Examining the numbers behind Indonesia’s biggest edtech startup

Having raised a blockbuster US$150 million funding round late last year, Ruangguru has shown that education technology is a promising vertical in Indonesia.

With the explosion of interest in the company, we decided to look at its recently filed financial statements for 2019.

Here are the numbers: The Jakarta-based online learning platform posted US$16 million in revenue last year – a fourfold increase compared to 2018.

However, this growth was fueled by advertising and marketing expenses, which increased 7x from the previous year, amounting to more than US$28 million in 2019. The company has launched aggressive campaigns, such as hiring celebrities as brand ambassadors, as well as running TV commercials and several TV shows on primetime slots.

On top of that, Ruangguru spent almost US$5 million on “selling expenses,” which usually refers to costs related to salespersons such as commissions and travel expenses. Overall, it has also tripled its staff expenditure to US$8.7 million. These rising expenses increased the company’s losses more than 6x to US$32 million.

The good news is that while its cost of sales has doubled, the number remains low at US$979,000. This is accounting for a 94% gross margin, which is what you’ll typically expect from a highly scalable and evergreen content business.

An important fact, however, is that its 2019 revenue figure may not account for Ruangguru’s full income. That’s because the startup’s financial year and Indonesia’s academic year conclude on different months.

Here’s what that means: Let’s say a parent signs up for a one-year package in 2019. Because the academic year starts in June, only half of the revenue coming from that purchase will be recognized in Ruangguru’s financial year, which ends on December 31.

Assuming the edtech company is on a rapid growth path, that would mean that a lot of the cash receipts in 2019 would only register in the following year’s accounting.

Majority of our subscribers purchase at least a year-long period.

In response to Tech in Asia’s questions, Ruangguru says it runs on “a subscription model where users pay for the subscription upfront.”

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