With an eye on profitability, edtech firm Unacademy is charting a steady path forward as it competes with industry heavyweights in a rapidly evolving market. Unacademy’s CEO Gaurav Munjal, in an interview with Anees Hussain, discusses the firm’s pivot to offline learning, and plans for sustainable growth. Excerpts:
Q: In the past, you’ve been vocal about staying online-only. But today, Unacademy is aggressively expanding offline. What changed? Was this shift driven by market conditions or new opportunities?
When we launched in 2015, offline wasn’t even on our radar. But as we listened to our customers, especially Class 11 and 12 students, it became clear that some preferred offline learning. By 2024, offline contributed 40% of our revenue, so it’s now a major part of our strategy. Initially, there was resistance, but we adapted, and now we’re very bullish on it.
Q. How has the online business performed in the meantime?
Our goal with online was profitability, which meant making tough choices. We shut down certain categories like SSC and state PSC exams, focusing instead on long-tail categories like JEE, UPSC, CA, and CAT. This led to a 20% de-growth in 2024, but we’re expecting some growth in 2025. The priority for online remains staying close to profitability, and we’re on track.
Q: Isn’t the offline push a capex-heavy initiative for a traditionally online company like Unacademy?
Not really. Offline’s challenges are more about operating expenses, like rent and educator costs, rather than capital expenditure. The key is running the centres efficiently, producing results, and ensuring quality teaching. These are the problem statements we’re solving for.
Q: Does your online business provide an advantage in identifying locations for offline centres?
Absolutely. Around 60% of offline admissions come through our online product. We have 250,000 paid online learners, and we nudge them to visit offline centres. That synergy has been instrumental in growing our offline business.
Q: How does Unacademy plan to compete with giants like Allen, Narayana, and Physics Wallah in the offline space?
Our yearly revenue from offline business is currently around Rs 350 crore, but our long-term goal is to grow 10x. We aim to position ourselves as a premium service that delivers results. The differentiators will be operational efficiency and discipline because offline is fundamentally a utilisation business – slow growth, consistent delivery, and efficiency are the only ways to win here.
Q: Are all your offline centres company-owned, or are you exploring franchise models?
We operate 33 company-owned centres and 10 franchises. Franchising offers better margins, but the experience is more consistent with company-owned centres. Franchises make sense in smaller cities, like Bikaner, where we wouldn’t otherwise operate.
Q: What occupancy rate is required for an offline centre to be profitable within an academic year?
A 60-70% occupancy rate ensures profitability within the academic year, and our new centers are consistently achieving that target.
Q: The rise of exam prep hubs beyond Kota has been noticeable. How has that trend impacted Unacademy?
Kota has never been more than 15% of our revenue. While it’s a major hub for some competitors, we’ve diversified our approach, so the rise of other hubs hasn’t significantly affected us.
Q: What are your offline expansion plans?
We’re focusing on cities that are already performing well for us. The only new market we’re actively expanding into is Bengaluru, where we’re opening four new centres. Historically, Bengaluru wasn’t a focus for us, but that’s changing.
Q: How have your acquisitions fared?
Prepladder and Graphy have been highly successful and profitable. On the other hand, our K-12 acquisitions, Mastree and SwiftLearn, didn’t work as the market shifted, so we shut them down two years ago.
Q: When do you expect to achieve group-level profitability?
Two years ago, we were burning Rs 1,400 crore annually. That’s been reduced to Rs 300 crore in 2024, and we expect to bring it below Rs 100 crore in 2025. By 2026, we should be profitable.
Q: Unacademy recorded a 62% reduction in losses in FY24. Beyond restructuring and cutting employee costs, what worked for you?
The key was shutting down long-tail categories, reducing marketing spends, and shifting to YouTube-focused campaigns, which lowered customer acquisition costs by 80%.
Q: Are you exploring new verticals or acquisitions?
No. This year is all about profitability and growing Airlearn – language learning app — which is nearing a $500,000 annual revenue run rate in the US. We’re focusing on scaling that 10x while ensuring profitability for our core business.
Q: Are you considering raising further funds?
No, we don’t need to raise funds. The plan is profitability first, followed by an IPO, although there’s no fixed timeline for the IPO yet.
Q: How has investor sentiment toward edtech evolved, especially after Byju’s challenges?
Edtech wasn’t the hottest sector even when we started in 2015, except during COVID. Today, investor sentiment is neutral – there are still deals happening, but it’s not a frenzy. We’re focusing on execution and profitability, which is what investors value now.
