Listed edtech major, PhysicsWallah posted a 34% y-o-y revenue jump to Rs 10,824 crore in Q3FY26 and profit after tax (PAT) of Rs 102.3 crore up 33% y-o-y. Meanwhile, the company’s adjusted EBIDTA grew 40% to Rs 351.2 crore, with margins improving to 32%. Nine-month revenues surpassed full FY25 levels. Co-founder Prateek Maheshwari, in an interview with Anees Hussain, discusses the company’s next areas of growth, ambitious bet on the K-12 segment, and timeline to operational profitability.
Excerpts:
Q: What drove Q3 performance?
Our unique paid users rose from 3.6 million to 4.37 million. Online users stand at 3.96 million, offline at 0.41 million. We deepened presence in existing categories and gained traction in State Boards, while expanding crash courses and value-added services.
Q: PW has positioned schools (K-12 segment) as a ‘market creation story.’ When will investors see this actualising, and what does the expansion pipeline look like?
The revenue and profit contribution will start from Q1 FY27. By FY29, it will become a significant, noticeable EBITDA contributor in our overall growth. We have kept a 1:5 ratio in mind—for every school we acquire, we will build five on our own. It is not hard maths, but broadly that is what we are aiming for. Right now, we are opening 8 schools on our own and 2-3 is acquisitions. Building on our own is less capital intensive, but it is slow.
Fundamentally, the outcomes of schools in this country are poor—someone has to fix it where the core problem lies. The material advantage we bring is that our core pedagogy is test prep. Our schools can become capable of giving high-quality test prep education from grade 6-7 onwards, so by the time students reach grade 11, the basics are strong. We believe this is a bottomless market, with no clear winner so far.
Q: Offline ARPU has declined from Rs 35,073 to Rs 31,880. What is driving this?
It is not advisable to see offline from one single lens. Vidyapeeth, which is our offline year-long courses vertical in JEE and NEET, has improved ARPU by more than 10%. But we have introduced a lot of short-term courses—government exam courses, three-month courses, crash courses. These are lower-ARPU courses. So the overall blended ARPU has declined because of the course mix.
Q: JEE and NEET offline enrollment growth is in single digits. Is this hitting a ceiling?
In the North India heartland, we have good penetration. But the entire southern market is waiting for us. We have launched all Indic language channels and started monetising these markets. For JEE and NEET, growth will come from geographical expansion to southern India. For other exam categories, we will see growth across India with high enrollment and ARPU growth.
Q: At a subsidiary level, what is the path to profitability?
Xylem and Utkarsh will both be EBITDA positive this year. Sarthi is already EBITDA positive and growing at more than 100% in revenue—it has been a major success. Eventually, we are trying to become a house of brands, but it is very early to say this. Innovation is the core DNA of this company. Our goal is to become a lifelong learning partner for students, and wherever we see a meaningful opportunity to do so we will go after it.
Q: A significant portion of PAT comes from other income, largely interest on fixed deposits from IPO proceeds. When do you expect to achieve operational profitability?
Operational PAT profitability will come next fiscal year. We are a negative working capital business, as students pay fees up front. We will always have a high treasury, and that treasury will generate returns. Our EBITDA grew 42% in the quarter, which is a significant jump. Ideally, we would have shown better PAT profitability, but there is a component of the Labour Codes impact and IPO-related expenses that we had to factor in during the quarter. Otherwise, operational EBITDA profitability would have been achieved in Q3 itself.
Q: What is the outlook on deployment of IPO proceeds?
Only about 10% has been utilised, so far. Treasury at the end of December stood at Rs 50,544 crore including IPO proceeds. Initially, general and administrative expenses and M&A, which is appropriately 25% of proceeds, will get consumed. Then offline centre expansion will kick in, because for next year’s expansion, you have to sign leases beforehand. Marketing will be spread over 3 years. We are looking at prudent expenditure.