Home / Companies / News /  Byju’s FY21 losses widen after change in revenue recognition

Think and Learn Pvt. Ltd, the parent of edtech major Byju’s, said its loss widened sharply to 4,588.75 crore for the year ended 31 March 2021 from 231.69 crore in the previous year as the company changed its accounting standard that delayed the recognition of revenues.

Byju’s, last valued at $22.6 billion, disclosed its audited financial statements for the year ended 31 March 2021 after a delay of more than 18 months.

Co-founder Byju Raveendran blamed the company’s losses on changes in accounting rules that determine how and when the company books revenue. However, Raveendran, also the firm’s chief executive, said that subsequent year’s results would show more robust growth.

“There was significant business growth in FY21 over FY20, but since this is the first year when the new revenue recognition started because of a covid-related business model change, almost 40% of the revenue was deferred to subsequent years," he added.

Readjusted revenue from operations rose slightly to 2,280 crore for FY21 from the previous year but was 40% lower than what the management previously projected.

“The rationalized growth between FY21 and FY20 is a result of the changes made in the way the company recognizes its revenue, as advised by its auditors," he said.

Mint reported on 4 August that the company was planning to revised its FY21 revenue because of a change in accounting rules, as sought by the auditor. The company’s accounts are audited by Deloitte Haskins and Sells, one of the big four accounting firms.

While the audit report is unqualified, there are two items flagged by the auditor on the company’s revenue recognition methods and retrospectively adjusted numbers for FY20.

There were two major changes in how revenues are booked. First, revenues from Byju’s ‘streaming services’, which were previously recognized fully on commencement of a contract’, have been adjusted to be recognized rateably over the period of the contract.’

Second, the interest paid to lenders on behalf of customers is to be calculated net of revenue, without classifying it separately as a finance cost. (The company brokers an interest-free loan to its customers via its lenders).

The restated numbers for FY20 and FY19 are insignificant and do not materially impact revenues, a person briefed on the report said, requesting anonymity.

As part of accounting adjustments, revenue for FY20 was reduced by 191.77 crore from 2,380.76 crore. Its loss for FY20 widened by 43.37 crore, and its loss for FY19 widened by 80.04 crore.

There is also an ‘adverse opinion’ on the firm’s ‘internal controls’ related to customer collections and revenue recognition.

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