Ed-tech giant Byju’s is aiming to become one of the largest players in the space in the US, with a target to hit revenues of $1 billion in the next three years. The company wants to replicate the success of its India model and generate 25 per cent of its overall revenues from the US in three to four years.
In an interview with Business Standard a few days after it acquired three new companies, including Epic, an e-book reading company in the US, for $500 million, co-founder Byju Raveendran
said, “In this financial year, which is our first full year of operation in the US, we should make revenues of over $300-350 million. Our target is to generate revenues of $1 billion and we are aiming to become one of the largest players in the US in the next three years.”
Last week Byju’s also announced the acquisition of Toppr, an e- learning and test preparation platform for school students, and Great Learning, an online learning
platform for working professionals, for a total of $1.25 billion. Epic, the other company it picked up, is the largest online reading platform in the US and has seen its subscriber base go up from 20 million to 50 million in just 12 months.
Raveendran said that Byju’s is planning to invest a hefty $100 million this financial year to build the company’s brand in the US market.
Apart from Epic, Byju’s has acquired another US company called Osmo, a developer of hardware-based iPad games for kids. Osmo was picked up last year for $120 million. That’s not all. It has also launched the Byju Future School, its own brand of one-to-one tutoring online classes in the US that has already garnered over 2 lakh paying customers.
Despite the rush of startups going for initial public offerings (IPOs), Raveendran made it clear that they are in no hurry. “Byju’s is looking at a 12-18 months’ time frame for its IPO, or somewhere in end of 2022. We hope that by that time, the acquisitions in the US and India will get integrated and the offtake of revenues from them will be significant so we will get a better valuation,” Raveendran said.
Based on its last fund raise this year, the company’s current valuation stands at $16.5 billion. Raveendran said that Byju’s was open to listing both in India and/or in the US. The company may also go for a staggered listing in both markets, but will not do so simultaneously.
He added that the Byju’s has over $1billion in cash reserves and is well capitalised. “We might not need any more fund raise until we see an opportunity for a large acquisition. However, we will use the money for smaller acquisitions to improve our product offering,” Raveendran said.
In the US, some of the big players in the ed tech space include Chegg, which has revenues of $644 million, and provides physical and digital textbook rentals, online tutoring and so on.
Meanwhile, Byju’s has quietly moved into other global markets such as the UK, Australia and New Zealand. It recently launched operations in Latin America, too — in the local language (Spanish) in Mexico and Brazil.
In India, where Aakash Institute, an offline chain which prepares children for competitive exams, was acquired in a surprise move, has been tweaked into a hybrid model, combining online and offline classes. “Aakash currently has 200 centres in 120 cities. Our target this financial year is to grow the number by 40-50 per cent,” Raveendran said.
Responding to a question on the road to profitability, Raveendran said their core business in India and even Aakash, which they acquired, was profitable. But, for example, in the US, they were still in an investment phase and it typically takes about two years to turn the business profitable.
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