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— PhysicsWallah Q1 FY27 shareholder letter
PhysicsWallah is building an AI tutor, specifically designed to teach students one-on-one. Unlike conventional AI assistants that primarily react to prompts, the company’s upcoming offering, AI Tutor, proactively engages with students, nudging them to learn concepts, while also asking questions.
Addressing analysts during the June quarter (Q1 FY27) earnings call, PhysicsWallah co-founder Prateek Boob said AI Tutor is already in beta phase, with the edtech platform planning to launch it by next quarter.
AI Tutor had a less than 1% hallucination rate during initial testing, said PhysicsWallah in a shareholder letter. The company attributed this to its proprietary teaching data. The tutor can significantly reduce hallucinations, given it is powered by PhysicsWallah’s proprietary teaching content including thousands of hours of lectures by its faculty and years of student learning data.
“Our initial POC has shown encouraging early results with 95% lesson-level accuracy, a <1% hallucination/error rate and response latency of 1.8–2.2 seconds. It has been tested with 300+ students and more than 1000 queries with early indications of strong learner engagement. The architecture is designed to scale across Indian languages and multimodal content, while voice-to-voice AI tutoring is currently being delivered ~$0.20 per hour,” PhysicsWallah said.
It is to be noted that the edtech company already offers in-batch AI tutoring alongside faculty via AI Guru. With the new offering, PhysicsWallah aims to strengthen its AI-powered tutoring ecosystem, which includes Ask AI, AI Guru, AI Grader, AI Mentor and PI.
NEET delay takes toll on offline revenue, online enrollments: PhysicsWallah’s offline revenue growth took a hit in the first quarter of the financial year 2026-27 (Q1 FY27) due to a delay in the NEET-UG cycle. The company’s offline revenue grew 14% year-on-year during the quarter, as against the 22-25% growth it could have registered had there been no disruption, PhysicsWallah said during its June quarter earnings call.
The offline revenue growth we witnessed this quarter, to the tune of 14% year-on-year, would have been somewhere around 22% to 25% had the NEET examination cycle been over by May 4 and if the results had been declared on time by early June. That would have definitely flown into our margins as well, because most of the costs in a business like ours, are fixed,” said Vikram Bhardwaj, Vice President of Head of Investor Relations at PhysicsWallah.
Why was NEET cycle disrupted? The NEET-UG calendar moved by more than five weeks this year. Last year’s exam was held on May 4, 2025, with results declared on June 14. This year, the May 3 exam was cancelled due to paper leak and reconducted on June 21. The results were ultimately declared on July 16, 2026, delaying the cycle by full one month than last year.
The NEET-UG 2026 paper leaks led to nationwide protests by students, with reports of protesters being subjected to video surveillance using CCTV cameras and AI-powered facial recognition systems.
How did NEET delay impact PhysicsWallah’s online business? The postponement of the NEET exam pushed the exam-and-result cycle that normally drives peak activity in Q1 for test-preparation platforms into the following quarter. The impact was visible in PhysicsWallah’s online NEET business. Collections from online NEET batches fell 28% in the June quarter, with the company attributing the decline entirely on the delayed exam cycle.
Had the NEET-UG cycle not been disrupted, PhysicsWallah would have recorded another 100,000-150,000 online NEET enrollments, its management claimed.
“On the online side, again in terms of enrollments, I think we would have seen at least 1 to 1.5 lakhs more enrollments in terms of the NEET,” Bhardwaj said.
However, PhysicsWallah said its online mix has become more diversified, with newer categories including “Earners” largely offsetting the gap in NEET enrollments. Earners offers short-term skilling courses across digital marketing, graphic design and AI, among others.
Apart from that, PhysicsWallah also saw engagement time declining by seven minutes year-on-year in Q1, primarily due to the postponement of the NEET examination.
For the quarter ended June 2026, PhysicsWallah posted a net loss of Rs 88 crore on an operating revenue of Rs 1,054 crore.
Key operational metrics — Q1 FY27
- Number of Paid Users: 2.49 million
- Unique Transacting Users (Online): 2.15 million
- Average Collection Per User (Online): Rs 4,311
- Number of Offline Student Enrollments: 0.35 million
- Average Revenue Per User (Offline): Rs 12,633
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