Simplilearn eyes IPO by end of FY26, mulls India and US markets for listing amid AI growth – IPO News

Bengaluru-based upskilling platform Simplilearn is targeting an initial public offering (IPO) by the end of FY26, after establishing a track record of profitability, according to co-founder and chief operating officer, Kashyap Dalal. The Blackstone and GSV-backed company is currently evaluating both Indian and US markets for the potential listing.

While preparing for the IPO, Simplilearn’s immediate focus remains on establishing a strong foundation through sustained profitability. “Right now, our clear goal is to run a fully profitable business for a year and establish a strong foundation. Post that, the slated goal is an IPO,” Dalal said. “Currently, the India market seems the most lucrative. However, where we choose to list will depend on market conditions at the time of listing. What we are sure about, is that profitability and long term potential are key metrics for investors in both markets,” Dalal said. The company claims to have achieved profitability at a quarterly level in Q4 FY24 and expects to achieve full-year profitability in FY25. The edtech which has not disclosed its FY24 results as of yet, generated a revenue of Rs 700.6 crore in FY23, up from Rs 465.4 crore in FY22. However, its losses increased from Rs 178.9 crore in FY22 to Rs 244.2 crore in FY23, according to Tracxn.

To turn this around, Simplilearn has restructured its operational model over the last year, decentralising responsibility for growth and profitability to business unit heads and mid-management. “We’ve moved from a model where CXOs owned the profit and loss to one where mid-management and business heads manage gross margin and contribution margin goals,” Dalal said. This “cultural shift”, Dalal said, allows for “faster corrective actions at the program level, enabling us to invest more in profitable programs while scaling back in areas with limited returns.” As a result, high-growth segments like AI, and cybersecurity continue to receive significant investment, while less profitable categories, like certain K-12 businesses, have been adjusted to reach sustainable levels. “Typically, losses occur when too much is invested in the wrong product. If we had tried to grow every product category at 40%, we would have lost money,” Dalal added. It also completely exited the study abroad category citing a lack of product market fit.

The IPO plans also come on the back of growth in Simplilearn’s artificial intelligence (AI) courses, which have seen an 85% year-over-year growth and now contribute over 40% of the company’s overall revenue, according to Dalal. This is a jump from “12-15% contribution two years ago, before the ChatGPT-led surge in interest around AI-related courses,” Dalal added.

Full Stack Academy, a New York-based platform that teaches web development, which Simplilearn acquired in 2022 for $270,000, — is also witnessing strong traction in AI courses, Dalal added. “Full Stack Academy did not have AI as a product. We launched it only about 6 months ago, and today it is already the number one growth driver for them,” Dalal said.

After AI, cybersecurity has emerged as the second-largest category for Simplilearn, contributing approximately 18-20% of revenue, according to Dalal. “With FinTech, AI, GenAI, all picking up at the same time, it’s actually exponentially growing cyber threats. Therefore the demand for equipped cybersecurity experts has also gone up,” Dalal added. The company collaborates with institutions like IIIT Bangalore, NPCI, and IIT Kanpur, offering courses on payment security and cybersecurity defence.

According to Dalal, Simplilearn allocates approximately 10-15% of its overall budget toward product development and upkeep, which includes curriculum updates, website maintenance, and learning management system (LMS) support, while 30-40% is dedicated to sales and marketing. Another 10-15% goes towards university partnerships, while the remaining accounts for its over head costs, Dalal added.

The company also recently relocated its US headquarters to Texas, from San Francisco citing favourable policies and the movement of key management personnel, including founder and CEO Krishna Kumar. While the larger US team remains distributed across the East and West Coasts, there is a preference for adding a new headcount in Dallas, Dalal added.

Simplilearn is also actively exploring acquisition opportunities in the Indian consumer and enterprise segments, though Dalal emphasised the need for reasonable valuations. “The business has to be good and available at the right price,” he noted.

The edtech has raised a total of $80.8 million across eight funding rounds, with the most recent round—a $45.5 million Series E, in November 2022, valuing it at $605 million, and bringing in investors such as GSV Ventures and ADQ. As of then, Blackstone holds a 61.5% stake, followed by an ESOP pool at 15.8%, founders at 14.4%, and GSV Ventures at 6.7%. Both Blackstone and GSV Ventures hold board seats, providing strategic oversight for the company.

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