Scaler Academy, a tech upskilling platform, has reported a remarkable revenue growth of 5X in the fiscal year 2023, reaching over Rs 300 crore from Rs 65 crore in the previous year. The Bangalore-based startup, which offers a six-month computer science course for college students and professionals, has also raised $55 million from Lightrock India and other investors in the same period. However, the company’s losses have also increased by 90% to Rs 330 crore in FY23, mainly due to higher employee and marketing costs.
Scaler Academy’s revenue model and growth drivers
Scaler Academy’s sole source of revenue is the sale of educational services, which include live classes, mentorship, career guidance, and placement support. The company claims to have over 15,000 learners and 1,000 mentors on its platform, and has partnered with more than 500 companies for hiring. Some of the notable companies that have hired from Scaler Academy are Amazon, Flipkart, Microsoft, Ola, Swiggy, and Zomato.
The company attributes its revenue growth to the increasing demand for tech talent in the country, especially in emerging domains such as cloud computing, data science, and machine learning. The company also says that it has improved its curriculum, pedagogy, and learner outcomes over time, resulting in higher retention and referrals. According to the company, its average course completion rate is 85%, and its average salary hike for placed learners is 200%.
Scaler Academy’s cost structure and profitability challenges
While Scaler Academy has achieved impressive revenue growth, it has also incurred significant losses in the process. The company’s consolidated financial statements show that its total expenditure rose by 2.7X to Rs 655 crore in FY23 from Rs 240 crore in FY22. The major cost drivers for the company were employee benefits, which accounted for 49% of the total expenditure, and advertising and promotional expenses, which accounted for 18% of the total expenditure.
The company’s employee benefits cost increased by 2.7X to Rs 322 crore in FY23 from Rs 119 crore in FY22, as the company expanded its team and offered stock options to its employees. The company’s advertising and promotional cost increased by 2.2X to Rs 118 crore in FY23 from Rs 54 crore in FY22, as the company invested in brand building and customer acquisition. These costs resulted in a negative EBITDA margin of -96.9% for the company in FY23, and a loss of Rs 330 crore, which was 90% higher than the loss of Rs 174 crore in FY22.
Scaler Academy’s funding and valuation history
Scaler Academy has raised over $75 million across rounds from various investors, including Peak XV (formerly Sequoia Capital), Lightrock India, Tiger Global, and Nexus Venture Partners. The company was valued at $710 million in its last round of funding in April 2023, when it raised $55 million led by Lightrock India. The company’s co-founders, Abhimanyu Singh and Anshuman Singh, hold a combined stake of 58.1% in the company, while Peak XV is the largest external stakeholder with 22.52%, followed by Lightrock India and Tiger Global.
The company’s high valuation reflects its potential to tap into the huge market opportunity for tech upskilling in India, where there is a gap between the supply and demand of skilled engineers. The company also has a differentiated approach from its competitors, as it focuses on individual learners rather than corporate clients, and offers a comprehensive and personalized learning experience. The company’s future growth prospects will depend on its ability to maintain its quality standards, scale its operations, and achieve profitability in the long run.
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