PhysicsWallah: What The Profitable Edtech Unicorn Has In The Pipeline

PhysicsWallah—one of India's rare profitable edtech unicorns—is looking to make more investments, as it seeks to deploy its cash reserves to expand geographies ahead of an eventual listing.

The company is set to close FY23 with a top line of Rs 800 crore, which will be a near fourfold rise, Prateek Maheshwari, co-founder of PhysicsWallah, told BQ Prime at the company's Noida headquarters. For FY24, that number is set to grow three times to Rs 2,400 crore.

For reference, it ended FY22 with Rs 233 crore in revenues and a profit of Rs 98.2 crore, according to data accessed from Tofler.

"For profits, we are looking at about 15-20% Ebitda margins. We have already realised a large chunk of that revenue, given the seasonal nature of courses in edtech," Maheshwari said.

One of the key reasons why PhysicsWallah is profitable while other edtechs aren't is because of its co-founder Alakh Pandey's community building efforts, Maheshwari said. That has kept the company's customer acquisition cost, or rather, student acquisition cost very low. "That's built into our DNA," he said.

The community efforts that Maheshwari mentioned are a nod to Pandey's journey, which started back in 2014.

Pandey started a YouTube channel by the name of PhysicsWallah and reached lakhs of subscribers. By 2020, he expanded to opening more channels, and Maheshwari and Pandey—who were associates by this time—decided to register PhysicsWallah Pvt. separately and launch an edtech app.

In 2022, they raised $100 million from WestBridge Capital and GSV Ventures at a valuation of $1.1 billion, making them a unicorn. Today, PhysicsWallah has about 35 lakh registered students. It has also grown to about 50 different channels on YouTube and about 3 crore subscribers.

Even when they raised money in 2022, they were "never in dire need" of cash, according to Maheshwari. "We had over Rs 100 crore capital lying on our balance sheet when we raised funds and mostly, it was for acquisitions."

Of the $100 million PhysicsWallah raised, about 60% has been allocated. "We did a couple of very good deals from that capital and moving forward, we don't need any additional funds for our expansion plans," he said, hinting that there could be more category and geography-led investments—such as with Kozhikode's Xylem Learning and Jodhpur's Utkarsh Classes.

Maheswari said that PhysicsWallah is open for more partnerships "considering the current scenario of funding dryness which startups are feeling". "There are more and more startups available as good assets for partnerships," he said.

Despite having started online, PhysicsWallah is also expanding into hybrid learning. Accordingly, a majority of revenue for FY23—about 60%—will be from its online business, while the rest would come from its centres that it calls 'PW Pathshalas' and 'Vidyapeeths'.

However, Maheshwari said that the 40% contribution from the offline business happened in just one year.

On the future online-offline mix, Abhishek Mishra, chief executive officer for PW's online business, said that increasingly, students want both touchpoints. "They want the online offering also and some kind of interlacing with the offline offerings as well. So, hybrid is the future; there is no division as such. It's just a medium of delivery for us."

Despite the rough ride to profitability that several Indian edtech startups—such as Vedantu, Byju's and Unacademy are facing—Maheshwari said the sector continues to be promising. "One or two players might feel difficulties, but I do see great potential as there's more penetration of hardware and internet across India."

Mishra said PhysicsWallah is "at a stage where the decision to go public can happen any time".

"But we will take a conscious call on how we organise our corporate governance. We should be prepared to give that predictability and transparency to retail investors before going public, so we are preparing for that journey," Mishra said.

"We are not even a three-year-old company officially, but we do see plans in the future. Only time can tell when exactly this will happen," Maheshwari said.

Watch the full conversation here: