Byju's has been in the headlines lately due to a number of layoffs as well as questions about the company's accounting methods from the company's own auditor.
As a result of the decline in the value of digital businesses, the Dutch venture capital (VC) investor Prosus NV calculated that the 9.67% stake it had in Byju was now worth $578 million as of the end of the third quarter of 2018. The value of $6 billion, according to analysts working in the edtech industry, is more of an accounting approach than a markdown. The edtech behemoth was estimated to be worth $22 billion during a deal that took place in October.
Now that Prosus has altered the method in which it is accounted for, Byju's will be recorded as an investment in future periods. This change will take effect immediately. Prosus stated that because the timing of the provision of Byju's audited financials did not coincide with the closure of our financial reporting periods, we were unable to establish reasonable assumptions for our Group's financial statements. "We were unable to establish reasonable assumptions for our Group's financial statements," Prosus said. According to Prosus, "an independent organisation determined what a reasonable valuation of the group's Byju's investment would be."
In its quarterly reports for the third quarter ending in September, Prosus no longer considers Byju's to be an associate but rather a non-controlling financial investment instead. This change was made in preparation for the conclusion of the fiscal year. In its H1FY23 financial statement, Prosus said that the venture capital company it had previously controlled but had since lost that control no longer had "influence on the financial and operational policies of the organisation." Byju's has been in the news recently owing to a lot of layoffs and issues about the company's accounting processes from the company's own auditor. Both of these factors have contributed to the company's poor financial performance.
Byju's came under intense scrutiny from the government and the ministry of corporate affairs when the company was over 18 months late in submitting its financials for the fiscal year 21 (FY21) (MCA).
Byju's incurred a staggering loss of 4,564 crore during the fiscal year 21. According to the financial statement, the company's net loss grew to 4,564 crore as a result of greater expenditures linked with advertising and employment. These costs were higher than planned. Because of the new revenue recognition technique, the firm was forced to delay the recognition of approximately 40% of its income until the following year. As a consequence, the company's sales decreased by 3.3%, reaching a total of Rs 2,428 crore.
More crucially, Prosus' 11 edtech portfolios helped drive a year-over-year revenue increase of 178%, bringing total revenue to $334 million at the conclusion of the H1FY23 fiscal year. Despite this, the losses from trading in edtech came to a total of $178 million over the reporting period for the first half of the year.
Our partners Because of Byju's, Udemy, and Skillsoft, we have had to make some one-time adjustments to the findings pertaining to the economic interest. Prosus disclosed in its H1FY23 financial statement that it had revenue of $290 million and trading losses of $116 million. This figure was calculated after removing the effects of some unusual items.
This has caused venture capital firms all over the world as well as those operating in the local market to mark down the fair value of their investments in Indian technology startups. This is because many of its listed counterparts have experienced significant market cap losses over the course of the past few quarters. As a result of a slowdown in startup investment and a crash in tech equities in the United States and India, experts predict that there will likely be a significant number of additional value markdowns in the near future. It has been reported that SoftBank, a Japanese technology investment group, has decreased the value of its portfolio companies, which comes out to approximately 280 total businesses.
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