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Income sharing based online coding trainer platform Newton School raised a $25 million Series B round at the start of FY23 but the large fund-infusion didn’t help the company to grow forward: its revenue dwindled nearly 18% in the fiscal year ending March 2023.

Newton school’s revenue from operations decreased by 17.65% to Rs 16.8 crore during FY23 from Rs 20.4 crore in FY22, its annual financial statements sourced from the Registrar of Companies show.

Founded in 2019 by Nishant Chandra and Siddharth Maheshwari, Newton School is an edtech platform that trains software developers and gets them placed in growing companies and startups as frontend, backend, and full-stack software engineers.

Income from coaching training services formed 73% of the total operating revenue which declined by 37.9% to Rs 12.2 crore in FY23. The rest of the income comes from University program and registration fee. 

Check TheKredible for the detailed revenue breakup.

Similar to the other edtech platforms, the employee benefit accounted for 40% of the overall expenditure. This cost surged 2.58X to Rs 42.4 crore in the previous fiscal. Its advertising cum promotional expense saw a surge of 2.5X during FY23.

The mentor educators, university license, legal cum professional, subscription and other overheads took the total expenditure up by 160% to Rs 107 crore in FY23 from Rs 41.1 crore in FY22. 

Head to TheKredible for complete expense breakup.

• Employee benefit expense
• Mentor and educators fees
• Advertsing promotion
• University license fees
• Legal professional Expense
• Subscription charges
• Others

The spike in total cost and diminished revenue pushed Newton School’s losses to the tune of 4.2X to Rs 82.6 crore in FY23 as compared to Rs 19.7 crore in FY22. Its ROCE and EBITDA margin stood -63.9% and -334.6% respectively. On a unit level, it spent Rs 6.37 to earn a rupee in FY23.

EBITDA Margin	-91%	-334.6%
Expense/Rupee of ops revenue	₹2.01	₹6.37
ROCE	-98%	-63.9%

Newton School has raised over $30 million including its $25 million Series B round led by Nexus Ventures and RTP Global at a valuation of around $138 million or Rs 1,034 crore.

As per startup data intelligence platform TheKredible, Nexus Ventures is the largest external stakeholder with 26.64% followed by RTP Global and Steadview Capital. Its co-founders Nishant Chandra and Siddharth Maheshwari cumulatively command a 35.88% stake.

Significantly, the Nexus and Steadview-backed upskilling firm also expanded its employee stock option (ESOP) pool recently with fresh options worth Rs 72.5 crore or $9 million, separate filings show.

Newton School competes with the likes of Coding Ninjas, Masai School, Altcampus, Pesto Tech, Scaler and others. 

One has to wonder if such income sharing based edtechs or skilltechs can really build a successful revenue model in India without that one single course with mass appeal and recognition within industry. The approach we have seen so far with high skill addition courses that build credibility based on a strong industry interface in both educators and recruiters, seems to be a very high cost approach. 

Seeing how India’s high volume IT services firms have virtually worked like edtechs themselves in terms of preparing poorly equipped graduates with the right skillsets to deliver in global markets, models like what Newton Labs has, which take that training a step ahead with value added courses, risks being stuck in niche segments with high acquisition costs as well as operating costs.