The edtech startup made at least 10 acquisitions for a cumulative transaction value of around $2.5 billion in 2021.
BYJU's has completed the consolidation of businesses and will be filing its pending financial results in June, a spokesperson from the edtech company told CNBC-TV18.
The response comes after The Ken reported that BYJU’s is yet to file its financial statements for FY21 and FY22 as auditor Deloitte is hesitant to put its signature due to concerns around refunds, loan guarantees and unusual revenue recognition practices.
In response to queries sent by CNBC-TV18, the spokesperson said, "At BYJU's, we follow the highest standards in all business practices from student success to governance and accounting standards. These practices have been in operation for the last six years, have been audited by Deloitte, and records are submitted to all relevant authorities over these years."
Attributing the delay to a series of acquisitions made by BYJU's over 2020 and 2021, the spokesperson said, "We reiterate that multiple acquisitions were made in FY21 and each of these acquisitions had a different accounting style and year. We have completed the consolidation of businesses and will be filing our financial results this month."
The edtech startup made at least 10 acquisitions for a cumulative transaction value of around $2.5 billion in 2021. In response to The Ken, the spokesperson had earlier cited a lack of audit bandwidth, given the rapid growth of BYJU’s in size and scale over the last two financial years.
As per sources cited by The Ken, how BYJU’s records its revenue from sales of hardware (memory cards, tablets etc.) and software (apps and online classes) could have caused a discrepancy in the edtech firm’s financial statements.
Loan guarantees are the second issue highlighted in the report. Reportedly, BYJU's offers a 100 percent default guarantee to some lending partners that make loans to its customers. Such guarantees are called First Loss Default Guarantees (FLDG). If the customer fails to repay, BYJU’s foots the bill, out of its own books or by raising cash from private investors.
"Working with lenders that help consumers finance a course lies at the heart of what allows Byju’s to book revenues in advance," the report said.
In response, the spokesperson told CNBC-TV18, "We would also like to highlight that securitization and First Loss Deposit Guarantee (FLDG) are accepted industry practices. Were it not for FLDG, the majority of consumer parents would not have been able to raise personal loans from banks and financial institutions at affordable rates."
So far, BYJU’s has raised over $6 billion in funding, with the founder Byju Raveendran pumping $400 million in its leading the latest $800 million funding round at a valuation of $22 billion in March this year.
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The Ken has cited finance industry executives who concurred with the assessment that the refund guarantees offered by BYJU's and its subsidiaries could create pain points if the actual refunds far exceed the budgeted amount.
The report comes at a time when BYJU’s is looking to go for an IPO in the U.S. through the SPAC route, according to a Bloomberg report. Hence, Deloitte could be taking a cautious stance, as per sources cited by The Ken.
The report also comes at a time when the Indian edtech space is reeling under the bad weather of the funding winter, causing at least two startups to shutter operations - Udayy and Lido Learning.
Edtech unicorns Vedantu and Unacademy have laid off over 600 employees each. At least 800 employees have resigned at BYJU’s-owned White Hat Jr. The total edtech layoffs have crossed 3,500 over the last two months.
First Published: IST