Physics Wallah In The Red, Posts INR 1,131 Cr Loss In FY24

SUMMARY

The primary reason behind the sharp rise in the loss in FY24 was change in fair value of CCPS and jump in ESOP and employee expenses

Physics Wallah also readjusted its bottom line for FY23 due to a change in accounting standards. It had previously reported a net profit of INR 8.9 Cr in FY23

The startup’s operating revenue surged 2.6X to INR 1,940.4 Cr in FY24 from INR 744.3 Cr in the previous year

Edtech unicorn Physics Wallah (PW) slipped into the red in the financial year 2023-24 (FY24), posting a consolidated net loss of INR 1,131.2 Cr. This was an increase of nearly 13.5X from a loss of INR 84.06 Cr in FY23.

It is pertinent to note that the startup readjusted its bottom line for FY23 due to a change in accounting standards. It had previously reported a net profit of INR 8.9 Cr in the fiscal year ended March 2023.

The primary reason behind the sharp rise in the loss in FY24 was change in fair value of CCPS and jump in ESOP and employee expenses.

The startup said that the change in fair value of CCPS in FY24 cost it INR 756 Cr as against INR 67.1 Cr in FY23. ESOP expenses nearly quadrupled to INR 151 Cr during the year under review from INR 38.3 Cr in FY23.

In terms of revenue, the startup’s operating revenue surged 2.6X to INR 1,940.4 Cr in FY24 from INR 744.3 Cr in the previous year.

Founded in 2016 by Alakh Pandey and later joined by Prateek Maheshwari in 2020, PW started as a YouTube channel and has since scaled up to become a full-fledged edtech startup. It provides online and offline coaching and study material for test preparation for various competitive exams such as NEET, JEE, among others.

In September this year, the edtech unicorn secured $210 Mn in its Series B funding round, led by Hornbill Capital, at a post-money valuation of $2.8 Bn. The funding round also saw participation from Lightspeed Venture Partners and existing investors GSV and WestBridge.

Where did PW Spend?

Physics Wallah’s total expenses soared over 280% to INR 3,279.1 Cr from INR 862.01 Cr in FY23. Here’s a breakdown of the expenses:

Employee Benefit Expenses: PW spent INR 1,158.96 Cr towards employee costs, which surged 180% from INR 412.5 Cr in FY23.

Advertising & Promotional Costs: The startup brought down its brand promotion activities in FY24 as expenses under this head plummeted over 70% to INR 19.56 Cr from INR 67.09 Cr in FY23.

Depreciation, Depletion & Amortisation Expense: Expenditure under this bucket rose 297% to INR 298.2 Cr in FY24 from INR 75.12 Cr in the previous year.

Rent-Related Costs: As the edtech major embarked on its offline foray in FY24, it paid rent worth INR 32.72 Cr during the fiscal under review from nil in the previous fiscal.

It is pertinent to note that “miscellaneous expenses” were the biggest cost centres for PW as the startup spent INR 1,452.7 Cr under this bucket in FY24, up from INR 169.73 Cr in FY23. However, it didn’t give the breakdown of these expenses.