The PHZ processing is based on an evolution of the Q1 data processing. The Q1 pipleine is described in detail in the Euclid QUick Data Release (Q1) - Photometric redshifts and physical properties of galaxies through the PHZ processing function. The upgraded DR1 processing is described in Euclid Data Release 1 (DR1) - Photometric-redshift pipeline overview and validation. The derivation of physical parameters is tested in Euclid Data Release 1 (DR1). Photometric redshift pipeline overview and validation.