Physicswallah Limited (PWL) Q1 2027 Earnings Call Transcript

Good evening, everyone, and thank you for joining Physicswala's Q1 FY27 Earnings Conference call. We hope you have had the opportunity to review our financial results and shareholders' letter, which have been uploaded on the stock exchanges and are also available on our Investor Relations website. Joining us today are Mr. Alak Pandey, CEO and Hold-Time Director, Mr. Prateek Bhu, Full-time Director, and Mr. Amit Sachdeva, Chief Financial Officer. Before we begin, I would like to remind everyone that certain statements made during this call may be forward-looking in nature and should be read together with the risk factors disclosed in our public filings. We request participants to limit themselves to two questions at a time and rejoin the queue for any additional questions. With that, I would now like to hand the call over to Mr. Amit Sajdeva. Please go ahead.

Hi, thank you. Good evening, everyone. Thank you all for joining our first quarter earnings call for physics column. We are making good progress across all our education categories. Our focus now is to continue to build online early learning and capable business, which has grown by almost 88% year-over-year. We are also tracking well on our offline business with focus on center-level cohort profitability. Like always, we'll cover our financial results, key business, and other updates. And in the last, we can open the call for questions. Our online early learning in K-12 includes foundation, pre-foundation, Curious Junior, Commerce, SIP boards, including our state boards. We will talk about these exam categories in detail as we go through the call. In terms of our quarterly results, we are happy to announce that our first quarter revenue from operations closed at 1,054 crores, an year-over-year increase of over 24%, in line with what we were expecting. Revenue from online grew 33% year-over-year, and offline and other businesses grew at 16%. Our Vishwa's diverse collections and early enrollments have been very encouraging across all our exam categories. As we had mentioned in the Q4 shareholder letter, our business continues to scale with the cyclical nature of the academic session as enrollments continue at the start of the year and batches commence progressively in line with the academic calendar. Given this seasonality, our first quarter pre-indice EBITDA closed at negative 44 crores, equating to 4%, with an improvement of 624 basis points from Q1 of last year. Our profit before tax for the current quarter was at negative 84 crores, against 152 crores for last year, same quarter, and improvement of 995 basis points. We also took a one-time non-cash charge on account of our additional stake purchase in Sarti IS, largely due to better-than-expected financial performance of Sarti. EBITDA was positive in Q1, closed at 52 crores, compared to negative 21 crores last year, same period. Like I said, pre-indice EBITDA of minus 44 crores as against 88 crores of last year's same quarter, an improvement of 624 basis points. All of this happened, you know, through all our leverage coming through our cost items. Our employee costs without ESOP costs were lower by 2.6% as compared to last year. Also, our current quarter use of costs remained flat in line with what we had expensed in the first quarter of last year and gave us a leverage of 117 basis points. We continue to see leverage on our distribution and marketing expenses. Our marketing spends for first quarter were 128 crores against 117 crores and improvement of 172 basis points year over year. Also, as part of improving our quality of reporting, we have committed to initiate segment-level reporting and post-discussion with our auditors, we have reported revenues and EBITDA separately for online and offline business for the first time. We've also provided a reconciliation of, you know, the online EBITDA and offline EBITDA along with our overall EBITDA. Given our academic and cyclical nature of the business, we believe full year view of our segments will provide meaningful direction to our business. This was also one of the key reasons for us to report the financials on the last day that was permissible. One of the impacts that we saw in this quarter was the NEET examination patent change. We did see an impact on our collections and enrollments across our court business and our subsidy asylum. We do believe while NEET's UG calendar shifted by five to seven weeks this year, our collections post the results announcement on July 16 have been encouraging and we've seen almost 50% growth as compared to last year. PW is now moving beyond its strength in test prep to build a complete learning journey for students, starting much earlier with online early learning in K-12 education and continuing all the way through competitive exams, higher education, and skills. The idea is to use the same approach that made PW successful with our earlier categories, like classes, affordability, online first teaching, focused on outcomes and bring it to young learners too. We've almost doubled our revenues from this category over here and we will continue to build on this. We have detailed this in question number 3 of our Q1 shareholders letter and remain bullish on this category to grow. In terms of our overall treasury and cash position, as of June 30th, our treasury is 5,600 crores, including IPO proceeds of 2,000 crores. Like I mentioned last time, our capital allocation will largely be towards new online content and categories, both organic and inorganic. Our approach to offline expansion will be opportunistic and limited to geographies that fit into our cohort economics. Accordingly, new centers' planning would probably get decided over the next two quarters. We are also keenly looking at AI-first opportunities that will complement our offerings and what we are building as part of our personalized AI tutor investments. I'll take a moment here, hand the phone to Alexar now to provide an overview of our business and new initiatives that we are now taking in the business. Alexar.

Thank you so much, Amit, sir. Hello. Good evening, all. A very happy Independence Day in advance. So, the results are amazing, as expected, and everything is online, in line with what we were expecting this year. A couple of things to tell, that apart from our test prep business, which has been going as usual, growing as Amitsar has rightly quoted. So, apart from test prep and the competitive exams, we have stepped into the school exam preparation, the K-12 online business. This is pure asset-like, pure online business, the online tuition. It has grown by 40%, 41% enrollment-wise, from 0.55 million to 0.78 million. Revenue-wise, it has grown by 88% year-on-year, from 56 crores to 105 crores. This includes P Foundation, Grade 6 to 8, Curious Junior, our state boards, categories across different states. This seems to be a very promising feature for us. More and more students who are going to school are opting for online tuition, and this is a huge another market. State boards is a sixth CR camp across India. And apart from that, the grade 6 to 8, grade 3 to 5, so everything we are exploring, and it is growing tremendously. Apart from this, we were investing in a category called NEAT-PG, which may become a big category. We have seen competitors doing immense business in this particular category. This year, we have seen NEAT-PG enrollments growing approximately by 50%, and the collection are growing by 100% in NEAT-PG. This category is a big bet for us. Apart from this, some of our competitive exam categories like CA, CAS, ACCA, witness and enrollment growth of 30%. So all this is in line. As rightly said by MSG. As directly said by Amiti, that there is a kind of trend that can be seen around NEET enrollment, and we have highlighted this in the previous quarterly meeting as well. This is primarily because of the shift in the cycle of the NEET examination, which happened in 2024 as well, and annual basis, we saw no change in the overall enrollment in 2024, and similar results we are expecting this year, and we can witness this happening in July as well. So, the enrollment for NEET have shifted. The online, if you see the growth of online, we can witness at 33%, whereas the offline growth, if you see, is growing at 14%, because a large part of our offline comes from NEET examination. So, the enrollment have shifted by five or six weeks, so we can witness that enrollment and that growth in the next quarter to come. So that's all from my side. Everything is in line. As we said, we are not doing any new capital allocation. No new surprises are going to come from here. I hand it over to Pratik, sir.

Hello, good evening, everybody. Amit and Alek have given the update over the numbers. I would like to touch upon a couple of new initiatives, which we have entered this quarter. One is the launch of the PwBooks app, which is a digital book learning experience. A very solid initial traction in this regard, which we have covered into our shareholder letter as well. Along with that, we have created a new category for a skilling called earners. In which a short-term skilling courses have been provided regarding digital marketing, graphic design, AI-led courses, which is shaping up quite, quite well. Along with that, a Pi, which is our OTT learning platform, and a PWTalk, which we have mentioned in our earlier shareholder letters, are continuing to grow rapidly by 130,000 enrollments in Talk and 40,000 enrollments in Pi. Along with that, AI remains the core focus. area for the company. We have launched Ask AI, which is a doubt-solving, AI-led doubt-solving engine within our batches. Now we have witnessing majority of our doubts are now being solved by Ask AI, which is a great achievement by a product team. Along with that, we are creating a companion AI companion for the kids and an AI tutor, which is a one-to-one Socratic AI tutor at a very affordable price. This product is already in beta phase, and by next quarter, we will roll it out to our students. Along with that, AI-led efficiency is also taking in within the company. You can see the leverage coming in our people cost is because of some of the AI-led automation which we have achieved over the period of time. Along with that, a couple of numbers I would like to highlight is a strong online growth, 33% revenue growth as well as almost 600 basis point improvement in bottom line. Offline also, we have witnessed 14% revenue growth as well as 400 basis points improvement in our bottom line. A couple of specific updates, which we have already spoken. Vernacular, which is a vision to make a Pan-India brand. We have 1.7x jump in our enrollments and revenue in vernacular categories. K-12, like already spoke about, like 41% jump in enrollment and 88% jump in our revenue. Along with that, our state board, which is a huge, huge stamp, the enrollments are doubled, so does the revenue is doubled. So, there are a couple of achievements which we have demonstrated in our shareholder letter as well. Along with the capital allocation, we have decided to divest FinTech and we have already received a couple of interest and signed two non-minding term sheets. So, probably in a quarter timeline, we will be able to achieve this divestment. So that is majorly from my side and we can open the house for questions.

Thank you very much. We will now begin the question and answer session. Anyone who wishes to ask a question may press star and 1 on their touchstone telephone. If you wish to remove yourself from the question queue, you may press star and 2. Participants are requested to please use handsets while asking a question. We also request that you please limit yourselves to two questions only. You may rejoin the queue if you have any further questions.

Ladies and gentlemen, we will now wait for a moment while the question queue assembles.

Our first question comes from the line of Anmolgarh with Dam Capital. Please go ahead.

Hi, thanks for the opportunity. A couple of things that I wanted to understand. Sir, while we have indicated that there's a 50% growth in our online business for August, but if you can indicate on a like-to-like basis what could have been the growth in this quarter if meet exams were happening on time based on the registration as we have seen in early Q2. And also as a part of that, you can also indicate that what is the total registration in the repeat batch for us.

So, hi, Anmol. This is Vikram Daszai. I lead Investor Relations here at Prazeekswala. I think the offline revenue growth that has been witnessed to the tunes of 14% for this quarter, YOY, would have been to the tunes of 20% to 25% had the need examination cycle would have sort of been, you know, been over by both of me in terms of the exam, and if the results would have been out timely, which is early June. So if that would have been the cycle, I think the revenue growth would have been to the tunes of 20% to 25%. And definitely that would have flown into our margins as well, because most of the costs, as you would imagine, in the nature of business of ours are pretty much fixed. But having said that, I think this is just a quarterly shift for us. And as Aleksar had already highlighted, we definitely see that more so from a year-long perspective, we are pretty much in line to deliver what we have, you know, sort of provisioned in terms of our annual operating plans internally.

And also if you can indicate on the online side as well.

Sure. So on the online side, again, in terms of enrollments, I think we would have seen at least one to one and a half lakh more enrollments in terms of the need. But having said that, our online mix is right now very well diversified in terms of the number of categories that we have. So even, you know, with the launch of earners and few other categories that we have now launched, the enrollment has largely been compensated for by these newer categories that we have launched within our online mix.

Uh, secondly, uh, so are we planning to introduce, uh, you know, star teachers into our offline business and, uh, can this be a drag to a margins in near term? What is our, uh, is our margin guidance? Uh, does it remain same that we'll be break even by the end of this year?

No, no. So, I think the overall guidance for offline business is near profitability this year. We are confident that we will achieve those guidance. And overall, we are improving the teacher quality and the delivery and the experience of offline. And that is what we have guided in our last call, that that is coming from slower expansion as well as more focused approach. There is no abrupt increase in average teacher costs in offline. Start teacher launch in online. Is that the question?

Start teacher launch in online? We produce our own teachers to our security training program and there is a batch size of 80 students only. So there we don't have a single teacher teaching thousands of students. So there is no star teacher culture in the offline.

And we are improving the student-teacher ratio. We are improving the average teacher cost. So, and that is being delivered in overall profitability of offline. So, yeah, no major surprise there.

I understood. And one last thing is, you know, if you can elaborate on the cash side, what are the type of acquisitions that we are looking on, particularly on the online side of the business? Do we want to diversify away from STEM when we are looking towards M&A or is it more towards a geographical or a language type of expansion that we are looking for?

This remains the same in terms of critical expansion or in terms of geographical expansion. The focus is to have online assets and overall treasury is 5,600 odd crores as of 31st July. And we have a detailed question over question number 6 in section D in our investor shareholder letter, so you can refer to that.

Sure, sure. Thank you so much, sir, for answering your questions.

Thank you. Our next question comes from the line of Gaurav with Axis Capital. Please go ahead.

Yeah, hi. I just had a few questions. First of all, you know, your enrollment growth you mentioned has been impacted because of Neat. But Vikram, even you gave some numbers adjusted for the neat impact. You know, the online would still have been say around 19-20% and offline would have been another 20-25%. Where do we stand versus our guidance for the full year's revenue of 30%? I just want to check whether you're sort of maintaining that guidance as of now.

So, Gaurav, essentially, as you rightly mentioned, right, so NEAP would have had that impact. But having said that, I think, you know, government exams also was one of the impacts in terms of how the Q1 enrollments have shaped up. But having said that, I think at an overall revenue level, you know, we stood at around 1054 crores against 847 odd crores that we had delivered in Q1 F525. This is the primary fundamental sort of a metric that you should broadly look at. While we did around 847 odd crores in top line in Q1 FY26, the overall number that was there for FY26 was essentially 3,900 odd crores. So similarly, I think from a 1,054 odd crores top line that we have delivered in Q1, we are largely in line to deliver, you know, the annual operating plan that we have for FY27. Having said that, I think there would be an interplay that would keep happening between the enrollment vector as well as the ACPU vector. These two should not be taken as rigid metrics to sort of plot our business model for future. You know, there would be a certain trade-off that would keep on happening between these two. But largely in terms of the top line that we have committed, we would be, you know, largely aligned with our AOP.

To add on here, the annual guidance was 30% revenue improvement and 100% EBDA improvement remains the same.

Good. Got it.

The second question, you know, in terms of if you could just talk about, you know, the outcomes which we are seeing in NEET and JE and, you know, where we are versus where we would like to be and, yeah, so, and what are we doing to sort of improve those sort of outcomes over a period of time? Thank you.

Yeah, so the outcome has never been a challenge in our online category. Online, we have been delivering like mega results since the inception, and people are very receptive and very appreciative of our online results, the mass results, the maximum number of selection across NEET, JE, or even in UPSC, CEA, any examination. We teach maximum number of kids, so we give maximum number of selection. When it comes to offline, then people always compare us with the results of our competitor. Without taking any name, I would like to address that. So we are investing towards results in the offline segment, and that is one of the core reasons that we have somehow slowed down the offline growth, working on the unique economics in offline and better results in offline. And that is what we have talked about in the Investor Roadshow and the previous earning call as well, That will slow down the offline expansion, not be that aggressive as we were, and focus more on the results. And this year, we are working on the results vertical and investing on that. So if you talk about this year's results, so we delivered the maximum numbers of need selections and JEE selections compared to any coaching in India. And we claimed it, and these are verified results. We published it. So, yeah, the number of results are superb. Talking about the top results we talk about, yeah, we have a couple of ranks in the top 100 this year as well, and we are making our share of top 100 increasing by 5% or 10% year on year, and we are working on that, we are investing on that as well. The path is, the vision is to become the most result producing, the top result producing centers in offline and to beat anyone out there. Offline is not about affordability for us. It is about the top results. We are very much into the game and land on the results. This year only we produce Aulia Rank 1 in International Junior Science Olympiad and we beat anyone out there. So offline is the competition for the top results. Online we are already winning the result vertical.

Thank you. This last question, Pratik, you mentioned this year, like you have been saying previously that, you know, you were sort of going to be doing near break-even for the offline. How should we think about the online business in terms of marketing?

So, the online business, if you see the first quarter numbers itself, the revenue is up by 33%. The bottom line, we have improved by almost 600 basis points. And in terms of online business, we have bucketed the entire business into three buckets, and we have covered this in our section B of our, you know, section C of our shareholder letter. One is very high profitable categories like J-E-Mail, C-A-M-B-A, Commerce, Boats, and another bucket is path to higher profitability categories like gate, UPSC, state. PSEs, foundation, government exams, and a couple of state boards. And there's a third segment, which is slightly loss-making categories in terms of neat PG skills, furious junior, or vernacular, which we have ventured quite recently. But there is the great improvement in terms of MealPG numbers, Skills numbers, Curious Junior numbers. You see, Curious Junior alone have shown improvement in 67% enrollments and 150% collections. But still, this year, Curious Junior online business will become breakeven. So, overall, online margins are continue to be strong, and Vikram will add on the specific numbers here.

Sure. So, last fiscal year, we witnessed around 27% margins. As Pratik, sir, already mentioned, I think, paths to higher profitability, some of these categories, UPSC, CATE, Foundation, and State Boats, we are already seeing that they are approaching towards higher profitability and much more categories like JE, NEET. So, margins from here onwards are definitely going to improve. I think within this fiscal year itself, we are seeing good improvement in terms of our online margins. As and when the neat PG and vernacular and curious union categories wherein we are consistently investing over the last few quarters, these also start breaking even and, you know, contributing towards the EBITDA margins. We should see, you know, the overall margin expanding. Having said that, the online margin that we have planned within our annual operating plan, we see that we are largely there, and we feel that we'll be able to deliver on whatever we are planning in terms of.

I understood. Just last thing, last question for me, on the offline side, you know, there is obviously a healthy improvement in ARPU, and, you know, the ARPU had sort of fallen last year. So, is it more Vidya feet, or is it, if you could just give us some sense of, you know, what are the interventions which have been taken to sort of reverse this ARPU decline?

So, Gaurav, the last year, ARPU was largely in line with the mix of the business, you know. So, what we have consciously, if you look at the first quarter itself, we are up on 7% in terms of our offline ARPU. The last year was largely a mix of, you know, shorter term courses, and obviously the interplay of what we were doing in UC and, you know, Dylem, smaller time courses, was the reason for the ARPU place. In terms of... Our approach towards, you know, decrease, like Alexa said, our clear path to, you know, profitability of a steady state of 13% to 15% will largely come in from an ARPU player and improving the outcomes, you know. So those are the two clear matrices that we are following in offline. With this year, cohort getting to near profitability.

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

Hi. Thanks for the opportunity. So, so in terms of disclosures, I was just trying to look for the enrollments between categories like you guys had earlier provided for GE versus need versus foundation. And I remember seeing your previous question, isn't that foundation or reaching closer to your largest category? Right. So, so just wanted to understand like how much behind what foundation and other categories like state and COT would be in terms of Margin versus the flagship category, and when do we see those also, all four of them kind of hitting the strong margin that you are expecting, right? So that's first question if you can answer.

So, see, already the categories which you have mentioned are profitable, but if you talk about specifically, Vernacular have 70% up in enrollments, Chateboard has 100% up in enrollments, QGIS Junior, which is again part of K-12, has shown 67% improvement in enrollments and 150% improvement in connections. So generally, these are hyper growth categories and steady state margins will take some longer time. And these are some growth vectors for us. In terms of what we have anticipated, we are completely in line with our internal operating plan, and we are confident that we will create a large market in these specific categories. Early traction remains very strong, and we will continue to show growth on an annualized number. Because of the cyclic nature of the business, we haven't disclosed that specifically in our investor-shareholder letter, but we will do that at an annual basis.

Great. Just to double click on that. So, because foundation is reaching closer to your need category in terms of, if I just look at the student enrollment scale, could you just explain what's the difference in the cost structure? Where do you probably need to invest more between foundation and need? Like, we are just trying to understand how, at what scale, probably foundation would be as profitable as need.

See, the cost structures of foundation is typically lesser ARPU as compared to the NEAT as well as lesser average salary cost of the teacher. But that's very deep market as compared to JE NEAT. So, steady state profitability, we anticipate, will be much higher than NEAT, but it will take longer time to reach a steady state. Already, the current margin profile is not a big delta between need profitability and foundation profitability, but at a steady state, it will definitely beat our flagship categories.

Okay. And the second question was on your offline business. So, last year, we remember that it was intensive competition between your peers, right? So, could you just mention how it is this year? Are you guys seeing similar levels of aggressiveness or if it has moderated any bit this year?

Yeah, so we are continuing to show ARPU improvement in our Vidyapeer, which is 70% of our offline business. And we have already demonstrated 7% ARPU improvement. That shows that despite the intensified competition, we are continuing to show the higher ARPU in our offline business and where our competitors' ARPU is almost flat or shrinking. So that is one testimony of a great experience which we have created in offline. And with better and better results, we could be able to increase the ARPU. And we have taken a conscious call that our offline business is not an affordable business. We intend to become number one in terms of ARPU, in terms of results, in terms of all the matrices in our offline business. The entire focus is to control bottom line and improve experience, and we are committed to achieve near profitability of our blended offline business.

Right, and so in your Vigrapeed category centers, right, how should we think about the utilization, right, at the current scale of centers, right, where are we on the utilization and how much could it improve if you could explain this?

So, we track student-teacher ratio and overall seat utilization, the total number of students divided by total number of seats. And on an annual basis, we try to, so historically, we have demonstrated a feature utilization metric going from 1.77 to 1.99. And with on an average 5 to 7% improvement every year in terms of overall utilization, this number will have slightly more improvement in future while we will not expand as aggressively as we have. expanded in the past. Along with that, it's not just the seat utilization which drives the overall profitability of offline. Other metrics are non-academic to academic ratio. Overall, Vidya Pete is becoming more academic in nature, and there are a lot of central level cost optimization, a lot of automation which we are driving, a lot of fresher faculties which we are hiring and training, and that ratio also we are increasing. And the student-teacher ratio, which used to be in the 80s, will become higher this year. And all these parameters are combining, driving a bottom-line growth.

Thank you so much and all the rest.

Thank you. Thank you. Our next question comes from the line of Swapnil with JM Financial. Please go ahead.

Hi, thanks for the opportunity. My first question is in your cash position. It seems on a quarter-to-quarter basis, your cash position has gone up by 600 crores. Can you just explain us what has happened over there?

Again, this is a cyclic nature of business where it's a negative working capital cycle business where a student pays the fee suffered, and that remains in our treasury. So that is one primary reason that quarter, specifically quarter one, if you compare the cash position from the last year, it has improved by 600, from last quarter to this quarter, it has improved by 600 odd car roads. And this is a cyclicity which will happen every year from quarter four to quarter one.

This is basically the collection, sir, that you generate, right? Yes, it is.

So the nature of the online business is it's like R2 of 4000 rupees. So it's a one-shot payment by the students. So they pay the upfront fees for the entire year. So that is the primary nature of the business itself.

And the second question is with respect to some of the new initiatives that you talked about, you know, PW books and a bunch of AI-driven initiatives. Where do you report these new initiatives? I mean, between the three segments that you are reporting right now.

So, the first reporting happens on YouTube. If you want to take a close track, you will find a lot launching these new initiatives on YouTube every now and there. But as a company, we report these initiatives. Little later on our shareholder letter, once a new initiative gets launched among the students and is being used by 100,000 paid students, then generally we try to report in our shareholder letters. For example, initiative of Books, which we have reported this year, team, has been working from one and a half year. That actual launch of that application happened one and a half year back. And the current Play Store rating is 4.7 and there are 2.2 million downloads. And specifically, this is the Books has been launched almost two, three months back by Alakon on Internet. So this is how, and specifically for any new initiative in education, you have to take a pilot of one and a half years to assess the learning outcomes, to assess the engagement levels and retention level of the kids. It's a slightly longer life cycle, but there are a couple of new launches also happening in terms of AI, like, you know, as I mentioned, AI Tutor, AI Companion. Since we have already covered, since we have already seen success in AI-powered digital books, we will be launching these initiatives in this financial year.

Actually, my question was, like, how do you report the revenue in which segments or the cost associated?

So, for example, digital books is completely online, so we report in our online business. Pi is another online, Talk is another online, and if the nature of the new initiative is not online, then we generally report in other categories.

Okay. And have you changed the segment reporting a bit? Because it seems your Q1, FI 25, 26 numbers have been restated. Is there any change in the reporting of revenues? Correct, that is correct.

You know, so I think there were some changes that we had discussed in terms of the allocation done earlier to now. Like we said, this is the first quarter we are reporting, you know, segment reporting. So I think it will be nuanced after discussions with the auditors. But you will see a little bit of, you know, change largely towards the accounting of our B2B revenues and a couple of, you know, our others' revenues that was earlier, you know, treated under the others. Thank you.

And just the last one, there seem to be some Parchala centers have come down on a quarter-to-quarter basis. If I remember correctly, you had 84 centers in Parchala at the end of March. Now, you have reported 70. Have you closed down these centers, or do you report only the active centers? I mean, what is happening?

Great observation. Thanks for calling it out. I think the trajectory of a mature Pachala eventually becomes, you know, where we see the extraction becomes a Vidyapeet, you know. So technically what happens is once you create a certain, you know, size and scale into a Pachala, that becomes our bigger Vidyapeet because we feel, you know, we can actually turn that center into a much larger Vidyapeet center. And we, you know, we technically do not close any centers.

So, zero parcela has been through. Actually, those parcela's were converted into database.

Got it. Very clear. Thanks a lot for the opportunity and all the ways, guys.

Thank you. Our next question comes from the line of Ritwik Agrawal with 3P Investment Managers. Please go ahead.

Hi, I have two questions. My first question is, in terms of enrollment versus 1QFI26, I don't see a strong growth, even after considering a 2 lakh improvement in terms of need enrollment. There's only a 5-10% growth, is that the right observation?

Yeah, the observation is right, but the need enrollments have shifted from quarter one to quarter two. And there is a deep decline in terms of government exam notifications. And because of that, one of our subsidiaries, which is Utkarsh, have significant 800k enrollments overall delta, which is true. But if you see, the nature of the government examination notification is very cyclic. And you will see some of the spikes in upcoming years in terms of enrollments. But overall level, as you see, PW itself, we have shown 8-9% improvement in enrollment in quarter one alone. So, net-net level, we haven't anticipated any major delta because of this enrollment. It is just a cyclic meter which is getting shifted from one quarter to another.

I think, one more thing, how we should probably look at it, is the H1 numbers consolidated because I think the change in the admission cycle of need. Plus, you know, new notifications that we are anticipating. What we believe is, you know, the right number, eventually, you know, the proxy of that will be the revenue, like we talked about earlier. And the fact that, you know, when you actually look at year-to-date number, that will give a better proxy when we look at the, you know, the overall picture, both in terms of PW as well as all subsidies put to flow.

Understood. And the second question was on offline centers. We have added approximately 63 offline centers, but the enrollment theme has not improved a lot over there. So is this again because of NEET?

Yeah, so that is primarily because of need because the majority of our business, offline business, is JE need business. And because of the re-examination, students took a longer decision time to join our offline center. So there is one and a half months delay in terms of re-examination and then re-result. So that is primarily because of need only.

And one final question, do you guys also report collection for, you know, collection growth on a year basis?

No. I think the right process to look at, you know, the right process to look at it is our contractual liabilities on the liability side in the balance sheet. A good reflection of that you can see because collections is like on the business is more relevant metric for online and not the offline business. That's the reason online is reported at an ad pool level and offline is actually reported at an ad pool level which is a full year metric right for, you know, the right parameter for the offline business.

Right, that's good. Okay, good.

Thank you. Our next question comes from the line of Rajateep with Earth Nithi Capital. Please go ahead.

Hi, everyone.

Thank you for giving me this opportunity. I have two questions. In my first question, I want you to explain broadly what you exactly do in school-integrated programs, and what all regions are you covering? School Integrity Program is a Pan-India program in which we... We do partnership with existing schools and send our Wikipedia faculty so that students can prepare then and there within the schools. And that partnership number grew from 15 schools to more than 15 schools last year. And, and overall, it is a great program for the students to save time and, and focus and time in terms of going to school as well as preparing for. It's a completely asset light model in which we take some guarantee from, from school as well in terms of number of students admission as well. Okay, hi.

So, in my second question, I would like to ask you how large is the K-12 market and who are your key competitors in this segment?

See, K-12 market, there is no significant competition as such. We are a category creator and a small market leader at this point of time. But if you see the overall market size, the K-12 market is 250 million students all across categories put together. But the addressable market is the market of online teachers, which we are covering through Curious Junior. A great time market is State Board, which we are covering from our various State Board initiatives. We have doubled down in terms of our number of State Boards, which we operate from 7 to 14 now. And we are forming regional teams and regional teachers and regional YG distributions to cater to that demand of the students. And in a way, it's a great, great LTV business because if we grab them early and do the value addition at early stage, they become the lifelong learning partner to us.

Okay, thank you.

Thank you. Our next question comes from the line of Gaurav with Access Capital. Please go ahead.

Yeah, hi. Thanks for the opportunity again. Just a few sort of follow-up questions. First of all, in terms of, you know, you mentioned, you know, we should look at it on a YTD basis because, you know, a need sort of got pushed out. So can you give us some sense on what's the YTD sort of enrollment number for online, offline? Anything else you could sort of tell us?

See, in terms of YTD revenue guidance, we are aligned with a 30% improvement in revenue. In terms of enrollment guidance, we are not specifically guiding for any number at this point of time. But more or less, revenue guidance, we are quite intact, as well as inter-guidance.

Understood. And secondly, you know, in terms of the centers which opened in 2023-2024, you know, can you give us what would be the margin for these centers?

So, the steady state margin is 13 to 15 percent, which we are delivering in our 23-24 centers. Just calling out quota center here because the quota center, quota specifically city has declined in terms of student inflow, but remaining all the centers are now delivering 13 to 15 percent margin profile at this point of time.

No, actually, I mean, what would be the margin? So, you're saying the other centers are sort of at your, I just wanted to say what would be the margin levers for some of the newer centers? Sorry, I didn't come across clearly.

Actually, it's a very intelligent question. The margin lever for our, a couple of our early centers is we are thinking of a hybrid codes. Where the students need to come to the center at only twice a week. So that can improve further our student-teacher ratio, as well as overall capacity utilization. But still, that is again under the umbrella of our couple of new initiatives. But already we are delivering 13-15% margin profile, and we are continuously working on city-level results and center-level results. Once we have the majority over the city results, we can increase the ARPU. So ARPU becomes a good growth lever for future in Midyapit.

And this last thing, we request you to please rejoin the queue for any further questions. Thank you.

Our next question comes from the line of Dev Manish Shah with DAM Capital Advisors.

Please go ahead.

Hi, thank you for this opportunity. I have two questions. One is on the, in the offline piece, our other centers, what kind of drag, I mean,

where is that portfolio currently and what kind of drag is it contributing to the overall offline piece? And another one is in the last quarter, we had mentioned that around 60% of the 140-odd Vidya Peak centers were profitable. Where does this stand right now? Can we call out the percentage number as to how much is profitable at present?

Yeah, good, good question. So first, I will address the drag thing. So drag and offline is coming from couple of the new categories, which we have entered into offline business in past two years. Drag is coming from UPSC, government exams, CA as a category. In terms of overall profitability, Vidya Pete is... Vidyapid is delivering better as compared to the overall average number, both in terms of ARPU growth as well as bottom line growth. And in terms of profitability, I

think we had last time shared it across at the end of Q4 because we had the overall annual view at the end of February 26th. I think we want to maintain that cadence and mention it at the end of February 27th, given that we have a full year's profitability view only once we are through all the four quarters. Looking at it at a Q1 level wouldn't make a lot of sense, and hence, you know, we sort of avoid to share across that data. But we will be happy to revisit this at the end of the episode.

Sure. Is it possible to call out the percentage, the adjusted average percentage of the other centers?

I think the profitability metric for the offline centers would, at a center level, you know, would make sense at the end of the fiscal year. So, we would be able to share across that data once the year ends.

The point taken, at an annual level, we would like to give the cohort level profitability of Big Debit and overall offline business. Sure. Thank you.

Thank you. Ladies and gentlemen, we will take that as a last question for today. I would now like to hand the conference over to the management for closing comments. Over to you, gentlemen.

Yeah, thank you, everyone, and thank

you, everyone, for attending the call, and thank you, all the team members, for preparing us for this call and coming here. On the piece of the overall question, I could guess a lot of questions were forward-looking, and we really avoided the forward-looking questions, and the annual numbers will better make sense. On the question of the offline profitability, I would just like to say, in terms of offline profitability, we are improving like anything, year on year in offline profitability, whether it's Vidya Peak or the overall offline region is considered. Thank you so much for attending this call. We will be teaching whole India. Happy Independence Day, Ziva. Thank you.

Thank you. On behalf of Physics Walla Limited, that concludes this conference. Thank you all for joining us. You may now disconnect your lines.