore from Rs 398 crore the previous year. Its total income increased to Rs 845 crore in FY22 from Rs 464 crore the previous year, thanks to a twofold increase in other income to Rs 125 crore.

SoftBank-backed Unacademy’s losses nearly doubled in FY22 (2021-22) as the edtech startup’s ESOP (employee stock ownership plan) costs increased 2.5X during the period, in yet another case of a startup reporting widening losses as a result of high ESOP costs.

According to an internal document obtained by Moneycontrol, Unacademy reported a net loss of Rs 2,848 crore for FY22, compared to a net loss of Rs 1,537 crore the previous year. During the period, the company’s non-cash ESOP costs increased from Rs 481 crore to Rs 1,235 crore. Unacademy’s total expenses increased to Rs 3,703 crore in FY22, up from Rs 2,030 crore the previous year. The ESOP expenses accounted for 33% of the total expenses for the company.

Unacademy, on the other hand, reported an increase in operating revenue of more than 80% to Rs 719 crore from Rs 398 crore the previous year. Its total income increased by 2X to Rs 845 crore in FY22 from Rs 464 crore the previous year, thanks to a 2X increase in other income to Rs 125 crore.

The edtech unicorn posted an EBITDA (earnings before interest, taxes, depreciation, and amortisation) loss of Rs 2,742 crore for the fiscal year, compared to Rs 1,488 crore in FY21. The company’s adjusted EBITDA loss (after ESOP costs and impairment charges) was Rs 1,471 crore in FY22, compared to Rs 984 crore in FY21.

Unacademy’s employee benefit costs, including ESOP costs, increased to Rs 1,772 crore for the period, up from Rs 749 crore the previous year. Furthermore, unlike its larger rival Byjus, which was chastised for lax internal financial controls, the auditors issued an unmodified opinion on its FY22 financials.

Unacademy did not respond when this story was published.

Unacademy has joined a growing list of startups reporting growing losses due to high ESOP costs. Zetwerk, a business-to-business (B2B) manufacturing service marketplace, reported an operational loss of Rs 42 crore for FY22 last month. Adjusting for non-cash ESOP expenses, the company’s EBITDA for the year was Rs 57 crore.

Earlier this week, Walmart-backed PhonePe reported a loss of Rs 671 crore for FY22, adjusted for non-cash ESOP expenses. The company is currently in talks to raise a new round at a $12 billion valuation.

However, the company’s net loss for the year could be higher, as the company reported a net loss of Rs 1,727.9 crore (including ESOP costs) in FY21, while its net loss without ESOP costs was Rs 789 crore. Both unicorns’ specific numbers were not disclosed, and the companies have yet to file their results with the Ministry of Corporate Affairs (MCA).

Startups were wary of investing in ESOPs after unicorns such as Nykaa, Paytm, PolicyBazaar, and Zomato faced shareholder backlash after listing on stock exchanges last year.