PWL — earnings call
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Prepared remarks
8 PhysicsWallah · 8 PhysicsWallah
Physicswallah Limited May 27, 2026
Moderator · Conference Operator
Good evening, everyone, and thank you for joining Physicswallah’s Q4 and FY26 Earnings Conference Call.
We hope all of you had the opportunity to go through our results and our shareholders' letter uploaded on stock exchanges and our investor relations website.
Joining us today are Mr. Alakh Pandey, CEO and Whole-Time Director; Mr. Prateek Boob, Whole-Time Director; and Mr. Amit Sachdeva, CFO.
Before we begin, I would like to remind everyone that certain statements made on this call may be forward-looking in nature and should be viewed in conjunction with the risk factors disclosed in company's filings.
I would request everyone to limit their questions to two at a time and rejoin the queue for any additional questions.
I now hand the conference over to Mr. Alakh Pandey.
Thank you, and over to you, sir.
Alakh Pandey
Hello everyone, good evening.
Thank you so much for joining this call and a big thanks for supporting PW in this mission of affordable education throughout Bharat.
This FY26 as a whole year is a strong financial year for us.
It has proven to be a fantastic year for us.
Revenue-wise, we did INR3,900 crores of revenue, which is 35% year-on-year growth.
If we talk about EBITDA, against INR93 crores EBITDA last year, we did INR300 crores of EBITDA, that is 3x jump in the EBITDA.
If we talk about PAT, against last year of minus INR234 crores, we did minus INR24 crores of PAT.
There is a significant improvement in the PAT, and we would have been PAT positive, there was one adjustment of INR63 crores which Amit will explain definitely.
PBT is positive this year.
Enrolment-wise, we see across 10 lakh new enrolments, paid enrolments in our online, offline paid batches, that is 20% enrolment growth year-on-year.
The mission still remains intact to reach every corner of the Bharat.
We saw one mobile cover seller across the road getting selected in NEET due to the affordable online courses.
We saw a visually impaired child, Manu Garg, selected in UPSC due to the recorded and the AI-enabled courses.
It's just a matter of yesterday, we saw the strange story of a student getting selected from Champaran, Bihar in the International Olympiad.
He will be representing not only PW but India on the international stage.
So that's the summary that I have.
Over to Prateek.
Prateek Boob
Good evening, everyone.
Online continued to grow at a very strong rate.
So we grew 39% in online revenues, and blended we grew by 35%.
AI continued to be a large focus area for the company.
We have been building a couple of AI products internally.
Wanted to quickly give an update on that.
Last quarter we launched Ask AI, more than 3 million queries have been solved by Ask AI, one of the most loved features which we have launched for the students.
Apart from that, AI-powered books, AI Guru, AI Grader are continuously improving in every month.
Along with that, we are making AI affordable AI for the Bharat, and for that we have been investing in small language models.
Aryabhatta is our first small language model which we have done open source, trained on 4 billion parameters.
8 PhysicsWallah · 8 PhysicsWallah
Physicswallah Limited May 27, 2026 Now Aryabhatta 2.0 is coming, which is getting trained on 20 billion parameters.
This is a model which is better than in terms of accuracy from a couple of top frontier models, but as well as one-tenth of the cost and 5x of the speed.
So the AI for the Bharat mission continues to be a great focus for the company.
And this year we are planning to launch Socratic AI Tutor as well, and getting very good initial results in our beta testing of AI Tutor.
A couple of AI initiatives within the company to drive more efficiency.
Now 91% of our code is now AI-assisted, driving 2x improvement in engineering and go-to-market velocity.
AI Counselor is 75% cheaper, currently 6,000 plus daily calls are happening through AI voice agents.
Along with that, I would like to hand over to Amit sir for a quick financial update.
Amit Sachdeva
Thank you Prateek sir, Alakh sir.
Good evening, everyone.
Thank you all for taking the time to join the Q4 and FY26 earnings call for Physicswallah.
This is our first full-year financials post our IPO in November 2025.
Our strong results showcase our operating leverage, not only in terms of our cost structures but also in terms of the growth that we've seen across all our education categories.
A quick overview of our full-year results.
Alakh sir did talk about it earlier, but just covering some of those aspects in detail.
Our full-year revenue from operations closed at INR3,900 crores, an year-over-year increase of over 35%, in line with our expectations.
Revenue from online grew at 39% year-over-year, and offline and other businesses grew at 31% overall.
As we've mentioned earlier, we are an online-first community-led platform, and we will continue to invest in such opportunities for growth.
Our online revenues now contribute 50.1% of our overall revenues as compared to 48.6% in FY25. Our endeavor for the next three years is to ensure our online business contributes 55% of overall revenues.
We closed full-year pre-Ind AS EBITDA at INR300 crores, 3x of what we achieved in FY25. This was largely driven by leverage in our online business and our offline business reducing peak losses as we keep on improving our cohort mix.
We are also PBT positive for this year, closing the year at INR10 crores positive against negative INR259 crores for FY25. Our full-year PAT for this year is negative INR24 crores against negative INR243 crores that we did last year.
We would have been PAT positive but for one- time expenses of implementation of Labour Code that came earlier this year and IPO expenses.
As mentioned earlier in our shareholder letter for last quarter, we remain committed for full-year PAT profitability for FY27. Also, as communicated earlier to stock exchanges, our annual flagship event Vishwas Diwas concluded with 36% year-over-year growth in collections from our online business, 21% growth in enrolments, and 12% growth in ARPU for collections that were done during the Vishwas Diwas.
Our increased geographic penetration is a reflection of the market dominance that we have been able to get.
New categories that have seen strong adoption include state boards, vernacular batches, Curious Junior, and foundation and pre-foundation courses.
The details of some of them have already been outlaid in our enrolments as part of the shareholder letter.
8 PhysicsWallah · 8 PhysicsWallah
Physicswallah Limited May 27, 2026 These early indicators for the academic cycle remain encouraging, and the growth seen across categories demonstrates sustained demand and strengthens Physicswallah’s positioning as one of the most preferred education partners in the country.
As for our Q4 quarterly results, we've been able to deliver strong Q4 results, both in terms of what we did as compared to last year.
Quick summary of our Q4 results.
We closed Q4 at INR919 crores of revenue from operations, an increase of 51% as compared to last year.
We also significantly improved our profitability with pre-Ind AS EBITDA of INR9 crores against minus INR139 crores for last year.
This is largely due to our focus on early student engagement and our focus on spend patterns on a quarterly basis.
We are also very happy, just a few some color on our online and offline businesses.
We are very happy to see how our online business is shaping up.
Like I mentioned earlier, our online revenues now contribute over 50% of our overall business.
Our online segment grew at 39% year-over-year with over 4.9 million paid students across multiple categories learning from our platforms, an increase of 20% year- over-year.
Our investments in building strong foundation and pre-foundation is already showing promising results.
This segment across boards, CUET, foundation, pre-foundation along with state boards has almost doubled over the last year.
Our offline business grew 31% year-over-year and now contributes almost INR1,775 crores in our overall revenue from operations.
We now operate over 353 centers across PW and other brands, with VP, which is our Vidyapeeth offering, contributing almost 70% of offline revenue on an overall basis.
We will continue to have a very balanced expansion strategy going forward on our offline expansion, with focus on improving profitability across all our offline channels and business.
We are still in student enrolment academic season and highly optimistic of breaking even across all our offline business in FY27. Quick update on our cost initiatives.
Like mentioned a couple of times earlier, we closed the year at INR300 pre-Ind AS EBITDA as compared to INR93 crores, INR94 crores of last year.
Our overall leverage on direct costs gave us 2.4% year-over- year benefit as we scale up and improve our operating leverage across all our businesses.
Our employee cost excluding ESOP cost was lower by 1% as compared to last year.
We also saw leverage coming in our distribution and marketing expenses.
Our marketing spend for FY26 was INR353 crores, approximately 9% of our overall revenues.
We saw almost like half a percent leverage as compared to FY25. As I've mentioned couple of times in the past also, our playbook is to build communities in every category we get into, and we believe we will continue to get significant leverage on these costs as we scale up, with ambition of at least reducing this cost by 20% over the next three years, largely due to the impact of scale and efficiencies of spends.
Like we mentioned earlier, we did not do segment reporting in terms of profitability for our online and offline business in our financials or shareholders' letter.
We remain committed to report SOTP and the breakup of these two segments from this year onwards as we will report our financials going forward.
Physicswallah Limited May 27, 2026 In terms of our offline business, standalone offline business which comprises of Vidyapeeth, Pathshala, and other offline categories, remains the highest ARPU category.
Its contribution to total enrolments has decreased from 80% to 72% due to accelerated growth in other offline categories.
Shift has resulted in a lower blended ARPU which you will see has actually gone down from last year, whereas we've seen significant leverage in improving our margins in offline in spite of the lower ARPU.
Overall revenues and total enrolments have increased significantly.
In terms of our cash flow generated from our operations, this year we generated over INR800 crores of cash flow from operations.
Our current treasury stands at INR5,027 crores with approximately INR2,300 crores that we got from our IPO proceeds.
Our capital allocation will continue to remain judicious with selective inorganic opportunities in online community-led businesses and building vernacular capabilities.
We will also take a very disciplined offline expansion view this year, like I said earlier, once the student enrolment season ends.
In terms of our acquisition that we announced last quarter, we are very happy how the Saarthi acquisition is panning out, and we are already working on multiple synergies in terms of tech build and distribution leverage.
Saarthi will continue to run as an independent brand in the UPSC space.
AI initiatives, Prateek has already talked about this in details, and I would request everybody to refer this to question one in the shareholders' letter.
And as part of our capital allocation, we will continue to find opportunities in AI to continue invest there, both in terms of any AI tech product and tech talent that we can find in that space.
With this, we can open the floor for any questions, unless Alakh sir, Prateek sir, you have any initial comments.
Prateek Boob
In terms of the capital allocation strategy, there is a slight shift in terms of K-12 capital allocation.
So, we are taking a balanced approach from here after discussing with our board and couple of our strategic partners, and we will be going 100% asset-light in this direction.
And there will be no capital allocation for M&A in terms of K-12 domain, but our focus will continue to remain in online mode where we have seen huge upside in terms of 9x revenue jump in our state boards category which comes under K-12 only, and almost 4x revenue jump in Curious Junior, which is small cohort two-way communication online platform.
And as well as part of our expansion in South from FY25 to FY26, there also we have done almost 100% improvement in collection.
So overall continue to grow in very strong direction.
In our last earnings call that we will be announcing a couple of large online assets M&As in this year, which are PAT positive assets and will grow them as a independent brand like we are doing with Saarthi.
So, I think this is all from my side.
Happy to answer any of your questions.
Amit Sachdeva
I think we can open the floor for any questions.
8 PhysicsWallah · 8 PhysicsWallah
Physicswallah Limited May 27, 2026 positive.
Some of the change in our strategy to go into micro-centers over the last 18 to 24 months, that is the biggest call that we took in terms of going closer to students and actually opening in geographies.
So, they are all of them are actually now starting to operate the way that the cohort mix should be operating right now.
The same in terms of some of our other new offline centers that we have opened up, still 12 months old.
So, I think the journey for them to get to a maturity stage that we are seeing in VP will start coming in over the next 12 to 24 months.
Garima Mishra
Thank you.
Noted, Amit.
And yes, just on that, you know, a follow-up from me.
Medium term for the offline business, what is the kind of profitability or margin profile that you envisage?
Moderator · Conference Operator
Thank you.
Your next question comes from the line of Swapnil from JM Financial.
Please go ahead.
Swapnil
Hi, thanks for the opportunity.
My first question is more of a clarification to the previous question that was asked.
Like when you say offline will become profitable next year in FY27, do you mean full-year profitability or do you mean on an exit basis or quarter or two?
8 PhysicsWallah · 8 PhysicsWallah
Physicswallah Limited May 27, 2026 So, these are small duration less than one-year loans, 99%, and we will not be deploying very meaningful capital in this, and this is to support our existing students.
And we have already demonstrated less than 1% NPA in past two years.
Swapnil
So, these loans will be on your balance sheet, right?
Just to get that correct.
8 PhysicsWallah · 8 PhysicsWallah
Physicswallah Limited May 27, 2026 Q2 and Q3 are typically our strongest quarters in terms of revenue recognition as we run most of the batches both in terms of our online and offline courses at that point of time.
Q4 is always a strong quarter in terms of collections as we get into the enrolment season both in terms of Vidyapeeth and Vishwas Diwas for online.
What we also this year what we're doing is since first year we're doing quarterly reporting, there has been significant improvement in terms of efficiency and discipline on a quarter-to-quarter basis on some of the cost points, especially around marketing and other direct costs that we've been able to bring in.
And that is the reason, you know, what Prateek mentioned is at least Q4 to Q4 we've seen significant swing, but Q3 to Q4 is pretty much part of the normal cycle that you will see in an education company.
Moderator · Conference Operator
Thank you.
Your next question comes from Manish Adukia with Goldman Sachs.
Please go ahead.
Manish Adukia
Hi, thank you, good evening and thanks for taking my questions.
A few questions, most of them are follow-ons to the earlier question of Swapnil and Garima.
First one is just on the margin bit.
You called out 19% margin in FY25 going to minus 10% in FY26 on offline, and plans for break-even this year with mid-teens over a period of time.
Just want to understand drivers of this margin improvement apart from your centre utilization improving as those cohorts mature.
In your guidance of 13% to 15% margin, is there any pricing element built in as well?
And if you can just break out how much of margin improvement from here to, let's say, 15% is pricing increase of courses versus just improvement in store utilization?
That will be my first question.
Thank you.
8 PhysicsWallah · 8 PhysicsWallah
Physicswallah Limited May 27, 2026 Second is coming through the seat utilization.
And with the more and more seat utilization, currently we are at seat utilization as a metric at 2 at a company level, like total number of students divided by total number of seats, which is going to improve by 2.23, in upcoming years.
And the average faculty cost is also coming down by introducing more of more FTB, which is a fresher faculties in the cohort.
And the ARPU improvement is consistently happening.
So all these four parameters put together, and we have detailed answer in our shareholder letter that we have demonstrated in the past and that is going to be the trajectory in the future as well.
Manish Adukia
Very clear.
And thank you.
And then on that ARPU point, when I look at, let's say, your shareholder letter, it talks about ARPU improvement from, you know, better course mix and longer duration programs, etcetera.
So if I get that right, there is no pricing increase on a like- for-like course that you are building in your assumptions.
It's just mix improvement in ARPU rather than actual price increase in the course.
Is that assumption correct?
8 PhysicsWallah · 8 PhysicsWallah
Physicswallah Limited May 27, 2026 digit number of schools that we are running.
So this is very, very small and we are doing management over there.
There is no capex.
Yes.
Manish Adukia
Very clear.
Just last question from me on the NBFC.
So you mentioned 70% of the students are PW students and 30% are non-PW students.
Just want to again understand a bit better as to what is, like, PW’s right to win in the non-PW students in terms of giving them loans and what drives that, maybe if you can explain that maybe?
Moderator · Conference Operator
Thank you.
Your next question comes from the line of Karma Kapoor with Ritz Capital .
Please go ahead.
Karma Kapoor
Hi team, good evening.
Thank you for taking my question.
So these are more AI-centric.
I think in the start of the call, Amit sir had mentioned that PW is an AI-first company.
Given that we're seeing most companies making that claim these days, so was this like a generic statement in terms of PW employees using AI, or does PW have specific AI products that are for the students?
8 PhysicsWallah · 8 PhysicsWallah
Physicswallah Limited May 27, 2026 language model to make AI more cost-effective for our students.
And that is why we could able to achieve personalization in our mega batches at a fraction of cost.
At the same time, we have been continuously empowering our online batch with AI-powered solution.
More than 100 million questions are been solved, 100 million academic questions are been solved by AI Guru with very high accuracy.
More than 2 million answer sheets, the students' answer sheets, the subjective answer sheets have been evaluated by our AI Grader with very high accuracy.
And similarly, the AskAI is another feature which is a AI voice bot which solves students' doubt.
But now with the small language model Aryabhata, we will be launching our AI Tutor, and this will be a world-class transformative tutor.
This will act as a true companion for the kids, and it will remember all of your past mistakes.
For example, six months before you have done any question wrong in any of any of the chapter It will have that memory, and it will, not only increase the solving power of the student, but it will act as a true companion for the kids.
So, we are very committed to produce AI-led revenues this year, and this is the focus of our tech team at this point of time.
Karma Kapoor
Okay.
So, I think follow-up on that, given like we've heard about you working in terms of AI, but do you think India is behind in AI implementation when it comes to education compared to third-world countries?
Moderator · Conference Operator
Thank you.
Your next question comes from the line of Ankita from Amaya Capital.
Please go ahead.
Ankita
Hi, hi everyone.
So, have you taken any price hikes this year?
What is the reason from a long- term outlook for the same, and is it both for offline and online?
8 PhysicsWallah · 8 PhysicsWallah
Physicswallah Limited May 27, 2026 This year we have seen higher attachment rate for Infinity and Infinity Pro, which is a product- led pure profit growth.
So overall improvement in ACPU is more than 11%, and the majority of this contribution is coming from Infinity, Infinity Pro, Curious Junior, and Power Batch.
So that strategy is playing out quite well.
Still a lot of students opt for a base batch because they cannot afford premium batches, but overall improvement in ARPU is 12%, and the similar strategy is for Vidhyapeeth as well.
Ankita
Okay, okay.
Thank you.
Moderator · Conference Operator
Thank you.
Your next question comes from the line of Prateek Maheshwari with HSBC Securities.
Please go ahead.
Prateek Maheshwari
Hi, thank you for the opportunity.
I was looking at question four from DRHP where you guys have detailed Vishwas Diwas performance year-on-year.
Still wanted to request if you could double-click on, how should we understand the signals out of it, right?
So overall if it has grown 36%, right, like what should our takeaway be for FY27 or beyond for from this metric?
Alakh Pandey
So, we will grow revenue at a more than 30% rate for FY27, and upwards of 100% would be our EBITDA improvement is what we are guiding to the market at this point of time.
8 PhysicsWallah · 8 PhysicsWallah
Physicswallah Limited May 27, 2026
Prateek Maheshwari
Okay.
And is it correct the VP cohort would largely be JEE and NEET and not other?
Moderator · Conference Operator
Thank you.
Your next question comes from the line of Dhwanit Shah with PL Capital.
Please go ahead.
Dhwanit Shah
Yes, hi.
Thanks, thank you for the opportunity and congrats on good set of numbers.
So just a couple of bookkeeping questions from my side.
What would be the number of student dropouts during the year, and can you also quantify the refunds given to these student dropouts?
Yes, that would be my first question.?
8 PhysicsWallah · 8 PhysicsWallah
Physicswallah Limited May 27, 2026
Moderator · Conference Operator
Ladies and gentlemen, we will take this as our last question for today.
I now hand the conference over to the management for closing comments.
8 PhysicsWallah · 8 PhysicsWallah
Physicswallah Limited May 27, 2026 And we are blessed that the first digital purchase of any kind of online course in India is happening with us.
So, we have opportunity to become a lifelong learning partner with these kids.
And the AI will have all kind of personalization context right from beginning of the grade sixth, grade ninth, and it will be hyper-personalized to the needs of the students.
We have been continuously tirelessly working on it.
And this year and we will become the first company in India which will have a AI-led revenue, first consumer internet company which is not just using AI for operational efficiency or increase in terms of conversion, but we will have a AI-led revenue stream.
We have talked about couple of new initiatives also at a question number eight in our in our shareholders' letter.
One of the achievement is we have launched Earners category which is a small ticket size skilling courses and have done more than a million dollars in just one month of...
Moderator · Conference Operator
Thank you.
On behalf of Physicswallah, that concludes this conference.
Thank you, everyone, for joining us and you may now disconnect your lines.
Questions and answers
Moderator · Conference Operator
Thank you very much.
We will now begin with the question-and-answer session.
Your first question comes from the line of Garima Mishra with Kotak Securities.
Please go ahead.
8 PhysicsWallah · 8 PhysicsWallah
Physicswallah Limited May 27, 2026
Garima Mishra
Yes, hi.
Thank you so much for the opportunity.
Can you elaborate a little on revenue growth drivers in 4Q?
How much of the growth was organic and inorganic in nature?
I'm basically trying to understand the reasons for the sharp acceleration in revenue growth to 50% plus Y-o-Y in the fourth quarter compared to 30-odd percent growth witnessed in the first nine months.
And this despite you mentioning in the letter that 4Q is typically a soft quarter.