Edtech giant Unacademy has cancelled cash appraisals to its employees in another move to cut costs while startups, especially edtechs, are looking to become profitable amid a fund crunch, a report said on Thursday.

The SoftBank-backed firm will instead offer its employees stock options based on their performance, Gaurav Munjal, co-founder and CEO (chief executive officer) told employees in an internal channel on Slack of which Moneycontrol has seen a screenshot.

"We must continue to focus on profitability because when Unacademy does an IPO, it should do it with at least four quarters of profitability," he said in the note. He added that he was aware the move was disheartening after putting in a lot of hard work but requested employees to understand that this was a phase.

While thousands of tech-based firms including peers like Byju’s are laying off employees to stave off the macro challenges, Unacademy already let go of more than 1,200 staffers since the start of 2022 across departments and cities. Prior to that, it halved its team from over 6,000 employees as of April last year to about 3,000 employees currently.

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"I do think that 2023 will be better than 2022 because we took actions faster than most companies in 2022. And I believe that we will have a lot of wins in 2023," Munjal told employees in the note on February 2.

Earlier in January, the firm laid off 40 employees from its job guarantee vertical Relevel and transitioned it to NextLevel, a test product app, according to Moneycontrol.

The latest move comes at a time when the Indian edtech sector is seeing a gradual decline in demand after the industry boomed in 2020, with the pandemic hit and education moved online.

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