Ruangguru becomes profitable, revenue grows by 4x

Ruangguru continued its rapid rise amid a pandemic that has pushed students in its markets – Indonesia, Vietnam, and Thailand – toward online learning.

The Jakarta-based edtech firm recorded over US$63 million in revenue last year – an almost fourfold increase compared to 2019, when it also posted similar revenue growth from the previous year.

Recently, Ruangguru said it has served more than 22 million users across the three countries, almost a 50% rise compared to August last year. A company spokesperson told Tech in Asia that Indonesia is still its biggest market.

One curious matter about Ruangguru’s numbers is that despite increasing its sales by 4x, its deferred revenue – categorized as “current contract liabilities” (the total value of services that are “due” to its customers within a year) and “non-current contract liabilities” – have both decreased in 2020 from the previous year.

Without explaining further, Ruangguru said that this happened due to a change in its calculation method.

Spending less, making more

Regardless, the company has turned a US$31.9 million operating loss in 2019 to a US$1.8 million operating profit in 2020. It’s Ruangguru’s first profitable financial year since its inception.

This change can be largely attributed to how Ruangguru cut down its advertising and marketing expenses by 16% in 2020 to US$23.6 million. This is a big improvement compared to 2019, when the figure grew by 7x to US$28 million from the previous year.

Selling expenses – which usually refer to costs related to salespersons such as commissions and travel expenses – also grew by a marginal 11%.

Thus, the company improved its marketing-to-revenue ratio from almost 200% in 2019 to only 46% in 2020.

The cost of sales increased by over 5x compared to 2019, but the number remains low at US$5.5 million. Ruangguru’s gross margin was 91% in 2020, which is slightly lower than 94% in the previous year. This is what you’ll typically expect from a highly scalable and evergreen content business.

Ruangguru is also able to reach profitability despite doubling its employee benefit expenses. Today, it has 5,000 employees, a 25% increase compared to the end of 2019.

One step away from becoming a unicorn

Post-pandemic growth