Unacademy Is Smaller. Losses Fell Anyway.

The 30-Second Summary

Unacademy's revenue fell.

Its losses fell faster.

Consolidated revenue dropped 16% to ₹702 Cr. Consolidated loss compressed 31% to ₹435 Cr. The cost base shrank harder than the revenue base.

The standalone parent's revenue halved. Its loss shrank to ₹50 Cr.

Unacademy didn't fix growth. It fixed costs.

This is not growth. This is contraction done well.

Profitability isn't here. Control is.

The company is sitting on ₹1,168 Cr of cash and bank balances. It used ₹392 Cr of that pile in FY2025. The runway is real; the operating turn is not yet.

The Standalone vs Consolidated Gap

The two views of Unacademy's FY2025 audit diverge sharply.

The standalone parent (Sorting Hat Technologies) is the entity that runs the core Unacademy platform: live classes, subscriptions, the app. Its revenue dropped from ₹716 Cr to ₹347 Cr, a 51% decline. The standalone loss compressed sharply (from ₹284 Cr to ₹50 Cr), but largely because the FY2024 base carried material restructuring and write-down items that did not repeat.

The consolidated entity adds the subsidiaries: PrepLadder (medical test prep, generally a high-margin business), Graphy (creator platform), and other group entities. Consolidated revenue (₹702 Cr) fell only 16%, indicating the subsidiaries collectively held up better than the core platform.

The implication: the core Unacademy subscription business compressed materially in FY2025. The group-level decline is moderated by the test-prep and adjacent businesses still scaling.

How the Loss Compressed

Consolidated loss fell ₹196 Cr in FY2025 (from ₹631 Cr to ₹435 Cr).

The arithmetic:

• Revenue contributed -₹138 Cr (revenue fell ₹138 Cr).
• Other income contributed -₹24 Cr.
• Other expenses contributed +₹355 Cr (the largest mover).
• Employee benefits contributed -₹13 Cr.
• ESOP contributed -₹106 Cr (the line grew, reducing reported profit).
• Depreciation contributed +₹4 Cr.
• Finance costs contributed +₹4 Cr.

Net of these moves: loss reduction of approximately ₹82 Cr operating, plus ₹114 Cr from cost lines other than ESOP. The ESOP increase partly offsets the gains.

The single-largest contribution is the ₹355 Cr drop in other expenses. The audit doesn't break this line into sub-components at the form level, but two factors are likely at play.

Cost discipline. Marketing was cut (₹244 Cr to ₹219 Cr), offline-centre footprint was reduced, vendor renegotiations took effect.

FY2024 carried one-time charges that did not repeat. Unacademy in FY2024 was in active restructuring: writing down acquisitions (Mastree, parts of PrepLadder), closing offline centres, and recognising severance and lease-exit costs. The FY2024 other-expenses line of ₹934 Cr was abnormally inflated by these one-time items. FY2025 reflects a steady-state cost base, which structurally reads as a sharp year-on-year improvement.

The take: real cost discipline + a normalising baseline. Both are credible explanations; the proportions are not separable from the audit alone.

ESOP Going the Wrong Way

Consolidated equity-settled ESOP charges grew from ₹183 Cr to ₹289 Cr (+58%) in FY2025. The standalone ESOP charge of ₹197 Cr is 57% of standalone revenue from operations.

This is unusual in a year of revenue contraction; ESOP charges typically reduce when grant velocity falls. The increase likely reflects fresh grants at adjusted internal valuations or repricing of older grants.

ESOP inflated reported loss but not cash burn. Strip out the ₹289 Cr non-cash charge and the cash-adjusted loss is approximately ₹146 Cr, a more conservative read of the operating shortfall.

The Cash Pile, Drawing Down

Consolidated cash and bank balances were ₹1,168.30 Cr at March 31, 2025, down from ₹1,560.20 Cr a year earlier. ₹392 Cr was deployed during FY2025.

The mechanics:

• Operating cash flow: -₹383 Cr (improved from -₹553 Cr).
• Investing cash flow: +₹426 Cr (mostly maturing FDs being moved to bank balances; this is treasury rotation, not new external inflow).
• Financing cash flow: -₹76 Cr (lease repayments, minor borrowings repayment).

The investing inflow looks positive in the cash flow statement but isn't fresh capital coming in; it's the company's own treasury moving between buckets. Real new capital movement is captured in the equity reserve change at the balance sheet level.

The ₹1,168 Cr at year-end provides approximately three years of runway at the FY2025 operating burn rate. Unacademy is not under capital pressure today. The directional question is whether the burn rate continues to compress in FY2026, or whether the FY2025 cuts are largely realised and the underlying ₹146 Cr cash-adjusted loss persists.

At ₹146 Cr per year cash burn (post non-cash ESOP), the runway is closer to eight years. That is a different timeline than a 24-month runway story.

The business is shrinking slower than the cash pile.

What FY2026 Has to Show

The FY2025 audit makes clear that Unacademy has done the cost discipline. The next year's audit will determine whether that discipline produces a stable revenue base or just a smaller business.

Whether revenue stops falling. The standalone halving and consolidated 16% decline are large. If FY2026 holds revenue at the new level, the contraction is over. If revenue falls further, the cost base will need to compress again.

Whether operating cash burn continues to compress. OCF of -₹383 Cr is better than the prior -₹553 Cr but still material. A move toward neutrality (or at least to -₹150 Cr to -₹200 Cr) is what positions the business for medium-term sustainability without further capital.

Whether the ESOP line normalises. A ₹289 Cr ESOP charge in a contracting year is hard to read positively. If FY2026 brings that line back to ₹100-150 Cr, the underlying loss compresses correspondingly.

The audit shows a company that is now smaller. Whether smaller is the floor or just a stop on the way down is the next question.