Anyone familiar with the once-booming (and now reorienting) edtech startups in India is bound to recognise Physics Wallah, aka PW. The young edtech unicorn stands tall among industry giants, many of whom are almost double its valuation and raised billions of dollars by VCs before a funding winter gripped the market.
In essence, aggressive selling and high-octane promises failed to build sustainable businesses during the funding dip, and massive layoffs put a question mark on an industry’s potential, estimated to grow about 3x – from $4.6 Bn in 2022 to $13 Bn by 2026
But the shakeout had another side. As the market shrank and edtech startups exited en masse, a few still managed to grab bigger market shares and turned a profit. For instance, Physics Wallah emerged profitable back-to-back profitable years in FY21 and FY22, a unique feat when the edtech industry was in a quagmire.
Much of the credit goes to its founder, Alakh Pandey. It was a captivating rags-to-riches story, that of a disgruntled engineering dropout turning into a home tutor whose engaging teaching style resonated with students. He started a YouTube channel in 2016 and eventually raised $100 Mn in a Series A round in 2022, alongside Prateek Maheshwari who joined PW as its cofounder in 2020.
In brief, Pandey’s journey could be an inspiring tale for Indian wannapreneurs even now.
But the critical question is: Will the edtech major’s ambitious venture beyond its core specialities – medical and engineering test preparations (NEET and IIT-JEE) – eat into its business success and threaten its sustainability? Or will it be able to navigate every sub-sector and build an iconic edtech empire?
Critics are already accusing Physics Wallah of spreading itself too thin across a myriad of test prep segments. Others cite the destabilisation (both financial and operational) brought by hypergrowth. However, Maheshwari, an IIT-BHU alumnus, insists that the country’s 101st unicorn has seen significant growth online and offline, and its focus on providing affordable education to students has consistently defied sceptics.
The startup claimed a 2.5-fold rise in online student headcount, from 9 Lakh in FY22 to 2.35 Mn in FY23, while its offline student count saw a 5.5-fold surge to 60K enrolments in FY23.
It currently covers 28 exam categories, including IIT-JEE & NEET; the UPSC, SSC and State Public Service Commissions; the Common Admission Test, or CAT, for postgraduate management studies; NDA and CDS admissions for defence recruitment and other government exams such as banking, railways recruitment and more. Besides, PW has diversified into the K-12 segment and technology-focussed upskilling programmes on data sciences, full stack development and generative AI to cement its position as a top edtech player beyond test prep.
Asked about its success rates, Maheshwari rattled off the numbers. “This year (the 2022-23 academic year), PW recorded 20K+ selections for NEET; more than 3.5K qualified for JEE (Advanced); 180+ were selected for the UPSC (including AIR 1) and 70+ were chosen for the NDA,” he said.
These numbers are not the outcome of standalone efforts. The high score came through aggressive expansion, both offline and online, allowing it to reach nearly 98% of all pin codes in India. It has acquired 11 companies, including Knowledge Planet, a K-12 learning platform, Utkarsh Classes and Only IAS, offline test-prep centres for the UPSC and skilling platform iNeuron, among others.
Backed by WestBridge Capital, GSV Ventures and others, the edtech platform claims to have registered 798 Cr in FY23, a 3.4x increase from the previous financial year. Further, it said that its revenue from operations reached INR 771.76 Cr, marking a significant 3.3x increase from FY22’s INR 232.47 Cr.
It also disclosed a net profit of INR 97.8 Cr for FY22 but did not reveal its bottom line number for FY23.
According to Maheshwari, PW targets INR 1,950Cr in revenue in the current financial year (FY24 ending March 2024), more than 3x YoY growth, and aims to teach 2.5 Lakh students by the 2024-25 academic year, from 1.4 Lakh in 2023-24.
How Physics Wallah’s Vernacular Push, Pricing Benefit The Bottom 80%
“Physics Wallah primarily benefits the bottom 80% of the student pyramid, often overlooked in education. Those eager to learn but lacking financial resources can access quality education for free on our YouTube channels and PW app,” said Maheshwari.
Pandey and Maheshwari attribute YouTube as the launchpad for PW and a major channel for student acquisition. The platform serves as a gateway by providing a glimpse of PW’s offerings and teaching style so that students can decide about paid lessons delivered via the PW app. This organic approach reduces marketing costs while driving business growth exponentially.
Again, language plays a critical role in education as students often struggle with topics not taught in their mother tongue. To reach out to a wider audience, especially the Hindi-speaking segment, Pandey initially used casual Hinglish on YouTube. And the outcome was amazing. By 2020, PW emerged as the biggest YouTube channel for IIT-JEE preparations. Pandey pursued it further by expanding PW’s presence on the platform, launching NCERTWallah (K-12 segment) and DefenceWallah in 2021. SSCWallah (test preparation for government jobs) came a year later, yet another milestone in the startup’s journey.
After the initial success of NCERTWallah, PW recognised the need to localise teaching, especially for those who want to learn in regional languages. This prompted the launch of vernacular channels on YouTube, such as TeleguWallah, PW Gujarati and PW Bangla, catering to K-12 and IIT-JEE/NEET preparations. The aim was to address the preferences of students preparing for state board exams. Currently, Physics Wallah boasts 81 YouTube channels in 12 vernacular languages, with the total number of subscribers exceeding 36 Mn and the count of daily active users (DAU) racing past 2.1 Million , Maheshwari told Inc42.
The founder admitted that finding proficient teachers fluent in regional languages was challenging. However, Physics Wallah attracted top-notch educators to its Faculty Training Programme through extensive outreach and word-of-mouth. The programme aims to establish a strong bond between students and teachers to improve learning outcomes, thus driving the startup’s success.
The PW app provides access to the UPSC, SSC and NEET/JEE courses at affordable rates. Ranging between INR 3K and 4K, the courseware features live classes, a repository of pre-recorded lectures, doubt-clearing sessions and personalised mentorship. However, the pricing may increase to INR 7K or above for MBA and CA preparations. These may seem high-ticket items, considering the purchasing power of Bharat. But every year, the edtech platform consistently enrols more than 40K students online, a testament to its credibility among the student community.
Students who purchase courses from Physics Wallah can download the video content for offline viewing. This feature is especially beneficial for students who live in areas with weak internet connections and intermittent power supply. PW has further optimised its courses for multi-quality streaming and compressed each courseware into 2 GB.
It also provides pen drive courses that students can purchase online from any PW store, which will be delivered to their doorsteps. These contain essential learning components, including videos and practice papers, thus eliminating the need for internet connections.
Maheshwari claims that the platform goes the extra mile to ensure students get optimum learning exposure and maximum value for their money. “As they spend an impressive 60-70 minutes daily on the app, we see one of the highest engagement rates in educational video content, indicating the substantial value PW brings to its users,” he added.
Online Brings Home The Bacon, But What’s Hurting PW’s Offline Growth?
Although Physics Wallah operates as a hybrid test prep platform, 95% of its paid customers opt for online courses, which account for 60% of its revenue. Offline batches, priced at around INR 50K for JEE and NEET prep, attract the remaining 5% but amount to nearly 40% of the overall revenue, according to Maheshwari.
Much of its online expansion was spearheaded by a series of acquisitions that added to the growth momentum. For instance, in June 2023, the startup secured a 50% stake in Kerala-based Xylem Learning, an online test prep platform for IIT-JEE and NEET, for an estimated $61 Mn. PW made the strategic move to enter new markets in southern India and enhance its competitive edge. Following the acquisition, the platform consolidated Xylem’s existing user base of 3 Mn+ with its own, said Maheshwari.
But all was not well with Physics Wallah’s offline ventures.
In June 2022, it started offering IIT-JEE and NEET coaching offline through a PW Vidyapeeth Centre in Kota, popularly known as India’s coaching hub, where students from all over the country gather to be coached for admission to elite colleges and pay steep fees. Understandably, it was not an original initiative by PW, as edtech giants BYJU’S, Unacademy and Allen Career Institute were fighting neck and neck to acquire students and teachers by the month’s end.
Physics Wallah also struggled to grow its user base, and its student headcount soon dipped from 27K to 22K. Despite the setback, Maheshwari was unfazed, stating that PW Vidyapeeth’s net promoter score (NPS) increased by 40% in 2023, and he did not feel unduly concerned about the fall in student numbers in Kota.
He put the decline down to Vidyapeeth’s geographical expansion, saying that students could access the same quality education in their hometowns, which reduced the need to flock to Kota. Since 2022, PW has set up 75 offline PW Vidyapeeth centres in 49 cities, including Delhi, Noida, Kota, Bareilly, Patna and Pune, among others.
It has also established 30 Pathshala units in 29 cities, such as Lucknow, Varanasi and Kanpur, for IIT-JEE and NEET preparations. These offline units are equipped with smart boards so that online classes can be conducted. Offline doubt-clearing sessions with the PW faculty are also held in these centres.
“We are creating more educational hubs across the country. The aim is to bring quality education closer to students so they don’t have to travel far. Overall, our offline centres have more than 1 Lakh students,” said Maheshwari.
Interestingly, the Kota chapter was not the only dent in Physics Wallah’s iconic status. Controversies began to surface in 2023, starting with star teachers quitting the platform, students opting for refunds and live lectures marred by misconduct. Soon after, the edtech giant laid off 120 employees, citing performance-related concerns.
It also appears that PW has been struggling to retain its teachers, which is crucial for its growth. This is reflected in its latest financials, as employee costs skyrocketed by 863% to INR 406 Cr in FY23, from INR 42 Cr in the previous financial year. In addition, its marketing expenses surged by 475% to INR 204 Cr in FY23, from INR 42.9 Cr in FY22. This could be due to damage control or spending on a growth strategy to attract more students.
Can Physics Wallah Escape The Lure Of Hypergrowth?
After its stable performance in the initial years, industry experts thought that PW might have decoded the profit puzzle and is now fully prepared to dive deeper into test prep and skill-building. In fact, per an Inc42 report on India’s edtech landscape, skill development is the fastest-growing segment, estimated to reach a market size of $2.5 Bn by 2030, growing at a CAGR of 30% between 2022 and 2030 Test prep is close behind, expected to reach $9 Bn during the same timeframe, growing at a 29% CAGR.
Physics Wallah is now targeting these high-growth segments (although it has other offerings), which may help it retain its financial wizardry.
Unless it falls prey to the lure of hypergrowth à la BYJU’S and throws caution to the wind. The surge in expenses in FY23, along with a disturbing saga of controversies, is a clear indicator that all may not be well at Physics Wallah, and growth at the cost of sustainability is not likely to work during the ongoing funding winter.
For context, funding in edtech saw a sharp decline from $2.4 Bn in CY22 to $283 Mn in CY23, according to Inc42’s latest report titled Tech Startup Funding.
However, Maheshwari is not too worried about these disruptions, as businesses will be in growth throes now and then. “Edtech upheavals have not caused any lasting damage to the brand, except for momentary disturbances on social media. Our student community has consistently supported us through these challenges,” he said.
Of course, competition will be tough and growing. In test prep, the unicorn competes with the likes of Adda247 and Unacademy, while in skill development, there are Scalar, Newton School, Masai School and more.
As Physics Wallah plans to grow its business in the new year, it remains optimistic about its expansion strategies. For example, the acquisition of Knowledge Planet (a Dubai-based K-12 company) in 2023 has already proved beneficial in reaching a large segment of the Indian diaspora preparing for the IIT-JEE/NEET exams. PW will continue to serve the MENA market and expand its global footprint in 2024.
In addition, it aims to set up 100 Vidyapeeth Centres by 2024. PW also intends to venture into the skilling/upskilling market with a new programme launch this year, although no further details were revealed about this initiative.
It is worth noting that PW’s financials came when the edtech unicorn was reportedly in talks to raise $250 Mn at a $3.3 Bn valuation. Quizzed about it, Maheshwari declined it and stated, “We are fundamentally a cash generating business, with three consecutive years of profitability, and we have a clear visibility to remain so while growing in the upcoming years. Therefore, there is sufficient reserve within the company to fulfil all our growth ambitions. We are not actively seeking any funds for our business.”
Can Physics Wallah, an all-things-edtech startup, leverage India’s $29 Bn edtech market opportunity (by 2030) and emerge as the dominant force? The tide seems to be in its favour, with hybrid learning taking centre stage in the current edtech landscape.
Industry experts believe that edtech companies seamlessly blending online and offline education will win back investor confidence. Therefore, PW’s success will hinge on its ability to capitalise on the hybrid learning trend and effectively integrate online and offline learning experiences.
