Physicswallah Limited (PWL) Q4 2026 Earnings Call Transcript

Good evening, everyone, and thank you for joining Frizzik Suala's Q4 and FY26 earnings conference call. We hope all of you had the opportunity to go through our results and our shareholders later uploaded on stock exchanges and our investor relations website. Joining us today are Mr. Alak Pandey, CEO and Whole-Time Director, Mr. Pratipo, Whole-Time Director, and Mr. Amit Sajdeva, CFO. Before we begin, I would like to remind everyone that certain statements made on this call may be forward-looking in nature and should be viewed in conjunction with the risk factors disclosed in companies' filings. I would request everyone to limit their questions to two at a time and rejoin the queue for any additional questions. I now hand the conference over to Mr. Alekh Pandey. Thank you and over to you, sir.

Hello, everyone. Good evening. Thank you so much for joining this call, and a big thanks for supporting P.W. in this mission of affordable education throughout Bharat. This FY26 as a whole year is a strong financial year for us. It has proven to be a fantastic year for us. Rev-wise, revenue-wise, we did 3,900 CR of revenue, which is 35% year-on-year growth. If you talk about EBITDA, Against 93 CR EBITDA, last year, we did 300 CR of EBITDA, that is 3x jumps in the EBITDA. If you talk about PAT, against last year of minus 234 CR, we did minus 24 CR of PAT. There is a significant improvement in the PAT, and we would have been PAT positive. There was one adjustment of 63 CR, which Amit will explain definitely. PDT is positive this year. Enrollment-wise, we see across Bharat 10 lakh new enrollments, paid enrollments in our online, offline paid batches. That is 20% enrollment growth year on year. The mission still remains intact to reach every corner of the Bharat. We saw one mobile cover seller across the road getting selected in need due to the affordable online courses. We saw Visually Impaired Child, Manu Garg, selected in UPSC due to the recorded and the AI-enabled courses. It's just a matter of yesterday, we saw the strange story of a student getting selected from Chambaran, Bihar in the International Olympiad. He will be representing not only PW, but India on the international stage. So that's the summary I have. Over to Prateek.

Good evening, everyone. Online continued to grow at a very strong rate. So we grew 39% in online revenues and blended we grew by 35%. AI continues to be a large focus area for the company. We have been building a couple of AI products internally. Wanted to quickly give an update on that. Last quarter, we launched Ask AI. More than 3 million queries has been solved by Ask AI. One of the most loved features which we have launched for the students. Apart from that, AI-powered books. AI guru, AI grader are continuously improving in every month. Along with that, we are making affordable AI for the Bharat. And for that, we have been investing in small language model. Arivata is our first small language model, which we have done open source, trained on 4 billion parameters. Now, Arivata 2.0 is coming, which is getting trained on 20 billion parameters. This is a model which is better than in terms of accuracy from a couple of top frontier models, but as well as one tenth of the cost and five times of the speed. So the AI for the Bharat mission continues to be a great focus for the company. And this... This year, we are planning to launch SoCritic AI Tutor as well, and getting very good initial results in our beta testing of AI Tutor. A couple of AI initiatives within the company to drive more efficiency. Now, 91% of our code is now AI-assisted, driving 2x improvement in engineering and go-to-market velocity. Thank you. It's 75% cheaper. Currently, 6,000 plus daily calls are happening through AI World Voice Agents. Along with that, I would like to hand over to Amit, sir, for a quick financial update.

Thank you, Pratish, sir. Good evening, everyone. Thank you all for taking the time to join the Q4 and FY26 earning calls for Philipsville. This is our first full year financials post our IPO in November 2025. Our strong results showcase our operating leverage, not only in terms of our cost structures, but also in terms of growth that we've seen across all our education categories. A quick overview of our full-year results. Alastair did talk about it earlier, but Jiren is just covering some of those aspects in detail. Our full-year revenue from operations closed at 3,900 crores, and year-over-year increase of over 35% in line with our expectations. Revenue from online grew at 39% year-over-year, and offline and other businesses grew at 31% overall. As we mentioned earlier, we are an online-first community-led platform, and we will continue to invest in such opportunities for growth. Our online revenues now contribute 50.1% of our overall revenues as compared to 48.6% in FY25. Our endeavor for the next three years is to ensure our online business contributes 55% of overall revenues. We closed full year pre-endee's EBITDA at 300 crores, 3x of what we achieved in FI25. This was largely driven by leverage in our online business and our offline business, reducing peak losses as we keep on improving our cohort mix. We're also PVT positive for this year, closing the year at 10 crore positive against negative 259 crores for FY25. Our full year pact for this year is negative 24 crores against negative 243 crores that we did last year. We would have been pact positive, but for one-time expenses of implementation of labor code that came earlier this year and IPO expenses. As mentioned earlier in our shareholder letter for last quarter, we remain committed for full year-packed profitability for FY27. Also, as communicated earlier to stock exchanges, our annual flagship event, Vishwas Divers, concluded with 36% over-year growth in collections from our online business. 21% growth in enrollments, and 12% growth in HADPU for collections that were done during the Vishwa's divorce. Our increased geographic penetration is a reflection of the market dominance that we have been able to get. New categories that have seen strong adoption include state goals, vernacular batches, QGIS Junior, and foundation and pre-foundation courses. The details of some of them have already been outlaid in our enrollments, you know, as part of the shareholder letter. These early indicators for the academic cycle remain encouraging, and the growth seen across categories demonstrates sustained demand and strengthens physics well as positioning as one of the most preferred educations out there in the country. As for our Q4 quarterly results, we've been able to deliver strong Q4 results. Both in terms of what we did as compared to last year. A quick summary of our Q4 results. We closed Q4 at 919 crores of revenue from operations and increase of 51% as compared to last year. We also significantly improved our profitability with pre-endee of 9 crores against 139 crores for last year. This is largely due to our focus on early student engagement and our focus on spend patterns on a quarterly basis. We are also very happy, just a few, you know, some color on our online and offline businesses. We are very happy to see how our online business is shaping up. Like I mentioned earlier, our online revenues now contribute over 50% of our overall business. Our online segment grew at 39% year-over-year, with over 4.9 million paid students across multiple categories learning from our platforms, an increase of 20% year-over-year. Our investment in building strong foundation and free foundation is already showing promising results. This segment across boards, CUT, foundation, free foundation, along with state boards, has almost doubled over the last year. Our offline business grew 31% year-over-year, and now contributes almost 1,775 crores in our overall revenue from operations. We now operate over 353 centers across PW and other brands, with PPP, which is our with-the-peat offering, contributing almost 70% of offline revenue on an overall basis. We will continue to have a very balanced expansion strategy going forward on our offline expansion with focus on improving profitability across all our offline channels and businesses. We are still in a student enrollment academic season and highly optimistic of breaking even across all our offline business in FY27. A quick update on our cost initiatives. Like mentioned a couple of times earlier, we closed the year at 300 pre-endress EBITDA as compared to 93-94 crores of last year. Our overall leverage on direct costs gave us 2.4% year-over-year benefit as we scale up and improve our operating leverage across all our businesses. Our employee costs, excluding ESOP costs, were lower by 1% as compared to last year. We also saw leverage coming in our distribution and marketing expenses. Our marketing spends for FY26 were 353 crores, approximately 9% of our overall revenues. We saw almost like half a percent leverage as compared to FY25. As I've mentioned a couple of times in the past also, our playbook is to build communities in every category we get into, and we believe we will continue to get significant leverage on these costs as we scale up, with ambition of at least reducing this cost by 20% over the next three years, largely due to the impact of scale and efficiency of spends. Like we mentioned earlier, we did not do segment reporting in terms of profitability for our online and offline business in our financials or shareholders' letter. We remain committed to report SOTP and the breakup of these two segments from this year onwards as we will report our financials going forth. Uh, in terms of. Of our offline business, you know, our standalone offline business, which comprises of Vidyapeet, Pachala, and other offline categories, remains the highest RQ category. Its contribution to total enrollments has decreased from 80% to 72% due to accelerated growth in other offline categories. TIFT has resulted in a lower blended ARPU, which you will see, has actually gone down from last year, whereas we've seen significant leverage in improving on margins and offline in spite of the lower ARPU. Overall revenues and total enrollments have increased significantly. In terms of our cash flow generated from our operations, this year we generated over 800 crores of cash flow from operations. Our current treasury stands at 5,027 crores, with approximately 2,300 crores that we got from our IPO proceeds. Our capital allocation will continue to remain judicious, with selective inorganic opportunities in online community-led businesses, and building vernacular capabilities. We will also take a very disciplined offline expansion view this year, like I said earlier, once the student enrollment season ends. In terms of our acquisition that we announced last quarter, we are very happy how the Saati acquisition is panning out, and we are already working on multiple synergies in terms of tech build and distribution leverage. Saati will continue to run as an independent brand in the UTSC space. Of AI initiatives, Prateek has already talked about this in details, and I would request everybody to refer this to question one in the shareholders letter. And as part of our capital allocation, we will continue to find opportunities in AI to continue to invest there, both in terms of any AI tech product and tech talent that we can find in that space. With this, we can open the floor for any questions, unless, Alasar, Patiq, sir, you have any mutual comments.

In terms of the capital allocation strategy, we have a... There is a slight shift in terms of K-12 capital allocation. So we are taking a balanced approach from here after discussing with our board and a couple of our strategic partners. And we will be going 100% of satellite in this direction. And there will be no capital allocation for M&A in terms of K-12 capital allocation. K-12 domain, but our focus will continue to remain in online mode, where we have seen huge upside in terms of 9x revenue jump in our state boards category, which comes under K-12 only, and almost 4x revenue jump in Curious Junior, which is small cohort two-way communication online platform. And as well as part of our expansion in south from FY25 to 26, there also we have done almost 100% improvement in connection. So overall, continue to grow in a very strong direction. In our last earnings call that we will be announcing. A couple of large online assets, avenues, in this year, which are bad positive assets and will grow them as an independent brand like we are doing with Saarthi. So, I think this is all from my side. Happy to answer any of your questions.

I think we can open the floor for any questions.

Thank you very much. We will now begin with the question and answer session. Anyone who wishes to ask a question may press star and then 1 on their touchtone phone. If you wish to remove yourself from the question queue, you may press star and 2. Participants are requested to use hand fits while asking a question. Ladies and gentlemen, we will wait for a moment while the question queue assembles. Your first question comes from the line of Garima Misha with Botox Securities. Please go ahead.

Thank you so much for the opportunity. Can you elaborate a little on revenue growth drivers in 4Q? How much of the growth was organic and inorganic in nature? I'm basically trying to understand the reasons for the sharp acceleration in revenue growth to 50% plus YOY in the fourth quarter compared to 30-odd percent growth witnessed in the first nine months, and this despite you mentioning in the letter that 4Q is typically a soft quarter.

See, Garima, if you see blended eye, we as a company grow at 35%, and quarter four, there are a couple of growth livers' drivers. One, essentially, is Vishwaaz livers' performance. And then we had couple of AI-led initiatives which have significantly improved in terms of our engagement. We have seen improvement in our pay-to-pay conversions as well. Majority of growth, this growth is coming from organic, but there is a small contribution because of Sarti acquisition as well. Overall, quarter four performance has been very strong, and that is an indicator of a good, strong year ahead for a company because the nature of the business is that first three to four months becomes very important for us, and the growth is coming from the higher enrollment, higher ACPU. If you see, our ACPU is also improved by 12%, which is... Better than the entire year. So, these are some major growth levers for Quarterfoot, but the biggest driver is the new year enrollments and the strong year ahead is what we are anticipating.

A lot of new initiatives that we took have been in their second or third year. Like, after 12th course for UPSC has picked up very well in UPSC. State boards have picked phenomenal this year. Pre-foundation has picked up very well. Curious Junior, the high ARPU course for grade 3rd to 9th, that has picked up very well, and of course, as Prasik mentioned, a contribution from Sarti as well.

But the safety contribution is very small in the overall schema, so majority is organic growth only.

Understood. Very clear. Can you also talk about the relative margin profiles of the online and offline businesses? Offline is clearly the lesser mature business of the two. So, if not specific numbers, but what trends of center utilization and center level profitability did you witness, let's say, in the last six months? And how many of your Vidyapeed centers were profitable in, let's say, the fourth quarter?

Yeah. So I'll start and then Amit will top up on this question. So if you see blended level, the entire offline did minus 19% in FY25, which we have improved by 9%. And this year, our offline business did minus, little less than minus 10%. So overall, 9% improvement in net offline, which 70% of the business comes from Zidhyapir as a business. Thank you. Our early Vidyapeed Centre, which we had started, have shown profitability, and out of 72 centres, Out of 116 Vidyapeet centers, which is 60% of our Vidyapeet centers are now profitable. And the centers which we have started in FY25 and FY26 will show profitability. So what we are guiding that net offline will become nearly profitable in FY27, and the early direction shows that we are going in that direction. Amit, do you want to add anything here?

No, that's good. So I think our early cohorts, very much just on the specific question of how VP is operating right now. So centers that were open in MAPA 22, 23, 24, all of them are a bit, you know, positive. Some of the, you know, the change in our strategy to go into micro centers over the last 18 to 24 months, That is, you know, the biggest call that we took in terms of going closer to students and actually opening in geographies. So they are, all of them are actually now starting to operate the way that, you know, the cohort mix should be operating right now. The same in terms of some of our other new offline centers that we have opened up is still 12 months old. So I think the journey for them to get to a maturity stage that we are seeing in VP will start coming in over the next 12 to 24 months.

Thank you.

Sure. Noted, Amit. And, yeah, just on that, you know, a follow-up from me. Medium term, for the offline business, what is the kind of profitability or margin profile that you can reach?

So 13 to 15% Garima is what the current business model we have factored in. And that is the trend which we are seeing in a couple of our older centers, the average trend. Some of the centers have higher profitability on upwards of 20% as well. But blend in is 13 to 15% is at a steady state margin is what we are aiming for.

Got it. Thank you so much.

Thank you. Your next question comes from the line of Swapnell from JM Financial. Please go ahead.

Hi, thanks for the opportunity. My first question is more of a clarification to the previous question that was asked. When you say offline will become profitable next year in FAT27, do you mean full year profitability or do you mean on an exit basis or a quarter or two?

So we are guiding on a full year profitability. So we have already demonstrated 9% improvement from minus 19 to minus 10%. And now we are targeting that at a group level net offline will become profitable next year.

Got it. And the second question is with respect to the announcement that you made of 120 crores investment in VFC, a wholly owned company. So can you explain the nature of loans that you intend to give through that company and who are these loans targeted towards?

So, this is a FinB initiative which we started two years before, with the external partnership of, external NDSP partnership, and, Yeah, and we did around nearly 200 crores of loan dispersions with the less than 1% NPA overall, and these are short duration educational loans for 70% primarily for PW students and 30% for outside PW students. So, after successfully running these operations with external partners, we took this call to form an NBFC inside and infuse a primary capital and infuse equity capital of 120 crores. So, essentially, this is... To bring more access and more inclusion, because we teach the below middle class, the below poverty line students, and for their inclusion, we have to empower them with educational financing. So these are small duration, less than one-year loans, 99%, and we will not be deploying. Very meaningful capital in this, and this is to support our existing students, and we have already demonstrated less than 1% NPN past two years.

So, these loans will be on your balance sheet, right, just to get that correct?

Yeah, so we got NBFC license from RBI, and yes, we will be giving loans to that NBFC only.

Got it. And can I just elaborate on this K-12 schooling strategy that you talked about, like you will be going 100% asset light. What do you exactly mean by that? Do you mean that the, I think, 400 crores allocation that we had done earlier, you may not be deploying that amount, the remaining amount of, I think, 300 crores?

Yes, so we took this strategy goal to deploy no further capital and go 100% asset light. When I say asset light, so this is a fourfold strategy. One is we are doing school integration partnerships. We have seen three times growth in terms of our revenues from school integration partnerships where we are sending our faculties to existing schools to have test preparation. That is shaping up quite well. The another, the online strategy to grow K-12 business is by launching StateBoost. Again, a 9x revenue jump from FY25 to 26 in our state boards. And this year also we have seen a very strong enrollment, and it's a mega market. For this, to go heavy on QGIS Junior, QGIS Junior is again a small cohort K8 platform, which is a two-day communication platform for the kids. Again, 4x jump in terms of revenue from FY25 to 26. And we will continue to go asset light in terms of overall capable strategy and no capital allocation there.

Will there be CapEx?

No, so this is, I have all the strategies I told is online, so there's no CAPEX.

The school integrated program means there is a running school already in the city by someone, and our teachers will just go and teach in that school, and we'll get a part of revenue for that. So it's no CAPEX involved. And all the other things that Pratik mentioned, state board, that is online course, affordable online course. Curious Junior is premium online course, and foundation that we run is online, and board and CUET is all online. So this is all online, where a couple of pages page thousands of strings.

And just a last one on your seasonality part. So, 4Q, we thought dip here on a Q-on-Q basis on the pre-indicative data. How does it work out for 1Q? I mean, will there be a further dip?

So, the 4Q, it was not a dip. What Amit have mentioned is from minus 139, minus 193, minus 139, we did positive plus 9, positive 9. So, it's not a dip in EBITDA.

I'm looking on a Q&Q basis. I mean, I'm looking. So, I understand.

Yeah, quarter on quarter only, I'm telling you.

From Q3 to Q4, obviously, if you look at our question 4 as part of the shareholder's letter, we've clearly articulated how the functionality of our business operates. So Q2 and Q3 are typically our strongest quarters in terms of revenue recognition, as we run most of the batches, both in terms of our online and offline courses at that point of time. Q4 is always a strong quarter in terms of collection as we get into the, you know, enrollment season, both in terms of Vidya Peet and Vishwas Divas for online. What we also, you know, this year what we're doing is since first year we're doing quarterly, you know, reporting.

There has been significant improvement in terms

of efficiency and discipline on a quarter-to-quarter basis on, you know, on some of the cost points, especially around marketing and other direct costs that we've been able to bring in. And that is the reason, you know, what Pratik mentioned is that Q4 to Q4, we've seen significant, but Q3 to Q4 is pretty much part of the normal cycle that you will see in education.

And it's not fair to compare our QQ to our Q4. The right way to look at the business is the Q4 to last year Q4. Because business is cyclic in nature and revenue gets accrued over the period of time. So one quarter comparison to other quarter comparison will not derive anything.

No, very well understood that part. I'm just looking, actually the question was from the point of view that, so we have seen around 150 crores of delta in our EBITDA on a YY business, let's put it that way. Should we build in a similar kind of number for 1QFI27 as well, or like it could be slightly lower than that? I mean, that...

So, see, as you said that Vishwa's enrolment... are upwards of 20% and total revenue is upwards of 36%. And I can guide you for an annual basis, there will be upwards of 100% improvement in terms of what we have demonstrated in FY26. But it is not advisable to stretch that column for the entire four years because this will not make the right model actually.

Understood. Thanks very much for that opportunity and all the best.

Thank you. The next question comes from Manish Adukia with Goldman Facts. Please go ahead.

Hi, thank you. Good evening, and thanks for taking my questions. A few questions, most of them are follow-ons to the earlier question of Sopnil and Karima. First one is just on the margin bit, you called out 19% margin in F25 going to minus 10 in F26 on offline, and plans for break even this year with mid-teens over a period of time. I just want to understand drivers of this margin improvement, apart from your center utilization improving as those cohorts mature, in your guidance of 13% to 14% margin, is there any pricing element built in as well? And if you can just break out how much of margin improvement from here to, let's say, 15% is pricing increase of courses versus just improvement in store utilization, that would be my first question.

So, for offline profitability improvement, we have detailed question, which is question number five in our investor shareholders letter. And the driver of… The margin improvement comes from a student-teacher ratio, which we are constantly improving. And currently, we are at 80s of a student-teacher ratio in our overall offline scenario. Second is coming through the seat utilization. And with the more and more seat utilization, currently, we are at a seat utilization as a metric. At two, at a company level, like total number of students divided by total number of seats, which is going to improve by 2.23 in upcoming years. And the average faculty cost is also coming down by introducing more from, more FTP, which is a fresher faculties in the cohort. And the ARPU improvement is consistently happening. So all these four parameters put together, and we have detailed answer in our shareholder letter that we have demonstrated in the past, and that is going to be the trajectory in the future as well.

Very clear. And thank you. And then on that ARPU point, when I look at, let's say, a shareholder letter, it talks about ARPU improvement from better course mix and longer duration programs, et cetera. So if I get that right, there is no pricing increase on a like-for-like course that you are building in your assumptions. It's just mixed improvement in ARPU rather than actual price increase in the course. Is that assumption correct?

So, see, if I dissect the business, exactly business, which is 70% of my offline business, like to like, ARPU is getting improved year on year. And the improvement is anywhere between 6% to 9% on an average level. But overall, ARPU, you would see slightly decreasing trend because of the mix. Mix is getting changed, and there are a lot of short-term courses which we have introduced, but if you see our offline trajectory, the enrollments are up by 42% and the revenues is up by 32%, so we are confident to have similar growth trajectories in future.

Got it. Clear. Second question, again, a follow-up to earlier question from Swapnil. On the K-12 Assetlight, and thank you for calling out all of those different dimensions of your K-12 business, but just to confirm, there are no plans to run schools. So, in the Assetlight model, you called out things like Curious Junior boards, foundation, et cetera, but there are no plans to run schools at PW. Is that correct? Understanding?

So we are already running schools, and we have disclosed that in the past as well, and in RDSP as well. But the approach towards that problem has taken completely a satellite mode. So we will have a couple of brownfield types where existing schools, six schools, we will take on management control. But since that number will be in single digit, the overall revenue contribution from school is less than 1%. So it's not fair to spend time on this question again and again.

Got it. Very clear. And in that case, just to follow on what you said in the previous earnings call, where I think I recall that you mentioned over a period of time, that segment could end up becoming bigger than your test prep. That does not hold to any more.

But right now, we saw good growth in online, and I think Tier 3 and villages are still waiting for us. So the complete company focus is right now on online only. And we hope and we know that there are segments in Rajasthan where online school has been legal. So we are waiting for these kinds of things to happen where the things turn online. So we are focusing more on state boards, students, junior boards, CUVT. In terms of school, SIP is a program through which we can reach out to schools. And of course, as Prateek told, that there are single-digit number of schools that we are running. So this is very, very small, and we are doing management over there. There is no CAPEX.

Very clear. Just last question from me on the NBFC. So you mentioned 70% of the students are PW students and 30% are non-PW students. So we just want to, again, understand a bit better as to what is, like, PW's right to win in the non-PW students in terms of giving them loans, And what drives that? Can you explain that, maybe?

Yeah, sure. So, just to explain you, the number of students which we have served through MBFC is just 80,000 students, which is, again, less than 2% of the total pay to students which we teach as PW. So, there is no significant, significant contribution in terms of revenue through loans. And the 70% of the students... Our PW students and we have their complete academic track record and what we are trying to build is AI-powered ML algorithm which will underwrite students on their academic performances. That is the vision because we have the maximum academic data and academic profile of the student. At the same time, the 30% of the students, the same model, the same academic ability underwriting model is we are testing, and we have demonstrated less than 1% of MPA. We are going very slow and very meaningful in this direction, and this is more for enabling students. Alaph wanted to add something here.

Yeah, there is no meaningful capital allocation over this also.

Thank you so much. Thanks for answering my questions. All the best.

Thank you. The next question comes from the line of Karma Kapoor with Ritz Capital. Please go ahead.

Hi, team. Good evening. Thank you for taking my questions. So, these are more AI-centric. I think at the start of the call, Amitra had mentioned that... Sorry. Yeah, so at the start of the call, Amit sir had mentioned that Pw is an AI-first company. Given that we're seeing most companies making that claim these days, so was this like a generic statement in terms of Pw employs using AI, or does Pw have specific AI products that are for the students?

Yeah, thank you for asking this question. See, all the repeat tasks, Especially in education, the AI can do a lot of value creation and the repeat task, AI can perform much better. So what we have the unfair advantage in this AI era is we have 3.5 million students coming on the application on a daily basis and spending almost two hours on application with us and generating billions of data points. See, if you have to understand this, the AI race, we have the unfair advantage of these billions of data points with us, and this data we are using internally to develop the small language model. Effectively, if an AI tutor has to be built for Indian students, it has to be very affordable. The current Frontier Labs, the token cost is very high and it cannot be built for Indian students because what we teach at PW, the average of our online courses is less than 4,000 rupees. That comes down to 10 rupees per day cost of tutoring. And we deliver almost four hours of live lecture. So, that is the approach we have taken is to invest more and more in a small language model to make AI more cost effective for our students. And that is why we were able to achieve personalization in our megabatter with a fraction of cost. At the same time, we have been continuously empowering our online batch with AI-powered solution. More than 100 million questions is being solved. 100 million academic questions is being solved by AI Guru with very high accuracy. More than 2 million answer sheets, the students' answer sheets, the subjective answer sheets, has been evaluated by our AI grader with very high accuracy. And similarly, the RPI is another feature, which is an AI voice board, which solves students' doubt. But now, with the small language model, we will be launching our AI tutor, and this will be a world-class transformative tutor. This will act as a true companion for the kids, and it will remember all of your past mistakes. For example, six months before you have done any question wrong in any of the chapter, it will have that memory and it will not only... Increase the solving power of the students, but it will act as a true companion for the kids. So we are very committed to produce AI-led revenues this year, and this is the focus of our tech team at this point of time.

Okay, so I think follow up on that, given like we've heard about you working in terms of AI, but do you think India is behind in AI implementation when it comes to education compared to third world countries?

See, the problem India presents is very different. Still, 95% of the test takers doesn't take any formal preparation. So, I think in terms of application layer, I considered Pw as a world-class AI team and the company, and we were able to demonstrate that with our Ask AI, AI guru, AI books, AI grader at a scale. And with our Socratic AI Tutor and Revenue Generation through AI, we will continue to have a strong position. A couple of companies globally, which I benchmark in education, is not U.S. companies. These are some of the Chinese companies have done fairly good amount of work. With the PWS AI stack, I don't think we are anywhere lesser than a global education player.

All right. Thank you for taking my questions. I think I've gotten all I want. Thank you, team. All the best.

Thank you. Your next question comes from the line of Ankita from Amaya Capital. Please go ahead.

Hi. Hi, everyone. So, have you taken any prize hikes this year? What is the reason from a long-term outlook for the same, and is it both for offline and online?

See, the strategy remains the same for our online. The base batch prices is nearly the same because we stand for the access, we stand for the inclusion, for the education. But at the same time, Infinity, Infinity Pro, Curious Junior, Power Batch, all these premium strategy have been worked out very well for us. This year, we have seen higher attachment rate for Infinity and Infinity Pro, which is a product-led pure profit growth. So overall improvement in ACPU is more than 11%. And the majority of this contribution is coming from Infinity, Infinity Pro, Curious Junior, and Power Batch. So that strategy is playing out quite well. Still, a lot of students opt for a base batch because they cannot afford premium batches. Uh, but, uh, But overall improvement in ARPU is 12% and the similar strategy is for Vidhyapeet as well.

Okay. Okay. Thank you.

Thank you. Your next question comes from the line of Prateek Maheshwari with HSBC Securities. Please go ahead.

Hi. Thank you for the opportunity. I was looking at question 4 from DRSP where you guys have detailed Vishal's performance year on year. I still wanted to request if you could double click on how should we understand the signals out of it, right? So overall, if it has grown 36%, right? Like what should our takeaway be for effect being 7 or beyond from this metric?

So, we will grow revenue at a more than 30% rate for FY27, and upwards of 100% would be our eye gap of the improvement is what we are guiding to the market at this point of time.

Just one thing for this offline, we believe online will obviously grow faster. That is where all, you know, investments on energy of the company is growing, like Alex also mentioned. I think it will still be closer. Offline will also come strong, you know, probably a couple of percentage lower. But we still believe at a full year number, 30% year-over-year growth is what we are still projecting. In terms of Vishwas, there was The numbers that we have reported, I think one of the reasons for that is largely, you know, those are early signals that help us start, you know, our planning sessions in terms of how we start building batches, you know. So, year-over-year basis, that gives us significant confidence as we continue to, you know, start getting into the academic session when our batches start operating, which translates into accrued revenues over the Q2 and Q2.

Right. Also, on one of the previous questions you all mentioned about seat utilization. So, the seat utilization that I heard was about two times, right? So, I just wanted to understand where this could get because there is also interplay of... Other than J in 8 categories, right? So just wanted to understand, depending on your center growth and new category growth, what should we kind of think of as a steady state for the

C2.2.5 is the number, what steady state number is we have taken our model. And since our center runs in two shifts, some centers runs in three shifts, some centers have a three days program, some centers have a weekend program, so currently they are guiding only for 2.25 as a steady state number, but this may improve with time.

And this is for our VP cohort only. So I think that is how you should probably look at it in terms of our vidya feed cohort is, you know, what we are looking at from the feed organizations.

Okay. And is it correct the VP cohort would largely be J-E-A-N-E-T and not other?

Yes, it's J-E-A-N-E-T. 70% of our off-end users is J-E-A-N-E-T.

Okay, okay. And lastly, just if we do break up on online margins, so online margins would be somewhere around 26-27%, right? If the offline margins are around minus 10, right? So I would concur that probably your JE and need categories which are gradually becoming lower than 30%, right? It would be highest margin category, right? While the state and foundation categories are kind of, uh, Scaling really fast. So, just wanted to understand, when we see foundation state category improving, are they improving a lot more in depth of margin expansion as well?

Yeah, both top line and bottom line are improving because the online essentially is a very profitable model. It gets for first few months of operation, it starts getting cash. And at a gross level, you are thinking in the right direction.

And so, should we, from here on, should we see a strong expansion on online margin as well? Because probably as we...

Yeah, yeah, yeah, yeah, that is, that is...

The new categories will scale more, have more number of students, and the cost will remain almost same, definitely.

Because every additional student in our online batches is not top line, it's bottom line.

Okay, thank you. Those are my questions.

Thank you. The next question comes from the line of Dhvanit Shah with PL Capital.

Please go ahead.

Yeah, thank you for the opportunity and that's a good set of numbers. Just a couple of bookkeeping questions for me. What would be the number of student dropouts during the year and can you also quantify the reference given to the student dropouts? Yeah, that would be the first question.

So, the refunds and the dropouts at a blended level is less than 2% overall for the group, and that is completely in control, in line with our projections, and, yeah, and overall... It is going in line with our projections.

And we are very generous, then it is two percent. So we are very brand sensitive.

All right, all right, sir. And, sir, another question will be that as compared to the earlier participant, the 36 percent growth, can you quantify that number? What number would be the vision day sales? I witnessed a 36% crore. Can you quantify the number?

That's 36%? I'll just say 200 crores worth of sales in just one month. Worth of collections through Vishwa Zivas in just one month, which is three weeks actually. 200 crores of the collection. It's a sales event that we do.

Okay.

Great, sir.

Ladies and gentlemen, we will take this as our last question for today. I now hand the conference over to the management for closing comments.

So, as we mentioned in our shareholders' letter also, and the initial trends of this year looks very strong, very promising. A couple of things I wanted to highlight, which we haven't covered in shareholder letter. This year, need examination got cancelled because of paper leak. So, and this has happened in FI24 as well. It has nothing to do with our business. It's just a cyclic shift of student enrollment from one to another, but this comes with one of the biggest opportunity for us is that need from FY27 onwards will become online, so that will, that may drive this category on an upwards enrollment in our online batches as well as we are planning to launch a dedicated test series product. But not just for need, but for all exam categories, but of course, there will be great affinity in the deep market and it's our biggest market. And as well as whether in terms of the global macros, it is counterintuitive to our business because education is a non-discretionary spend of any household. And people may not spend on groceries, but it is just themselves.

It's sad, but incidents like this actually make students shift more towards online. So that same thing happened in COVID. And so that's the nature we operate in. And on an ending note, I would like to say that me, Prateek, the CFO, Amitsar, and the whole company is running for online. And we are damn focused for online. And we see great opportunity in online. We stepped into a scale board, and that is scaled like 10x this year in terms of revenue. In terms of enrollment, it scaled 10 years this year, 10 times this year. And same thing is happening with board, CUET, foundation. So the company focus remains largely on online. And talking about the offline expansion, so we'll be closing the list for offline expansion once we end up the enrollment for this year, and then we will take a balanced approach about it.

And in terms of our southern India expansion, this is going in a very direct direction. We got some very good success in Telugu market, Andra and Telangana, as well as we are in talks with southern market asset to expand further and deeper in south market, as well as there are a couple of talks. To have partnership with online first player, which allows us to have a partnership, which we did like Sarthi. So continuing to remain focused and keeping learners at the center of all our discussion, we keep on investing heavily on AI, and we will produce the world's first Socrity AI tutor, which will create a large impact. And if I have to touch upon quickly, the course completion rates of an AI tutor is very high in terms of any of the categories I have seen because it is truly acting as a companion. And when we talk to the young learners, they are more comfortable to asking a doubt to an AI than a human because AI don't judge them. And they can repetitively ask again and again a silly doubt also. And a machine will not get tired, not get emotional, not get angry at the student. So this is a great affinity which is coming from the student side. And we are blessed that the first digital purchase of any kind of online course in India is happening with us. So, we have opportunity to become a lifelong learning partner with these kids, and the AI will have all kinds of personalization context right from beginning of the grade 6th, grade 9th, and it will be hyper-personalized to the needs of the students. We have been continuously, tirelessly working on it. And we will become the first company in India which will have an AI-led revenue, first consumer internet company, which is not just using AI for operational efficiency or increase in terms of conversion, but we will have an AI-led revenue stream. We have talked about a couple of new initiatives also, and a question number eight in our shareholder's letter. One of the achievements is we have launched earners category, which is a small ticket-sized skilling courses, and have done more than a million dollars in just one month of...

Yeah, one-pack student enrolled. So this is like affordable online skills, and these courses are like AI-enabled video editing, AI-enabled graphic designing, and AI core skills. So, we see good traction there, and we see, like, infinite time over there. So, we'll be going in there, and that is, again, one thing is online. So, that's the core message. The company is moving towards online affordability, which was the initial mission. I thank you, all of you, for coming to this call, and big thanks to all of you for supporting in this mission of supporting offline affordable education throughout Bharat and lifting up these kids. Thank you so much, all the investors. Thank you so much, all the bankers and everyone.

We are planning an investor day also in upcoming months. We would like to see your participation there. Thank you so much.

Thank you. On behalf of Physicswalla, that concludes this conference. Thank you everyone for joining us and I'll disconnect your lines.