Edtech company PhysicsWallah is using artificial intelligence (AI) to improve operational efficiencies and reduce its workforce requirements, even as it looks to expand through inorganic route — acquisitions. The Noida-based company also continues to face profitability challenges in its offline business, despite the expansion of its Vidyapeeth centres.

During its Q2 FY27 earnings call, management confirmed that its total employee count, which stood at around 19,100, and faculty strength of approximately 7,100 declined sequentially in the quarter. The firm attributed the reduction partly to efficiencies from AI across content creation, quality checks, test paper preparation and evaluation.

Management said AI now writes around 90% of the company's code. The shift towards automation has also helped contain employee expenses, which declined 2.3% year-on-year in Q2 FY27, excluding ESOP costs. For the first half of FY27, employee expenses were down 2.4% compared to the same period last year.

However, PhysicsWallah continues to invest in technology which stood at Rs 104 crore in H1 FY27, compared to Rs 70 crore in the corresponding period last year.

While AI-led efficiencies have helped improve operating leverage, PhysicsWallah's offline business remains a key area to watch. The segment reported a pre-Ind AS EBITDA loss of Rs 108 crore in H1 FY27, compared to Rs 120 crore in the year-ago period, as per figures discussed during the call.

The offline business reported 9% year-on-year revenue growth to Rs 541 crore in Q2 FY27, while H1 revenue rose 12% to Rs 1,031 crore. Management attributed the moderation in growth partly to lower NEET enrolments and delays in government exam notifications, which affected demand at some of its centres.

Source link