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Alakh Pandey-led PhysicsWallah (PW), known for being the only profitable edtech unicorn in the Indian startup ecosystem, witnessed a significant drop in its net profit for the financial year ending March 31, 2023.
According to the Inc42 report, The edtech unicorn saw its net profit fall by 91% to Rs 8.9 crore in FY23 from Rs 98.2 crore in the previous fiscal year.
Last December, the company said it remained profitable; however, it didn't disclose the specific numbers then.
What led to the decline in losses?
The decline is attributed to a substantial increase in the company's expenses. Despite the fall in profits, PW's total revenue saw a notable increase of 234% to Rs 798 crore in FY23, marking a 3.4-fold surge from the previous year. The growth comes on the back of its expanded penetration in the offline category.
Surge in expenses
However, this revenue growth was overshadowed by a 671% surge in total expenditure, amounting to Rs 794.5 crore in FY23. The bulk of PW's expenses went to employee benefits, costing the company Rs 413.8 crore in FY23, an 878% increase from Rs 42.3 crore in FY22.
The startup, which has expanded its team to over 10,000 employees, also saw its advertising costs rise 6X to Rs 67 crore and rent expenses skyrocket by over 1,500% to Rs 57 crore due to its offline expansion.
Expansion and acquisitions
PhysicsWallah's aggressive expansion strategy included entering the offline education sector and making several acquisitions. The company ventured into primary education with PW Gurukulam School and expanded its offerings to include post-graduate programs and upskilling through PW Skills.
It also acquired a 50% stake in Xylem Learning for $61 million and announced significant investments in its UPSC vertical and PW Skills.
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