Physics Wallah (PW), a prominent player in the edtech landscape, has reported a staggering 3.3X year-on-year (YoY) surge in revenue, reaching INR 771.76 Cr in the financial year 2022-23 (FY23). The startup, founded in 2020 by Alakh Pandey and Prateek Maheshwari, originated as a YouTube channel and has since evolved into a comprehensive test prep platform for competitive exams. The recently released financial figures provide insights into a dynamic fiscal year marked by robust revenue growth, strategic investments, and significant operational expansions.
PW’s operating revenue stood at INR 232.47 Cr in FY22 and INR 24.6 Cr in FY21, demonstrating a remarkable acceleration in business operations.
In a preliminary announcement, PW disclosed key financial highlights ahead of filing audited financial statements with the Registrar of Companies (RoC). While the net profit for FY23 was not disclosed, the adjusted EBITDA (before ESOP costs, LER, and one-time inventory provisioning) was reported at INR 127 Cr, a modest decline from INR 134 Cr in FY22.
The startup, having achieved unicorn status with a valuation of $1.1 Bn after raising $100 Mn in a funding round in 2022, is currently in talks to secure an additional $250 Mn at a valuation of $3.3 Bn.
Amidst its diverse offerings spanning IIT/JEE and NEET preparations, post-graduate programs, UPSC prep, and upskilling courses, PW has actively invested in expanding its offline presence. The startup currently operates 58 Vidyapeeth (offline) and Pathshala (hybrid) centers, with plans to increase the count to over 120 in 2024.
The financial results reveal a significant increase in offline and hybrid course enrollments, with 1.4 Lakh students enrolled in the academic year 2023-24. Overall, PW claims to have ‘taught’ 23.5 Lakh students across various exam categories in FY23, a substantial increase from 9 Lakhs in the preceding fiscal year.
PW’s Fiscal Landscape: A Closer Look at Investments and Expenses
PW’s financial disclosure sheds light on its strategic investments and increased expenditure in various domains. The company invested INR 100 Cr to scale up its UPSC vertical and an additional INR 120 Cr to strengthen its skill development vertical earlier this year.
Expenses witnessed a substantial surge, rising 7.54X to INR 777 Cr in FY23 from INR 103 Cr in the previous year. Employee costs, a significant component, grew by 863% to INR 406 Cr in FY23, reflecting the company’s aggressive hiring and expansion initiatives. Marketing expenses also saw a substantial increase, soaring 475% to INR 204 Cr.
The offline expansion contributed to rising rent expenses, escalating to INR 56 Cr from INR 3.4 Cr in FY22. Similar trends were observed in ‘other expenses,’ which rose six-fold to INR 66.7 Cr in FY23 from INR 11 Cr in the previous fiscal year.
Despite the surge in expenses, PW’s cash reserves exhibited significant growth, surging 6.23X to INR 745.9 Cr at the end of FY23, compared to INR 119.7 Cr a year ago.
PW acknowledged the impact of funding challenges and underwent a streamlining process, reportedly laying off 70-120 employees to extend its runway, conserve capital, and optimize operations. The company emphasized that the layoffs were attributed to performance-related issues.
The edtech sector, including PW, has encountered the challenges of a funding winter, reflected in a decline of 88% in funding numbers for the sector in 2023 compared to 2022.
