Testbook’s scale grew nearly 2X in FY21

1
Iron Pillar-backed Testbooks scale grew nearly
2X in FY21
The edtech space has been hyperactive in the past
two years. About 185 startups in the space have
raised over 7 billion since 2021 with several
early movers raising back to back rounds at
staggering valuations. However, the segment
got a reality check in recent months with
mass layoffs and some early stage startups
going under. While it has been rare to see a
VC-backed edtech company that didnt raise
capital in the past two years, Mumbai-based
Testbook is an exception as it chose not to raise
money after February 2020 and grow on its own
terms. The company is yet to file its annual
financial statement for FY22 but it managed to
grow at a fast pace in FY21. Testbooks revenue
from operations surged 85.8 to Rs 22.3
crore in FY21 from Rs 12 crore in the
previous fiscal year (FY20), as per its annual
financial statements filed with the Registrar of
Companies (RoC). Founded in 2014, Testbook helps
students from smaller cities prepare for
government exams through live classes, mock tests
and quizzes. Till date, it has raised around 13
million from Iron Pillar, Matrix and a clutch of
angel investors. The firm primarily makes its
money from selling online courses and mock test
papers which soared 85.8 to Rs 22.3 crore in
FY21 from Rs 12 crore in previous fiscal year
(FY20). The companys non-operating revenue
(interest income) jumped 2.9X to Rs 2.51 crore in
FY21 from Rs 86 lakh in FY20.
2
In line with revenues, Testbooks total expenses
jumped 2X to Rs 58.4 crore in FY21 as against Rs
29.05 crore in FY20. It spent 37.2 of the total
cost on employee benefits which formed the
largest cost center for the company, rising by
91 to Rs 21.73 crore in FY21. Advertisement and
promotions make up 29 of the cost and shot up
4.2X to Rs 16.91 crore in FY21 from Rs 4.02 crore
in FY20. IT along with live streaming costs grew
71.2 to Rs 4.88 crore in F21 from Rs 2.85 crore
in the previous fiscal year (FY20). With a 2X
jump in expenses, the companys cash outflows
grew 6.4X to Rs 10.60 crore in FY21 from Rs 1.65
crore in FY20. Losses consequently kept pace with
revenue, jumping 2X to Rs 32.5 crore in FY21 from
Rs 15.3 crore in FY20. On a unit level, the
company spent Rs 2.62 to earn a single unit of
operating revenue. With its focus on
government exams (jobs). Testbook needs to
maintain a very diversified roster of
teachers and trainers, even as it targets
smaller cities. Thus, with its focus on
set syllabi, patterns and testing, the lower
costs of training possibly are matched by the
increasing complexity of demand across the
country, in terms of multiple languages etc. It
will have to be wary of the brand being seen to
be good for only one type of exam, even as
competition is intense for the more prestigious
options like UPSC entrance. Its a tough
balancing act, and getting it right, even while
improving its margins, will be the key to
surviving and even thriving in the market.