Hello everyone, good day. A very warm welcome to all participants here.

I would like to brief the journey introduction about Physics Wallah. A lot of attendees on this call might be new.

Physics Wallah started as a YouTube channel back in 2016 by Alakh Pandey, and in 2020, it became India's largest YouTube channel, and that's where our monetization journey started. Company formation happened in 2020 with a very unique business model where we are teaching for everything for free on internet across now 250 YouTube channels.

That gives us a very strong social media presence, and that gives us a very strong top of the funnel. The model is very unique in nature where we teach for free on internet, and we launch our scheduled live classes, batches on our mobile application for various exam categories, currently now covering 40-plus exam categories, right from JEE entrance exam, NEET entrance exam to UPSC level.

This is our brief journey. Model is quite unique in nature where we call it as a zero CAC model.

Essentially, it is for free on internet, and that's how we get traffic on our mobile application, currently having 3.4 million daily active user on our mobile app and getting engaged for 106 minutes on a daily average basis. This is a quick brief journey introduction.

Back in 2022, we started our offline learning centers as well, currently operating more than 300 offline learning centers. Our offline model is also quite unique in its nature.

It's tech-enabled offline learning centers, which we have expanded. This is essentially to cater a certain section of the students who are distracted in online mode of learning, and their learning outcomes are better in offline mode of learning.

Our offline is just part of our online slightly, where 90% of the audience are studying in online mode of learning. 7% of our total learner base comes in our offline mode of learning.

Wherever we became number one in terms of number of students, we started our offline learning centers as well. This is a brief journey and a model explanation.

Along with that, we have created a great innovative culture in the company. If you ever get a chance to come to Noida, I would love to host you.

There are a lot of entrepreneurial energy on the floor and a lot of innovations which is happening at this point of time. Company stands for a vision and a mission that we want to make education affordable for every Indian household.

Highest quality education should either be free or it should be affordable. That is the vision which we are carrying.

Along with that, we want to become a lifelong learning partner of the students. This is something, a motto which all of us are living here.

Thank you so much for your continued support and showing trust on us. Together we are creating a great impact.

The students who had never access to good quality, structured learning are now able to crack JEE, NEET, UPSC, kind of world's largest and toughest examination. We are empowering India, which was underserved, and now it is creating equal access and opportunities to students out there.

Thank you so much. Handing over to Amit.

Thank you, Prateek sir. Good evening, everyone.

Thank you all for taking the time out to join the Q3 earnings call for Physics Wallah. We are overall very happy with our strong Q3 quarter results and believe that the education opportunity in India remains significant.

I take here a few minutes just emphasizing the results that we have published. Overall, the revenue growths remain robust in Q3 FY26, with total revenue from operations reaching to 1,082 crores, 34% revenue growth year over year.

Free interest EBITDA of 218 crores, translating into 20.2% margin. PAT of 102 crores, an increment of 9%, and this is in spite of the 23 crores of one-time expense that we booked in this quarter related to changes in the labor code and IPO expenses, which we just concluded on 18th of November.

In terms of the overall performance for nine months, we are happy to report that the growth came very strong in the overall nine months performance as well. Revenue was clocked at 2,980 crores, 31% year over year increase, and surpassed the full-year revenue of last year of 2,886 crores.

PBT EBITDA was close at 291 crores against 233 crores for last year. For the full year, in terms of full year nine months, we closed at a PAT of 45 crores, even in spite of the one-time adjustments of 37 crores for the nine months.

In terms of a breakup of our online and offline segments, our online segment now contributes almost 51% and grew at 31% year over year. Offline grew 26% year over year at 46%, its proportion of offline is now at 46%, and other contributes 3%.

Like we mentioned in the last earnings call as well, our playbook is to build communities and continue to increase our share of overall online revenues. That is the focus for us going forward, and I'll talk about some of the new categories that we are building in the online segment that will help us get to a higher share in the online segment.

In terms of the overall cost initiatives, the direct cost gave us a leverage of almost 2.8% year over year, obviously due to all the cost reduction initiatives that we ran, especially around the consultants and the faculty. Our employee cost were higher, including ESOP expenses.

Our ESOP expenses now are at 125 crores for nine months against 73 for last year, largely due to the valuation impact on the new ESOPs that we issued, and secondly, in terms of the new categories that we are now starting to invest, which I will talk about in detail in the latter half of the call. Also, like we mentioned last quarter, I think our marketing spends, the pattern of marketing spend was changed where we took a very conscious call of spending higher in the initial quarters rather than spreading it across over the year, which was the case in the last financial year.

Hence we see significant leverage of those marketing spends to come, both in this quarter and the next quarter. Our marketing spends dropped by almost 20 crores in this quarter, and we expect significant synergies coming in from the Q4 of last year to Q4 of this year.

Moving on, in terms of our treasury, our treasury now stands at 5,000 crores, post our IPO, upsized by 1,100 crores because the fresh issue that we did. We generated almost 600 crores from cash flow from operations in the first nine months.

In terms of our capital allocation, like we have put in the shareholder letter, we will be allocating cash and capitals on four key areas. The first is the offline expansion, like we put it in the use of proceeds on the RHP, we will continue to invest in opening centers.

We are looking at 70 centers next year with an outlay of 200 crore. Inorganic opportunities, as and when the inorganic opportunities arise, we will be in a position to invest into that.

There is a certain amount that we have raised, have GCP and M&A, unannounced M&A, as part of our IPO proceeds, and as and when such opportunity arises, we are going to look at it. Third is focused investment in K-12 platform.

As we have seen, we actually acquired Tender Heart and we are now partnering with Tender Heart. We find ourselves in a very leading position to now create a quality K-12 platform.

We'll again talk about this in detail. Some of these opportunities, they keep on arising and we will allocate capital as part of the next year's planning exercise.

As of now, we have invested 400 crores in our wholly owned company to drive some of that K-12 platform investment that we will do. The last one is AI.

I think this is an ongoing investment both in terms of people as well as the new products that we will be developing. We talk about PW Talk, we talk about Gyani and some of the other AI initiatives that we have invested in the shareholder letter as well, and we see a significant leverage coming in from this one as well.

Like I earlier said, there is a renewed focus on schools and K-12 platform. Our existing K-12 platform currently supports three schools, and this is outside the SHG program that we run under the Vidyapeeth program.

It's now almost 25,000 to 30,000 kids out there. This will be in addition to that.

Overall, I think our idea coming in from the K-12 platform will be to teach at least 10 to 11,000 kids from a K-12 platform perspective. The sales teams are now within PW starting to work in franchise and streamline operations and academics and all synergies associated with the respective K-12 platform.

Moving on to the performance of our acquisitions, we are extremely bullish about the Sarthi partnership and acquisition that we did last quarter in UPSC practice. On like-to-like basis, Sarthi doubled its revenue for nine months for this year as compared to last year.

This quarter Sarthi reported revenues of 22 crores and EBITDA of 15 crores. This is what we consolidate in our book.

We can now surely say that our overall UPSC practice is now the market leader in terms of the overall all our competition as well. Utkarsh Classes had a great year in managing the entire state exams business.

They reported 6% CAGR EBITDA against a negative for last year, and we will see a significant amount of cost leverage continue to come in that business. Also in Xylem, our test prep business in Kerala, that has been growing this year, they will cross roughly around 330 to 340 crores of revenue, top line.

When we bought the acquisition, I think they were 90 crores in top line. We opened 13 new centers in Xylem, supplementing our natural reach in Southern states, and we see that helping us to build our vision of a formidable player in the southern part of India as well.

Like I said on the AI initiative, I think it's been mentioned in question 10 of the shareholder letter in a very detailed and cutting-edge way. We find ourselves significantly ahead of the AI initiatives at PW.

Most of us would have seen the recent announcements about Gemini entering into mock testing, and that actually validates our investments that we did in Aryabhata. We have done a detailed press release around Aryabhata as well.

We now confidently are investing in AI tech talent. Our overall tech spends, because of the scale that we have grown last year, we see almost a percentage leverage on the tech spend, in spite of our AI pod cost of the tech producting going up by 40% from last year.

There are three additional categories now this time we have reported. We used to report 13 categories, but now we had three new categories that crossed the annual collections of 10 crores.

That is CLAT, NEET PG and IIT JEE. These three categories put together this year for the first nine months have contributed 32 crores, and we will continue to invest in these new categories to actually get them to the goodness that we've seen in our earlier categories.

The second category that we wanted to talk about today are state boards. There are almost 6 crore kids studying in state board exams across India, and this vertical was launched in June 25, and we have scaled to 175,000 paid learners with a revenue of 22 crores for the first nine months.

I think we talked about this in the last early call as well, and what we feel is this is going to be the category that will actually give us the goodness of the JEE needs scale, mass scale that we have seen in those categories, the early categories. While we started with five or six states, you will see a roadmap of the next state that we are going into as part of the shareholder letter.

The third key category online expansion that we are seeing is on the vernaculars. We started batches in five regional languages and enrolled 94,000 students in the first nine months with a revenue of 24 crores.

Again, we will replicate the same PW playbook, which we have grown our community to almost 2.2 million subscribers across 13 regional YouTube channels. That's the overall financial and business overview.

We can now open the forum for any questions that we can take.

Oh, hi, good afternoon, thanks for taking my questions. My first question is on the K-12 foray that you discussed extensively in the opening remarks.

A few questions: One, if you were to take a slightly longer-term view, maybe three to five years, how should we think about the potential for how much this could add to your revenues or revenue growth? How should we think about the margin profile of the business, and is there an upper limit in terms of how much capital you may allocate to this business beyond what you already talked about?

Maybe a related question to that also is what drove this decision? Of course K-12 is a large segment, but we talked about the large headroom for growth in your core exam categories that you operate in, whether it's in online or offline.

It's also early stage. Given there is a lot of headroom in your test prep, online and offline, why the need to foray into this K-12 school segment just yet?

Your thoughts will be best. Thank you.

Manish, I will take it up. Thank you for bringing this question.

Amit had briefly talked about it in his starting address. See, if you see test prep as a market, because the TAM would shrink at this point of time, which is going at a steady 15% CAGR.

The K-12 as a market, hai, yeh is four times bigger than the test prep as a market. It’s a much bigger market.

और अगर हम किसी की mature economy को benchmark करें, China is a perfect example, because wahan ke demographics in jaise same hain. India mein JNU hai to wahan pe gaon-gaon hai.

To wahan pe aaj se 15 saal pehle test prep market bada hota tha, but currently K-12 is a bigger market there. K-12 market ke andar China ke andar online and offline dono play ho rahe hain.

Humne bhi K-12 market ko address karne ke liye 18 months before, almost 18 to 24 months before, seeding kar di thi. Online playbook se hamari K-12 market ko address kar rahi hai.

That is a Curious junior product. I think is audience ke andar bahut saare log honge, jinke chhote bachche honge, from grade 3 to 10.

Curious junior is a product you guys should use. It’s an alternate to tuition.

It’s an online tuition platform which enhances your outcomes in school and exams. Curious junior product is growing at a very rapid rate, almost 100% improvement in terms of EBITDA and enrollment humne kiya, and we will continue to grow with the same rate in upcoming time.

That makes us the largest online tuition player as well, with a bandwidth of previous year. Similarly humein ek doosri opportunity dikhi thi, wo K-12 school management company run karne ki dikhi thi.

Our first initiative was two years before, humne Gurukulam Gurgaon aur Varanasi ke andar start kiya. Currently our school management company operates three schools, one out of Indore, another is Gurgaon, and third is Varanasi.

School is a bottomless market. It’s a large opportunity for us, and we have seen this opportunity from a parent side there is a great affinity because they want to get enrolled in a test prep national brand centric school.

Abhi tak ye opportunity jo hai, bahut zyada organized nahi hai. Ye bahut si badi market opportunity hai.

We already have a success story in Varanasi where we have turned around a downfield school into a school full of 1,200 students at this point of time in the 15 months of time. As this playbook is getting mature and mature, and this aligns with our overall mission to become a lifelong learning partner of the student.

As well as agar hum test prep ki baat karein, to hum already grade 3 se leke 12 se leke UPSC tak sab padhai rahe hain. To run any good online or offline education business, you have to take care of teacher ratings, learning outcomes, student attendance, repeat rate.

To basic principles same hi rehte hain. This K-12 schools ke andar humne three schools khole hain.

We are starting eight more schools, four ground field, four green field. As well as we have done a Tender Heart partnership where we have taken the management control of the school.

This is overall scheme of things that is not even contributing half a percent of revenue at this point of time, but in the long run it will contribute a good amount of EBITDA. Jo hum school bhi start kar rahe hain, uske andar ek fair amount of test prep education kar rahe hain ki bachchon ke formative years ke andar hi unki JEE ki preparation ho jaye.

By the time we enroll our students in JEE 11th, the damage is already done. Aur is basis par hi hote hain ki unka outcome badhana thoda muskil hota hai.

Agar hum dekhein to overall specialized preparation for medical and engineering entrance ki zarurat hi tab pad rahi hai because our schooling system hasn’t lived up to expectation of these exams. The entire coaching is also target schooling in the country.

We want to step at route. That is why we have taken some baby steps in this direction.

This is in long term generally three to five years, there still become a noticeable significant EBITDA by FY29-30 in upcoming years is what I can say here.

Manish, as far as the capital allocation, we allocated 400 crore in our school management company, probably a couple of months back. That is the capital right now for building the K-12 platform.

I think what has significantly turned around for us, like Prateek mentioned two things. First, the nuances around school management, which we’ve been able to work with the Varanasi school, has given us some level of how the entire economics of school management should run, that has given us a little confidence.

Secondly, I think what Tender Heart partnership has done is that a lot of good K-12 platforms have started reaching out to us, and they want to work with Physics Wallah, just in terms of the pedagogy that we bring on the table. Right now that is the validation, but once we go through the planning cycle for next year, that is when we will probably take a refresh view of where we are right now and the ambition, like Prateek mentioned, where we want to be in 2029-30, because this is going to be a long-term story for the next year, at least

four, five years where we start building. We have both the models here, Prateek here, that we have a asset-light model with the name of School Integrated Program, where we have partnership with professors in schools, will teach almost 25 hours, will generate almost 25 crores of top line through that model also.

Along with that we have complete management control over Tender Heart and as well as some greenfield and groundfield K-12 schools coming up. As I mentioned, K-12 is going to be a larger business than a test prep business down the line, five years is what I imagine.

If you benchmark any company in China, be New Oriental, EDU, all are listed. Their K-12 business is larger than their test prep business.

I feel, हमें लगता है कि future वाले के साथ में, down the line, five years होगा.

Very helpful. My second question would be maybe a related question.

You expand your opportunity in K-12, and when you think about the few buckets of education, which is test prep, where you have been, now you're entering K-12, and you have your own IOI as well, which is a small right now, but would you also then consider entering formal education in undergrad and postgrad as well? Or is that something which is not a part of the plan over three, five years?

See, formal education, if you see, 70% of the students which we are teaching at this point of time are plus-plus students, which have already passed grade 12. If you see, do I have the best faculty in India who is teaching computer science?

Yes, we do have. Do I have the best faculty in terms of civil engineering, in terms of mechanical engineering, in terms of from a K-12 category perspective?

I'm already number one player in terms of all engineering streams, producing almost back-to-back rank one in past two years consecutively. If you say, do I have the best faculty of UPSC humanities or science subjects?

Yes, I do have. See, UPSC as a business also has grown more than 100% in first nine months.

Every one in the three IAS and three IPS is being produced by us at this point of time. Formal education के अंदर हम degrees भी दे रहे हैं, but still we are GATE, UPSC, CAT, CA, इन सारे के degrees के अंदर significant number of students को पढ़ाई रहे हैं.

Formal education के अंदर, लेकिन the right way of entering is to start with 100% online digital university. वहाँ पे हमें gap क्या लगता है कि बच्चा college से exam खत्म ज़रा है, test prep की preparation अलग कर रहा है.

तो जब इन दोनों चीजों को merge कर दिया जाता है, तो students की life में बहुत value addition होगा. इसके लिए हमने बहुत सारे existing IITs, IIMs के साथ में partnership करके courses निकाल रहे हैं under the brand name of Vedanti, as well as we are trying to set up India's first digital university.

We are in talks with various authorities and we are finding a way to create value for the students there as well.

Right. Last question on, thank you for the details, student breakup, etc.

I noticed that even here, NEET and JEE student growth or enrollment growth has now maybe slowed down to around low single digit. Of course, other categories are doing really well.

Is that something that maybe we should extrapolate to other categories as well? That, as you enter categories, you see some very strong growth for the first three, four years, but over time these categories saturate and then they start growing slower.

I'm just trying to think that, of course, we talked about boards as a large opportunity, but when I think about the TWO, these categories where I'm getting JEE, it are very profitable for you, but the other ones, are early stages. How should I think about just the growth dynamics of these various categories and the interplay of that to profitability?

So

JEE, we have seen a great traction in terms of the southern part of the country. Their YouTube channels and enrollments are picking up very fast.

Since the denominator is very high in terms of number of students in North India and penetration is very high, so that's why the overall growth is only 3 to 4%. If you see, there is a good amount of shift of the students from JEE to board exam as well.

Earlier we never had offerings like state boards as exams, as well as CBSE, grade 11, 10, 12. If you see the cohort of grade 11 and 12 put together, you will see a double-digit growth, a higher double-digit teen growth for sure.

The UPSC as a category is growing at 100% revenue run rate for first nine months. The similar trends we have seen in commerce as a category, CA as a category.

The Hindi heartland, the North India, where we can see that we have a decent amount of study taking, but the entire southern part of the country is the headroom left for our early exam categories, JEE and NEET, and all our new exam categories are anywhere growing at a double-digit growth rate.

Right. Thank you for asking my questions.

All the best.

Thank you.

Hi, thanks for the opportunity. Just I have a couple of questions and some follow-up on this strategy for K-12.

See, in this one, we better understand what is the right to win here, right? Because in formal and offline, we have this to fine-tune top of the funnel, and that is sort of helping us gain a disproportionate advantage in the online space and to extending offline.

This is a completely different kind of a business, right? Just wanted to get some sense on our right to win over here.

So

I'll put you after this question. We have students enrolled in our Vidyapeeth, which is brick and mortar physical setup, technology enabled, right from grade 8 onwards.

Grade 8, 9, 10th, 11th, 12th are already being covered in existing Vidyapeeth setup. If you see the journey of the student, they have to go to schools in the morning and coaching in the evening.

That is double workload. If you talk to any parent, they want an integrated setup, both test prep and school education should happen at one go.

That's a great opportunity and that excuse my right to win. If I can create value for a grade 8th student, grade 9th student and 10th student, I can create a similar value in terms of school environment.

Second thing is from a brand perspective, अगर आप देखते हैं तो parents instead of sending it to a local hyperlocal school, say vis-a-vis compared to a national brand, which curriculums, pedagogy, data-driven systems, technology is giving more assurance for their kids to have the right foundation to prepare for IIT-JEE, NEET, as well as UPSC and all the test prep. It is the test prep branded school is what the playbook is.

और अगर हम अपने online setup की बात करेंगे तो students we start from grade 3, our online mega batches, which are affordable online mega batches, तो हमारे grade 6 से already start हो जाते हैं. We have all these curriculums in place, pedagogy in place, teacher training, and technology in place.

I think we have all the right to win. For example, what is my competition here?

My competition is a local non-tech-led school where the curriculum and the standard practices are not there. Even it is a much more easier market to win and create brand, is what we have seen in our initial interventions.

Got it. Just a follow-up.

You mentioned that in the next four to five years you would think that K-12 will become larger than test prep, and you sort of focus on the offline business, because offline business is also sort of keep growing. Right now there are 400-450 students allocated, but suppose I even say 1,000 students per school, right?

Even to get to, say 1 lakh students, it’s probably 1,000, say, 100 schools. Right?

I’m just trying to understand how big is the potential capital allocation for this segment, say if we were to think from a four- to five-year perspective, and how do we sort of think about it.

What we do, when I say K12 is broadly classified into school as well as online, which is much more larger number of students. For example, Curious junior में हम 30,000 students पढ़ा रहे हैं.

School integrated program, जो कि offline existing schools के अंदर चल रहा है, उसके अंदर 5,000 students and 25 crore का topline है. The Tender Heart school के अंदर 5,000 students, 5,500 students existing हैं.

This is a broader vision for the company. At this point of time, what is significant of this?

Overall 4,000 students का topline के अंदर the contribution of this initiative is less than 1% at this point of time, if I add Curious junior, SIP, and the existing schools put together. The playbook is the same to grow online in this segment significantly and to start hyperlocal school.

Of course, to reach to 1 lakh students, we have to have 100 and more schools in place. At the same time, if you see the economics of this business, students take education in grade 1, grade 1st, and it is there till grade 12.

It’s a three-grade helping business as well. At a steady state, we have schools making 25 to 35% margin business, and we will integrate Testprep into the schools.

That is a great synergy because by doing it, we could able to charge right amount of fees, we could able to save time for the student and create value within the school premises itself. Did I answer your question?

Do you have any follow-up question on this?

No, no, it’s good.

Hi, thanks for the opportunity. I just wanted to understand the state of your marketing spend.

How much of it is happening to drive traffic on the online side, and then these new initiatives that you are talking about with K12 and others, how do you distribute that? A related question to that is that you mentioned that you have started spreading out the investment from marketing over the entire year.

Does that mean that your full Q marketing spend this year will be significantly lower in percentage terms or absolute terms versus the previous year?

I address the first part of the question and Amit will take the second part. In terms of my early exam categories, engineering entrance and medical entrance, the spends are less than 2 to 3%.

It’s just awareness, is spent, because we already have a good position in the Hindi heartland in our early exam categories. A couple of my newer exam categories, the marketing spends is to generate awareness, is to generate top of the funnel, sign-ups, and to reach to a critical number of students where you need not to spend further marketing dollars to have a top of the funnel.

Then the word of mouth starts kicking in, then students keeps on adding the new students. To answer your question, the spend in the early exam category is 2 to 3%, and then newer exam category is slightly more, as well as the spend is going in the southern part of the country to generate awareness, to have enrollments.

In terms of leverage coming out, Amit will take it. So

I think, just two points I think Satish has mentioned and summarized it well. Our marketing spends, if you look at from any other education company, are almost like 20-25% of any other player who is in the online business.

I think the reason why I spend, and we typically don’t call them marketing spends, I think these are more cost of distribution for us because our playbook is largely community-led playbook. I think, like we mentioned right at the start of the call, is that you create communities on social media, on YouTube, start putting in content out there, then there is interaction that happens there, students start appreciating the content being put out there because these are like online teachers who are really good at their subject matter knowledge.

Student comes onto the app, still has the ability to consume free content, and then depending on all the value-adds that he sees in terms of buying a batch, which is our core product, he ends up buying a batch, and that is how the entire monetization channel works for us. In terms of the point that earlier we were making earlier, this is the big chunk of our business.

The point I was earlier making in terms of leverage, last year marketing spends was 76 crore, which was roughly 9.6% of the last year revenue. The nine months number for this year is 266 crore, which is roughly 8.9%, and the corresponding number for this nine months last year was 183.

If you look at it, the point I was making in terms of marketing spends lower for us, this was in terms of the marketing spends as compared to last quarter. On a full-year basis, we are anticipating that we will significantly be lower than the 9.6% that we spent last year.

Two reasons for it. Like I said, I think the incremental spends that we did in the first Q1 and Q2, that actually gave us a high ROI.

The reason why the marketing spends will not be lower this quarter as compared to the four Q3 of this year is largely because of the request business and the student acquisition that starts happening for the next academic session. What we believe, anything between 8, 8.5% is where we will land the full year marketing spend for this.

Which is significantly lower than 9.6% of the last year. Same, if you take the next question?

Hey, hi Amit and Satish, from JM Financial. I have two questions.

This is on my mind when I saw that you are getting into the acquisition of this school. I definitely have seen a lot of private equity streams happening in the last couple of years in the schools.

Particularly the question comes is that which type of schools are you actually catering to? Are you getting into the premium schools, or you are getting into the market of economy or sub-economy schools?

That is the one question, because, again, the margins, the EBITDA margin, the PAT margin, totally, definitely is relevant and gets impacted on the kind of schools we are operating in. Second question is regarding what kind of margins, EBITDA, which you see coming out from these schools?

Do you also see that these schools would be a DNA for the add-on service that you would be providing in terms of giving the online test prep coaching or something like that for the IIT, for NEET, etc., which you have already talked about. Is these schools not just a operating center for gathering or catering new people, students?

Is it also a go-to-market strategy for you in terms of getting the access of these people and getting the access of these students and getting them enrolled in your test prep division in the online mode. How do you see that plan coming up and ramping up?

In the interest of time, I'll quickly answer your questions. Spartans, the price point for the student, anywhere between 70,000 rupees as annual fees to 1.5 lakh rupees, depends on the metro T1, T2, T3 cities.

Essentially these are the CBSE schools, is what the price point is. The margins can vary between 20 to 40%, depends whether you own the property or it's a leased property.

Coming back to the synergy part, which is very important. See, a school-going kid, the positioning is above average or premium in between.

The synergy between test prep and school is very organic.

Grade

9th is the year where the student starts preparing for their medical and engineering entrance exams.

And

grade 11th, they become quite serious and either they opt out of the schooling, opt for a dummy schooling system, or they continue to go to school in the morning time and prepare for their specialized preparation in the second half of the day. Existing school ecosystem kids will get benefited with our test prep courses.

We can feed on their decision. For example, a commerce kid who is going in 11th grade

can

actually see a preparation journey in grade 11th itself. For a UPSC aspirant, the real foundation we can start building from grade 11th onward, grade 9th onward only.

It is a test prep integration. The question whether it will fuel our existing Vidyapeeth center partially yes, but if you see Ranchi as a city where we have done tender hawk.

We are number one in offline, now we are number one in schooling. That is a number one position in terms of one city, which is a state capital in terms of coaching as well as in terms of school prep.

That gives you a lot of cross-synergy in its sense. There is definitely a great synergy with existing Vidyapeeth ecosystem.

Got it. You say that margins for 18 to 44%.

Definitely I totally understand that.

Mr. Kamal, your voice is breaking.

Hello?

I'm

Hello?

Hi, thank you. Thank you for the opportunity.

My first question is that in the last concall you mentioned that you will be disclosing EBITDA separately for offline and online from the next year. The school chain that is coming up, will this offline mein included होगा या इसका भी separately होगा?

Greenfield अगर आप समझा देंगे that what is greenfield meant here, are we going to be capex-heavy here,

so कैसे रहेगा? Thank you for that.

तो सर, online और offline, ये segmental reporting हम first of April से करेंगे, और school will not be a part of our offline business. It will be a part of our others business at this point of time.

And जो मैंने greenfield बताया, ऐसे चार schools हो रही हैं, इसके अंदर land and property is a built-to-suit model, where owner is constructing the school as per our needs, and we are leasing out these properties for 9 years. There are four such schools which will be coming in this complete asset light.

That too, for the next financial year, it will be a very small portion of our overall bottom line and top line.

Thank you. Sir, मेरा जो question है, आपके AI capabilities पे है कि सबसे पहले तो आपका जो आपने AI capabilities है, वो बाकी share से कैसे different है?

Its follow-up होगा कि जो, जैसे Gemini है, OpenAI है, they are coming into education. How confident are you that you'll be able to outperform their models and competition?

See, one thing which makes us very different is कि हमने जो हमारे जितने AI tools बनाए हैं, be it AI Guru, be it AI Grader, ये सारे के सारे tools are completely designed for NEET test prep. It is completely designed by our own in-house proprietary data, जो millions of students daily आ रहे हैं, जो वो आपको सवाल पूछ रहे हैं, जो उनके doubts हैं, as well as जो उनके learning behavior और patterns जो data generate होता है, उसके उनके behaviors और data points से हमने fine-tune और एक RAG layer implement की है.

As well as अगर आप देखेंगे, now AI is becoming an integral part of the student's life cycle. AI learning को hyper-personalize कर दिया है, but through the life scale में बहुत ज़्यादा value addition हुआ है.

As well as teacher ki life में भी great value addition हुआ है with the help of AI. Teachers are now more efficient.

AI is designing PPTs, AI is designing question paper, AI is evaluating answer sheets of the kids. Teachers की life cycle के अंदर भी AI को बहुत खूबसूरती से integrate किया है.

Quickly on your point on Gemini and other folks coming in education. See, education is a very niche use case.

A guru cannot go wrong. तो अगर आप हमारे models की accuracy देखेंगे, तो it is better than Gemini and the existing GPT because it operates on a RAG layer, which is a fine-tuned layer on top of these large language models.

That gives us a great opportunity. हमने हमारे खुद के small language models भी launch किए हैं RFS का, as well as concept clearance के लिए एक और small language model आ रहा है.

इन सारे models की cost जो है, वो Gemini और GPT से one-tenth है. We are among the top players in terms of AI in education, and we continue to be bullish about it.

The way the ecosystem is developing, we see this as a great, great opportunity. Thank you.

Mr. Iyer, please return to you for more questions.

Next question comes from the line of Ayushi with Earthnetic Capital, please go ahead. Hi team.

I just had two questions around it. With the recent incorporation of our hotel, or with the entity, how do you intend to integrate and scale it across your existing student ecosystem?

Second question being, PW Talks caters to a separate target system. How large do you believe the opportunity is for PW Talks, as there are already many players doing it?

Thank you. I will quickly answer both the questions.

About the hostel entity, this is designed to integrate a hostel business of our subsidiary, Xylum, which was fragmentedly run in Trivandrum, as well as we have a very small student housing opportunity at various parts of the country. That's why we thought that we will integrate the entire housing business, which is very small, which is again less than 1% at this point of time, into an independent entity.

We don't have any aggressive plans to grow that business. That is just to facilitate a couple of student and parents' need, and this will be in some of the hot pockets, like Patna, like Trivandrum in India.

The second, which is a very good question about PW Talks. See, our brand is in the Hindi heartland, very strong, and there is a common problem kids have, which we see is English-speaking skills, especially government exams, especially our UPSC exam, GATE exam, after which the students go for professional careers, they face many hurdles in English-speaking.

We have PW Talks, which is completely a satellite tech product, where you can talk to an AI agent, and through PW's recorded lessons, bite-sized learning lessons, you learn English. This is basically 18-month-old initiative.

We haven't talked about a lot of these initiatives in our DRR, but this year, this initiative million-dollar run rate ARR will cross. Its monetization, we have integrated it beautifully in the student journey, in the app.

For example, when you pay for a basic, or when you purchase something from the website, you get to see frequently bought together items, and you add those items in the cart. It is the same if a government exam preparation is doing, and he is going to purchase a batch, then he can add the English-speaking course to it.

Add values, we have digital marketing effort also, top of the funnel, which is our YouTube ecosystem, we will leverage it. This is a self-learning environment.

If you see, the biggest company of the world in education at this point of time, which is Duolingo, and in India also, I see a large opportunity, because I am in the Hindi heartland. With a very small team of ten people, with a fraction of few lakh rupees of investment in content, we have created almost annual run rate million-dollar this year's end will come.

Happy first 10,000 students. We do see this as a great opportunity in city, after AI, play, the only way to learn is you have to speak.

I was a Hindi-medium student, but my first job was in Chennai, there, I did not know Hindi nor English. That's how I learned English.

We have benchmarked global standards, PW Talks, you also use it in your comments, help them. We have seen that after the efforts, people's spoken English efforts actually outcomes translate into.

Although, we are bullish about it, but still a very small percentage of revenue at this point of time. If I see globally, Speak.ai is a unicorn company, which helps Spanish as well as Korean people to talk in English, as well as Duolingo is another example.

It's a large opportunity in the long run.

Hi team, congratulations on amazing results. My question to you is, what is the roadmap for the M&A piece of PW?

Are you planning to do any M&As outside India as well? The second part of the question is, are you planning to do M&As in the online space only, like you just did in Sarthi, or do you intend to do it in the offline space as well?

See, consolidation is one of our major thesis why we listed and raised good primary capital. In terms of online, offline, that's not how I look at these businesses.

See, good education businesses, quality होती है कि बच्चों के attendance क्या है, outcomes क्या हैं, overall student ka NPS क्या है. तो इन सारी चीजों को देखकर हम evaluate करते हैं.

Outside India, the answer is simple no. अभी हम कोई भी asset outside India नहीं evaluate कर रहे हैं, ना ही acquire करने वाले हैं.

We don't have bandwidth to go outside India at this point of time. In terms of within India, yes, we are evaluating both offline and online assets, and we will announce a couple of M&As in the next two quarters as well.

The thesis here is the synergies with the group, as such exam categories जो हमारे target audience में नहीं हैं, जो हम नहीं कर सकते, और वहाँ पर किसी ने एक अच्छा business बनाया है, जिसमें अच्छा EBITDA है. That is another core thesis of the company, is we generally acquire profitable entities, and the range of the multiple we give it to these companies is anywhere between 8 to 12.

We believe in an earn-out structure where we don't take one-shot majority. We take anywhere between 25 to 50% equity as a first go and three to four years of integration and earn-out structure for the founder.

The Sarthi is the right example, as you mentioned, the very similar playbook where we want founders to run the company and transition the brand business for upcoming three, four years. We are in talks with a couple of good domestic offline players, as well as we are in talks with some of pure online players like Sarthi at this point of time.

Thank you, everyone, for joining the call today. I think the number questions that came on the Jio platform also reemphasizes the fact that we are heading in the right direction.

Also, while we talked about techers, a significant portion of our revenues still come from tech. We did almost 97% CAGR for the last two years, and even for a full year guidance, we even grown in the range of 32 to some 35% this year, with strong growth coming in both in the online as well as offline, and our commitment to continue to grow in both these segments.

With this, thank you again. We look forward to you all joining us in the next conference call.

Thank you.