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Testbook’s scale grew nearly 2X in FY21

Testbooku2019s revenue from operations surged 85.8% to Rs 22.3 crore in FY21 from Rs 12 crore in the previous fiscal year (FY20)

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Testbook’s scale grew nearly 2X in FY21

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  1. Iron Pillar-backedTestbook’sscalegrewnearly2X in FY21 Theedtechspacehasbeenhyperactiveinthepasttwoyears.About185startupsinthespacehaveraised over$7billionsince2021withseveralearlymoversraisingbacktobackrounds atstaggeringvaluations. However, the segment got a reality check in recent months with mass layoffs and some early stage startups goingunder. WhileithasbeenraretoseeaVC-backededtechcompanythatdidn’traisecapitalinthepasttwoyears, Mumbai-basedTestbookisanexceptionasitchosenottoraisemoneyafterFebruary2020andgrowon itsownterms.ThecompanyisyettofileitsannualfinancialstatementforFY22butitmanagedtogrow atafastpacein FY21. Testbook’s revenue from operations surged 85.8% to Rs 22.3 crore in FY21 from Rs 12 crore in the previousfiscalyear(FY20),asperitsannualfinancialstatementsfiledwiththeRegistrarofCompanies (RoC). Foundedin2014,Testbookhelpsstudentsfromsmallercitiesprepareforgovernmentexamsthroughlive classes,mocktestsandquizzes.Tilldate,ithasraisedaround$13millionfromIronPillar,Matrixanda clutchofangelinvestors.Thefirmprimarilymakesitsmoneyfromsellingonlinecoursesandmocktest papers which soared 85.8%to Rs 22.3 crorein FY21fromRs 12 crorein previousfiscalyear (FY20). Thecompany’snon-operatingrevenue(interestincome)jumped2.9XtoRs2.51croreinFY21fromRs 86 lakh in FY20.

  2. Inlinewithrevenues,Testbook’stotalexpensesjumped2XtoRs58.4croreinFY21asagainstRs29.05 croreinFY20.Itspent37.2%ofthetotalcostonemployeebenefitswhichformedthelargestcostcenter forthecompany, risingby91%to Rs 21.73 crore in FY21. Advertisementand promotions make up 29%of the costandshotup 4.2Xto Rs 16.91 crorein FY21 from Rs4.02croreinFY20.ITalongwithlivestreamingcostsgrew71.2%toRs4.88croreinF21fromRs 2.85 croreinthe previous fiscalyear (FY20). Witha2Xjumpinexpenses,thecompany’scashoutflowsgrew6.4XtoRs10.60croreinFY21fromRs 1.65croreinFY20.Lossesconsequentlykeptpacewithrevenue,jumping2XtoRs32.5croreinFY21 fromRs15.3croreinFY20.Onaunitlevel,thecompanyspentRs2.62toearnasingleunitofoperating 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,thelowercostsoftrainingpossiblyarematchedbytheincreasingcomplexityofdemandacross thecountry,intermsofmultiplelanguagesetc.Itwillhavetobewaryof thebrandbeingseentobegood foronlyonetype ofexam, even ascompetitionisintenseforthe more prestigious optionslike UPSC entrance.It’satoughbalancingact,andgettingitright,evenwhileimprovingitsmargins,willbethekey to survivingand even thrivingin the market.

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