Unacademy is making a strategic pivot away from company-operated offline centres, transitioning to a franchise-led model by April as the edtech firm refocuses on its core online learning strengths. The decision comes after months-long acquisition talks with upGrad collapsed due to disagreements over valuation and deal structure.

Strategic Shift to Franchise Model

Founder Gaurav Munjal announced the operational changes in an internal email to employees, outlining the company's plan to convert existing company-operated centres into franchise partnerships. Under this model, local operators will handle day-to-day centre operations while Unacademy provides academics, technology, curriculum, and brand support.

A company spokesperson emphasized the return to core competencies, stating that Unacademy will be "an online first company moving forth. Like it was when we started in 2015."

Significant Cost Restructuring Achievements

The franchise transition is part of broader cost optimization efforts that have yielded substantial results. Munjal detailed the company's financial restructuring progress, highlighting major reductions in operational expenses through strategic business decisions.

The cost reduction was achieved by shutting down underperforming initiatives and concentrating resources on profitable business segments.

Business Performance and Profitability

Several of Unacademy's core verticals have achieved positive contribution margins, demonstrating the effectiveness of the company's restructuring strategy. Multiple test-preparation segments and subsidiary platforms have reached profitability milestones.

Contribution-Margin Positive Verticals:

• UPSC preparation
• NEET PG preparation
• CAT preparation
• Multiple other test-prep businesses

Cash-Flow Positive Platforms:

• PrepLadder (full year)
• Graphy (full year)

Leadership Changes and Financial Position

The strategic pivot follows recent leadership transitions within the Bengaluru-based company. Munjal and co-founder Roman Saini stepped back from operational roles, with co-founder Sumit Jain appointed as chief executive of the core test-prep business.

The company maintains a strong financial position with ₹1,100.00 crore in cash reserves, providing stability during the operational transition period.

Future Growth Focus

Munjal outlined the company's forward-looking strategy in his employee communication, indicating a shift from survival mode to growth orientation. He stated that CY2026 would focus on expansion rather than cost management, following years of unit economics optimization and structural improvements.

The planned acquisition of Unacademy by upGrad has been officially cancelled due to fundamental disagreements over company valuation, marking the end of what could have been a significant consolidation move in India's edtech sector.

Deal Termination Confirmed

Ronnie Screwvala, co-founder of upGrad, confirmed the cancellation on Thursday, stating that the companies were unable to bridge their valuation differences. "We are not proceeding due to valuation differences. While we cannot comment on specific numbers, it is fair to say that we were unable to arrive at a mutually agreeable valuation," Screwvala told NDTV Profit.

Dramatic Valuation Decline

The proposed acquisition would have represented a steep fall in Unacademy's market value. Reports from November indicated that upGrad was set to acquire the edtech platform for a valuation between $300-400 million, a sharp contrast to the company's previous high-water mark.

Previous Funding History

Unacademy's last major funding round occurred in 2021, when it raised $440 million in a round led by Temasek. The funding round included participation from Mirae Asset Venture and notable individual investors including family offices of Oyo founder Ritesh Agarwal and Zomato CEO Deepinder Goyal. This fundraise valued the Unacademy Group at $3.44 billion.

The company's investor base includes prominent global funds:

• SoftBank
• Tiger Global
• Temasek
• General Atlantic

Deal Structure Details

Beyond the main acquisition, the proposed deal included specific arrangements for Unacademy's portfolio companies. The agreement under consideration involved spinning off AirLearn, Unacademy's language-learning application, into a separate venture. Under this structure, upGrad would have had no stake in the spun-off AirLearn entity.

Operational Restructuring

Unacademy has undergone significant operational changes over the past two years as it adapted to post-pandemic market conditions. The company downsized its operations across multiple offerings, focusing resources on its core business to maintain cost efficiency. This restructuring included multiple rounds of layoffs in 2022 as the company realigned its operations to match demand trends that emerged after the pandemic period.

The cancelled acquisition reflects the broader challenges facing India's edtech sector, which experienced rapid growth during the pandemic but has since faced valuation corrections and operational adjustments as market conditions normalized.