PhysicsWallah’s FY23 Profit Tanks 91% To INR 9 Cr

Alakh Pandey-led edtech unicorn PhysicsWallah (PW) saw its profit plunge over 90% in the financial year ended March 31, 2023. The startup, which is the only profitable edtech unicorn in India, reported a 91% decline in its net profit to INR 8.9 Cr in the financial year 2022-23 (FY23) from INR 98.2 Cr in the previous fiscal year due to a sharp rise in its expenses. 

Founded in 2016 by Pandey, PW started as a YouTube channel which prepared students for competitive exams. Later, it went on to become a full-fledged edtech startup and added multiple other courses. The startup has been on an expansion spree for the last couple of years. Later, Prateek Maheshwari joined PW as a cofounder in 2020.

Its operating revenue increased 234% to INR 779.3 Cr in FY23 from INR 233 Cr in the previous fiscal year. Including other income, the startup’s total revenue stood at INR 804.6 Cr in FY23, a 243% jump from INR 234.6 Cr in FY22.

PhysicsWallah Loses Profit Momentum

On the back of its offline expansion and acquisition spree, the startup saw its total expenditure zoom 671% to INR 794.5 Cr in FY23 from INR 103.1 Cr in FY22.

Employee Benefit Expenses: The startup’s biggest expenditure was employee costs. PW spent INR 413.8 Cr on employee benefits in FY23, a whopping 878%, or almost 10X, jump from INR 42.3 Cr in FY22. 

As per Linkedin, the startup currently has over 10,000 employees. It is pertinent to note that star teachers are being paid handsome salaries by most of the edtech startups, including PW. 

Interestingly, Pandey’s remuneration more than halved to INR 4.6 Cr in FY23 from INR 9.6 Cr in FY22.

Advertising Expenditure: The startup’s advertising cost rose 6X to INR 67 Cr during the year under review from INR 11 Cr in the previous fiscal year. 

Rent Cost: As a result of its offline foray, PW’s rent expense surged over 1,500% to INR 57 Cr in FY23 from INR 3.5 Cr in the last year. 

The edtech startup entered the unicorn club in 2022 by raising $100 Mn in its maiden funding round from Westbridge and GSV Ventures. Since then, it has been constantly expanding its offerings by entering the offline space and acquiring multiple startups and companies.

The startup has expanded its offerings to offer post-graduate programmes as well as upskilling platform PW Skills. 

It also offers offline and hybrid coaching options through its 60 Vidyapeeth centres throughout India. Earlier this month, the edtech startup ventured into offline education for primary classes with the launch of PW Gurukulam School. 

As part of its aggressive expansion strategy, PW has made several acquisitions. In June last year, it acquired a 50% stake in Xylem Learning in a $61 Mn deal. 

The edtech unicorn also announced an investment of INR 100 Cr to strengthen its UPSC vertical and INR 120 Cr to shore up PW Skills. 

However, it also fired around 70-120 employees in November last year to reportedly extend its runway, conserve capital and streamline operations. However, the startup attributed the layoffs to performance issues.

Note: We at Inc42 take our ethics very seriously. More information about it can be found here.