BYJU'S mulls closing down WhiteHat Jr, its loss-making coding platform
What's the story
When edtech giant BYJU'S acquired the coding platform WhiteHat Jr, it was touted as a great decision. How has time changed?
Since then, both companies have been at the receiving end of a multitude of criticism. And now, BYJU'S is mulling shutting down the coding platform to cut its losses.
The company is yet to make a decision on the matter.
Context
Why does this story matter?
The post-pandemic world has been brutal on edtech companies, especially BYJU'S. The Byju Raveendran-led company struggled to find new revenue streams as people left the comfort of their homes for schools and physical coaching centers.
With its revenue declining and losses increasing, the company has been pushing aggressively to cut costs.
To make matters worse, its multiple acquisitions haven't paid out as it hoped.
Bleeding subsidiary
WhiteHat Jr contributed nearly 37% to BYJU'S growing losses
Discussions about shutting down WhiteHat Jr come at a time when BYJU's is cutting costs across the company. Therefore, it is not surprising that the firm is considering putting an end to its bleeding subsidiary.
WhiteHat Jr has been running on losses. In BYJU'S FY21 losses of Rs. 4,588 crore, WhiteHat Jr contributed 36.8% with losses to the tune of Rs. 1,690 crore.
Acquisition
BYJU'S is spending a lot on WhiteHat Jr's expansion
BYJU'S acquired WhiteHat Jr for $300 million, which at the time was considered a bargain. The company eventually spent $235 million, as the rest of it was tied to growth metrics.
Per TechCrunch, WhiteHat Jr is not independently profitable. To add to the woes, BYJU'S has been spending a lot on the company's expansion, especially in the US.
Other issues
WhiteHat Jr sued its critics
WhiteHat Jr's baggage is not limited to financial problems. The coding company has been criticized for its misleading claims, quality of teaching, and aggressive marketing tactics.
The scrutiny intensified after the firm filed a definition case against some of its critics. Although it later withdrew the suit, the antics brought unwanted attention to BYJU'S.
Founder Karan Bajaj left a year after the acquisition.
Fired
Ex-employees have criticized BYJU'S for using intimidating tactics
BYJU'S has also been busy making headlines for all the wrong reasons. Earlier this month, the company axed over 1,000 employees to trim costs.
After the first round of job cuts, Raveendran had promised employees that there wouldn't be more layoffs anytime soon. He broke the promise.
Ex-employees have alleged that the firm uses intimidating tactics to make staffers voluntarily resign.