PhysicsWallah’s profit nears Rs 100 Cr in FY22; revenue grows 9.5X

Edtech platform PhysicsWallah joined the coveted unicorn club after raising its first-ever institutional round of $100 million from WestBridge Capital and GSV Ventures in June this year. It can now be seen that the valuation was possibly powered by a  nine-fold plus growth in its income and 14 times surge in profit.

PhysicsWallah’s revenue from operations skyrocketed 9.5X to Rs 233 crore during the fiscal year ending March 2022 from Rs 24.6 crore in FY21, the company’s annual financial statement with the Registrar of Companies (RoC) shows.

Revenue from educational services such as coaching and sale of study materials were the only source of revenue for the company during FY22. PW also booked a non-operating revenue of Rs 1.67 crore which drove the total income to Rs 234.7 crore.

Led by Alakh Pandey and Prateek Maheshwari, six-year-old Physics Wallah provides online and offline courses and study materials for JEE, NEET and other engineering entrance and state board exams. The platform offers live classes, video lectures, test series, and dynamic exercises for the aforementioned exams.

Besides YouTube and mobile apps, PhysicsWallah also runs 28 offline centers across 20 cities such as Delhi, Bhopal, Varanasi, Lucknow, Pune, Patna, and Ranchi. Its YouTube channel has more than 18 million subscribers.

On the expense side, employee benefits expense was recorded as the largest cost center, contributing 41% of the total expenditure. This cost ballooned over 21X to Rs 42.34 crore during FY22 from Rs 2 crore in FY21. Legal & professional fees formed 16.8% of the annual expenses and surged around 49% to Rs 17.3 crore in FY22.

During FY22, other costs such as advertising-promotional and information technology expenses shot up exponentially to Rs 11 crore and Rs 3.72 crore from Rs 14 lakh and Rs 3 lakh reported in the preceding fiscal year. The company also incurred a transportation cost of Rs 4.07 crore during the last fiscal year.

Akin to its income, PW’s total expenditure also soared 6.7X to Rs 103 crore in FY22 as compared to Rs 15.36 crore in FY21. The 9.5X growth in scale helped the company achieve over 14X surge in annual profits which stood at Rs 98.23 crore in FY22 against Rs 6.92 crore in the previous fiscal year (FY21).

Cash inflows from operating activities also blew past Rs 70.2 crore during FY22, growing 57%.

Coming to ratios, the EBITDA margin improved by 1,948 BPS to 57.58% during the year which can be ascribed to the improved top and bottom lines. On a unit level, PhysicsWallah spent Rs 0.44 to earn a rupee of operating revenue.

PhysicsWallah is the only startup to enter a unicorn club with profits in the income statement. Not only did the company keep its focus on unit economics but it also survived the funding winter without any layoffs. The firm recently told Entrackr that it hasn't utilised the last funding round yet and it is not targeting any new fundraise in near future. Which is just as well, and places it in a very strong position vis a vis competition possibly.

Rivals like Byju's, Vedantu, and Unacademy are finding it hard to raise new rounds and have laid off more than 3,000 employees collectively in 2022. The number could be higher as per some media reports.

For the fiscal year FY23, PhysicsWallah targets Rs 1,200 crore in revenue. If it gets there, it will be a considerable achievement, considering how fast the market has continued to evolve ever since the opening up of educational institutes again. The online market, which was on steroids during the pandemic has definitely slowed down in many categories, and the future is likely to be much more challenging when it comes to user acquisition.