Ladies and gentlemen, good day, and welcome to Infibeam Avenues Limited Q4 FY 2024 Earnings Conference Call, hosted by Go India Advisors. As a reminder, all participant lines will be in the listen-only mode, and there will be an opportunity for you to ask questions after the presentation concludes. Should you need assistance during the conference call, please signal an operator by pressing star, then zero on your touchtone phone. Please note that this conference is being recorded. I now hand the conference over to Mr. Rajat Gupta from Go India Advisors. Thank you, and over to you, sir.
Yeah. Thank you, Manav. Good evening, everyone, and welcome to Infibeam Avenues Limited earnings call to discuss the Q4 and FY 2024 results. We have on the call with us today Mr. Vishal Mehta, Chairman and Managing Director, Mr. Vishwas Patel, Joint Managing Director, and Mr. Sunil Bhagat, Chief Financial Officer. Also joining us on the call today is Mr. B. Ravi, who's advising Infibeam on corporate and financial strategy as an independent consultant. We must remind you that the discussion on today's call may include certain forward-looking statements and must be therefore viewed in conjunction with the risk that the company faces. I now request Mr. Vishal Mehta to take us through the company's business outlook and financial highlights, subsequent to which we'll open the floor for Q&A. Thank you, and over to you, sir.
Thank you, Rajat. Hello, everyone, and welcome to our Q4 2024 and full year FY 2024 financial results conference call. I'm very pleased to report that the company has built a very strong liquidity position, holding cash and cash equivalent of INR 837 crores versus 365 crores that we reported in 2023. So our cash and cash liquidity position has increased by 129% year-over-year. Today, we reported the quarter with revenues of INR 727 crores, EBITDA of INR 60 crores and a PAT of INR 36 crores. While we've made meaningful progress in our financial measures, what we are most pleased about is our continued improvement in our take rates and margins on the CCAvenue payments business.
Put simply, a take rate is how much money we make from a payment transaction, so higher the take rate, higher the profits. We increased our take rates from 8.5 basis points in the beginning of the year in Q1 FY 2024 to 9.2 basis points in Q4 FY 2024. This increase in take rate is a result of discipline, execution, optimization, and reimagining a lot of digital payments, so it comes across the teams of Infibeam. Looking back at Q4, I'll start with our CCAvenue payments business. We continue to have the broadest range of payment options in the industry, with deep payments integrations across thousands of third-party merchant systems. Being sharp on pricing payments to merchants is always important, but merchants are careful about how much they spend for acquiring payments, particularly as more and more transactions are moving digital.
Alongside our payments business, our platform business remains strong, which is also up more than 29% year-over-year, primarily driven by large enterprise clients. We have not reported any income from one of our clients, GeM, which is called Government e Marketplace, in the fourth quarter of FY 2024, in spite of our continued utilization of our e-commerce platform by GeM. We've extended a commercial offer to GeM for licensing our base marketplace platform intellectual property, but the matter has not been concluded. Since we've not been able to reach conclusion, so we've not reported any revenue from GeM in Q4 FY 2024 onwards. 2024 also was a very significant year for starting our journey in the field of artificial intelligence under our brand, Phronetic.AI.
During this period, we proudly announced a revolutionary video AI platform that we introduced called Theia, which is poised to redefine how business institutions and governments harness AI for increased productivity and efficiency. In an age where AI lacks insights from so many data types, video understanding emerges as the next frontier. Theia leads this charge, empowering organizations to extract valuable information from videos, optimize workflows, and enhance operational efficiencies. What customers have learned in the early stage of AI, in our opinion, is that there's meaningful iterations required in building a production application with the requisite enterprise quality at the cost and latency which is required. Customers want practical, scalable and multimodal frameworks. They want different models for different types of applications and different size models for different applications.
Our team continues to rapidly iterate, deliver capabilities, including guardrails to safeguard, with retrieval, augmented generation, end-to-end queries, agents to complete multiple multi-step tasks, and fine-tuning to keep teaching and refining the models, all of which will help customer applications be higher quality and have better customer experiences. We are already in pilot phases with many customers at this time. In 2024, we delivered solid financial operating results across our key performance metrics. This was accomplished during a challenging period of dynamic competitive environment in which we operate. We ended the year with 10 million-plus merchant accounts. Revenue increased 62% to more than INR 3,000 crore compared to 2023. In 2024, we processed more than INR 250,000 crore in payments value, not including the RuPay debit cards and UPI payments.
For full year FY 2024, I'm happy to report that Infibeam has achieved full year FY 2024 financial guidance. At the start of the year, we had a gross revenue target of INR 3,000-INR 3,300 crore, and net revenue target of INR 410-INR 415 crore respectively. We closed the year recording gross revenue of INR 3,171 crore, and net revenue of INR 429 crore, which is at the high end of the estimates. Both EBITDA and PAT also reached and exceeded the high end of our guidance. We closed the year with EBITDA of INR 253 crore, compared to the target of INR 235 crore, and PAT came in at INR 148 crore versus our estimate of INR 130-INR 150 crore.
Yet, I think this is just the start of what's possible. We have a very long way to go, and there is a considerable upside in each of the business. With that, I will turn on and give the call to Vishwas. Vishwas, all yours.
Thanks, Vishal, and good afternoon to everybody on the call. Our CCAvenue payments business is built on a strong foundation designed to drive growth and differentiate us from the competitors. A critical element of our overall growth strategy involves increasing the engagement of our merchant accounts, which we expect will contribute in growth to the payment transactions, total payment volumes, and net revenues. During this past quarter, Infibeam Avenues received the final authorization from RBI for the payment aggregator license. This will enable the company to further expand its payment brand, CCAvenue. This authorization enhances the credibility and trustworthiness in the digital payments industry. It allows us to attract more merchants onto our platform. With an already substantial merchant base exceeding 10 million, the ability to operate as a payment aggregator will facilitate seamless and secure digital payment transactions at a scale.
This, in turn, is expected to drive increased adoption of CCAvenue among merchants, leading to accelerated market share growth and further expansion opportunities in the payment gateway and the bill payment space. We are also focusing in growing our international payment business and working towards scaling the business. This past quarter, we invested $10 million for a 20% stake in XDuce, a leading U.S.-based enterprise application and AI development company. This strategic move is aimed to enhance improving avenues, Phronetic.AI solutions, and CCAvenue payments business in the U.S. market by integrating AI capabilities and expanding CCAvenue's presence there. Furthermore, in the Kingdom of Saudi Arabia, we achieved a significant milestone by being the first Indian payment gateway player to secure a PTSP Payment Technical Service Provider approval from the Saudi Arabian Monetary Authority, also called SAMA.
Saudi Arabia is experiencing rapid economic growth, driven by the government's 2030 Vision and of targeting one hundred and thirty million tourists annually. With this certification, CCAvenue is poised to become a leading player in digital markets within the Saudi Arabian market. Our payment gateway solution has been localized, data storage and hosting within the Kingdom of Saudi Arabia, and obtained the approval from the authorities. We believe our competitive strengths includes the following: One, the merchant network. Our payment platforms connects merchants and consumers, enables CCAvenue to offer unique end-to-end product experiences while gaining invaluable insights on how the clients use our platforms. Our payments platform provides for digital and in-store CCAvenue TapPay point of sale transactions, while being both technology and platform agnostic. Payment choice.
Our payment solutions support an open ecosystem that provides choice to both merchants, enabling flexibility to receive payments using a wide variety of payment options and digital wallet solutions. Scale. Our domestic and increasing international scale helps us to drive organic growth. As of March 2024, we had 10 million+ merchant accounts with more than 200 payment options, and in this FY 2024, we processed transactions in excess of INR 257,000 crore. Trusted brands. We have built and centered well-recognized trusted brands like our CCAvenue for online, CCAvenue TapPay for offline, ResAvenue, and BillAvenue for the bill payments. Our communications and relationships with banks across multiple geographies, demographic groups, play an important role in building brand visibility, usage, and overall preference among merchants. Risk and compliance management.
Our enterprise risk and compliance management is designed to help secure merchant information, to help ensure we process legitimate transactions around the world, while identifying and minimizing illegal and high-risk or fraudulent transactions. Regulatory licenses. We believe that our regulatory licenses, which enable us to operate in India and internationally, are a distinct advantage and help support business growth. In the past decade, we have partnered with our merchants to help grow and expand their businesses by powering all aspects of their digital checkout. We offer maximum number of payment methods, provide best-in-class fraud prevention and risk management solutions, reduce merchant loss, and offer tools and insights for utilizing data analytics to attract and engage customers and improve sales conversions.
We employ a technology and platform-agnostic approach intended to enable merchants of all sizes to quickly and easily provide digital online payment acceptance, as well in store, using tap pay across all platform and devices, and to secure and simply receive payments from their customers.... Our diversified suites and products is tailored to meet the needs of merchants, regardless of their size or business complexity. We aim to offer a seamless omnichannel solution that merchants manage and help grow their business. In FY 2025, we'll focus on international growth, and our international subsidiary has announced a pre-IPO round of up to $25 million to accelerate our growth in the Middle East region.
We have doubled in all our metrics over one year in that region, and with express settlement to merchants, rollout of tap pay, as well as international experience, expansions in the neighboring, countries there, we believe there is a tremendous potential to grow. We also plan to offer access to merchant with financial, products through the business loan products, insurance product, as well as wealth management under a new brand name, which we'll collectively refer to as our merchant finance offerings. We believe that our merchant finance offerings, offerings enable us to deepen our engagement with our existing small and medium-sized merchants and expand services to new merchants by providing access to financial products that were not available to them.
Within the next four quarters, we'll be focused on providing affordable, convenient, and secure consumer financial products and services, intent to democratize the management and movement of money. We'll continue to update you on our execution throughout the year, and be transparent about our process. I'm confident we are taking the right steps to build a long-term profitable growth. Now, with all that, I hand over to Sunil Bhagat, our CFO, to take you through our first quarter and final full year results. Over to you, Sunil Bhagat.
Thank you, Vishal sir. Good evening to all of you. For the full year 2024, we had a meaningful improvement across our financial results. Revenue came in at INR 3,171 crore. Our PAT, we reported INR 148 crore, which is increased by 56% year-over-year, and our cash flow from operations stood at INR 720 crore, which is up by 537% as against last year. These financial outputs are a result of a lot of improvements in our key input metrics, such as take rate, which increased year-over-year, and our ability to onboard merchants. I want to thank our merchants, partners, and our team members for continuously innovating and building cutting-edge platforms for a very strong 2024 performance.
Focusing on the fourth quarter, revenue was INR 727 crore, which is an increase of 11% year-over-year. We reported net revenue of INR 106 crore, which was also up 16% year-over-year, and our EBITDA, we reported of INR 60 crore, which was up by 21%. We continue to invest in our AI business, which have tremendous synergies to both our platforms and payment business, and we'll have more to share in FY 2025. Our return on equity for FY 2024 stood at 9% as compared to 7% in FY 2023. While our return on capital employed, excluding goodwill, which reached at 12% compared to 10% in FY 2023. Finally, we are pleased that board has approved...
Board has proposed a final dividend of 5% for FY 2024, subject to the approval of the shareholders. Now, allow me to present our financial guidance for FY 2025. We are setting our sights on achieving a gross revenue in the range of INR 3,900 crore-4,200 crore. Net revenue between INR 450 crore-500 crore. EBITDA within a range of INR 275 crore-300 crore, and profit after tax at INR 175 crore-200 crore. To realize these ambitious goals, we are committed to amplifying our strategic initiatives that were set into motion during FY 2024. In the next two years, our focus will be intensified as we elevate our international business to new heights, aiming to contribute 30% to our total income.
Presently, our international operations account for less than 10% of our total income. As we enter FY 2025, we remain committed to pursuing more profitable growth initiatives. I will now hand, request moderator to open the floor for question and answers. Thank you.
Thank you very much. We will now begin the question and answer session. Anyone who wishes to ask a question may press star and one on their touchtone telephone. If you wish to remove yourself from the question queue, you may press star and two. Participants are requested to use handset while asking a question. Ladies and gentlemen, we'll wait for a moment while the question queue assembles. We have our first question from the line of Kunj Nandwani from Concept InvestWell. Please go ahead.
Thank you for the opportunity. So how significant is it for CCAvenue to be recognized as the first Indian payment gateway to secure this approval from Saudi Payments? And what are the specific objectives or benefits expected from this collaboration in the Saudi Arabian market? Could you provide insights into the potential impact of these developments on our market positioning and revenue growth?
... Vishwas here. Look, Saudi Arabia is a very interesting market. It is the most populous nation there in GCC countries. And from the religious tourism perspective, it's one of the, I think the largest inward receiving the visitors anywhere in the world. So from that perspective, which the kingdom has 130 million a year visitors target, right? And the kind of changes happening there, Saudi Arabia attains a very significant thing. At the same time, the government there has built a local network called MADA, similar to NPCI, and they want data localized in there. So that makes it very difficult to do a primary hosting within Riyadh and we are also within the kingdom.
So that all, and then get the license and certification through SAMA. So we have invested quite a bit of CapEx there to do all these things, and with that and the certification and the final approval from SAMA to operate. Now, a lot of our merchants were in U.A.E., where we are doing in excess of AED 1 billion a month, are also present in Saudi market because they're joining the other country, right? So from that perspective, for us, the initial growth momentum should come through that. And a lot of our solutions and other things, since it's a difficult market for the Westerners, but for us, we are quite adapted.
So we're looking very aggressively towards this, and we intend to do in the midterm better than what we have done in the U.A.E. market. So that's the perspective that we have on U.A.E., and I think growth numbers in the coming quarters will reflect on that.
Okay. And what is our current monthly processing volumes across the U.A.E. retail payments? And could you elaborate on PayU's U.A.E. subsidiary and its recent fundraising and listing plans?
Yeah. Vishwas, you want to? Sure. So basically, we process upwards of AED 1 billion a month in U.A.E. across more than 6,000-7,000 clients. So U.A.E is a market, we've been around for more than three years now, and, you know, we see a lot of growth prospects. Vishwas mentioned that we have doubled year-over-year in U.A.E., and we expect that we have not even yet rolled out TapPay and some of the other solutions that we talked about in that market, which we intend to do in FY 2025. So, while we see a lot of uptick in terms of, you know, our performance in U.A.E., we see that there is also a very large opportunity there.
As far as the fundraising is concerned, yeah, we've been, you know, reporting that the subsidiary has raised a pre-IP round of up to $25 million, which we expect to close this month. And, you know, that capital will be used for multiple reasons. One is, you know, merchants always want their payments faster. You know, so in other words, rather than having a settlement period, if we can process faster, it also drives more volume to us. Second is geographical expansion. We'd like to go beyond U.A.E. to other geographies, neighboring countries. And third is rolling out of tap pay and some of the other opportunities as well. So we think that the opportunity will be right for us to take on a significant role.
In U.A.E., you would have asked, and you would have seen our QR codes also now being presented. So you would want to make a payment, it will give you a QR code. You see, having a QR code will start appearing in many of the communities and many others. So I think we've got a very, you know, confident and strong plan in terms of growth in that region, and we'll pursue it.
Okay, thank you.
Yeah.
Thank you. We have our next question from the line of Shivam from SBI Securities. Please go ahead.
Hello, sir. Am I audible? Hello?
Yes, sure. Yes, you are.
I'm Sweta Padhi from SBI Securities. Congratulations on those, great set of numbers. We have seen that the take rate has improved from, on a yearly basis, from 8.2 to 8.8. If you could give a guidance on FY 2025 basis, how are you seeing, seeing this number going, moving ahead?
Sure. So, basically, we had announced in the past that we want to get to a double-digit take rate. And, you know, in India, in international geographies, we already have a double-digit take rate. But in India, it's competitive, and we need to optimize significantly to build out that kind of a take rate. So we've continuously worked on that. And so I think, you know, from a guidance perspective, all I can tell you is that we would want to get to our goal of a double-digit take rate in India.
If you could give us your initiative on, like which would help in augmentation of this?
What will help us achieve that? Is that the question?
Yeah.
Yeah. So I'll tell you three things. One is, we've announced that we are expanding our presence through TapPay into into local commerce. TapPay is the version where you can download the app on the phone, and you can tap a card, or in fact, you can do even an online transaction, send a link to someone to make payments. And so a lot of facilities opened up, and, some of those transactions become card present, which have a much better, you know, economics compared to card not present, which you see in an online format. So I think, you know, that becomes an opportunity for us to gain market segment share. We are definitely not going into devices.
We are going to, because we think phone is a very ideal mode for merchants to download an app and to be able to accept payments. And so rather than going and focusing on devices and investing CapEx on devices, we will open up our TapPay framework. And with more and more cards becoming, you know, somewhat NFC-enabled, and, you know, in some ways, even phones accepting such cards, I think, you know, from an NFC perspective, I think that, you know, we see a lot of potential there. So that's one. Second is, we think that, you know, in some ways, settling faster with the merchant, you know, helps us in terms of our take rate.
Which means that, you know, rather than allowing a merchant to get payment later, after a few days, maybe a day, two-day, three-day, we would like to offer faster payments. So that's second. And third is, significant amount of optimization in terms of being able to identify a transaction and to be able to, deliver that transaction through merchants and through card networks. And, you know, rather than going into specifics, but you can imagine that it's a very complicated problem, because every transaction is a different type, and to be able to drive that, across, you know, these billions of transactions, you know, in a format so that it's completely recognizable, traceable, and be able to attach to the right code, the significant amount of optimizations.
You can imagine that a lot of artificial intelligence will play a role in terms of optimization of those as well. So I think, you know, rather than getting into specific programs that we have, we think that, you know, optimizing, you know, that whole entire card framework, routing frameworks and others will become an important mode. And it's very defensible because doing it across this scale, very few companies in the world may have even attempted to do it, but we are going to try.
Thank you, sir. That was helpful. Sir, on the RBI front, you have received the payment aggregate license. If you could give a quantum of like what is the total processing value of that we can expect from this front, in addition, in FY 2025?
So in terms of our guidance for next year, FY 2025, Sunil mentioned that, you know, in terms of the revenue, we'd be targeting, you know, close to INR 4,000 crore in revenues, and that's upwards of 30%, you know, year-over-year. So our guidance is INR 3,900 crore-INR 4,200 crore. You know, we do not report the transactions which are UPI transactions through us and RuPay Card transactions, because they don't have a take rate for us. But yeah, I think that, you know, in terms of the overall perspective, you know, international, you know, is expected to double for us year-over-year through expansion in geographies and other places. In India also, we see a very strong, you know, digital presence.
I think, yeah, you can imagine, you know, we'd be targeting anywhere between 30%-50%.
Thank you, sir. That is from my side.
Thank you. We have our next question from the line of Pranav Mashruwala from Dolat Capital. Please go ahead.
Hello, am I audible?
Yes, sir, you are audible. Please go ahead with your questions.
Yeah. So just a few questions on the enterprise business. So now that we don't have GeM, which are all the clients that contribute to revenue?
Sorry to interrupt, Mr. Pranav. Your voice is breaking.
Yeah. Is it any better?
Yes, it is better now.
Yeah. So I was asking about the enterprise business. Now that we don't have any revenue from GeM, which are some of the clients, enterprise clients that are contributing to, this revenue this quarter? And, what will be the outlook going forward, and can we expect a similar kind of run rate? Some color on that, please.
Sure. So, we have international clients. You know, the ones that we've announced are Saudi Telecom. We've signed up a couple of more international clients as well onto our enterprise business. So, what we did last quarter, which was important, is to secure our intellectual property with GeM. Now we are very clear that, you know, there is no gray area on where the intellectual property belongs. I think we mentioned in our call earlier also that we've not concluded all of our relationships. GeM continues to use our intellectual property, but we wanted to ensure that it's very clear in black and white that all intellectual property belongs to us.
One of the reasons is because given that we are giving our frameworks and platforms to other clients also, that it exposes us to that risk. So I'm very happy to tell you that at least from the perspective of both GeM as well as Infibeam, we are clear that intellectual property for the entire platform belongs solely to Infibeam. So that's one. And second is that, you know, GeM continues building up, using our platform. Even today, it is being utilized. So the conversations around commercials, you know, are somewhat disputed, being able to figure out how to close that, that's one of the reasons why we've not reported any revenue out of GeM Q4.
In terms of, given that now that it's very clear, just last quarter in a few months, couple of months back, that intellectual property only belongs to Infi, and not to anyone else, then, we plan to sign up, you know, a very one or two very large enterprise clients this year. So one can expect that, 2025 would look similar to 2024 or slightly better. And that is, assuming that GeM is also not lighted up, in terms of, the numbers into us.
Sorry, I think, you have to ask that 2025, you mean FY 2025 looks better than FY 2024?
2025 should look equal or better than 2024.
Okay. Okay. And regarding the, so, this question relates to the XDuce acquisition. So we acquired about 20%, would be the stake. So how are you planning to utilize acquisition?
XDuce has many Wall Street clients on their roster. Clients who have been signed up with a master service agreement and, you know, these are all name brands that they've been working at, working with for several years. In order to give any kind of a framework, including artificial intelligence frameworks or payments frameworks to anyone, requires you to initially have an MSA. An MSA typically takes a long time to close. So initially, the conversation and the relationship for us would be to use that funnel to be able to expand our presence in the U.S. and to be able to start working with clients, Wall Street clients in specific. So you would have imagined even companies like Pershing Capital and others, which are very large in that, in that region, they're all clients of XDuce.
and so there will be a bilateral engagement. You know, we essentially, they have presence. There are a few hundred people in markets, in New York City, where we think that we'd like to expand both of our, artificial intelligence framework business as well as payments business. And, you know, as we build up and grow into a relationship, then we'll, we'll, be able to tell you more in terms of, you know, other interests. But, yeah, this is investment in a strategic interest for us. That much I can tell you.
Okay. Thank you so much.
Thank you. We have our next question from the line of Akshat Shah from Niveshaay Investment Advisory. Please go ahead.
Hello. I have a question on the side of Theia platform. So how does the company foresee Theia platform reorganizing business operations?
See, Theia is a visual AI platform, which means that what we think is important in the AI world is data. And we realize that camera is data. And you know, whenever we think about fraud, authentication, risk also, including video devices and many others, and deep fake, and you name it, it's all video-based. So in terms of the use of AI, we think they can be used on text, audio, and video. And there are a lot of models that have been there, general purpose models, which have been there for text as well as, in some cases, audio. But video, general purpose models, you know, some of what I'm missing now, the GPT-4o and many others, that potentially those will also may be there on some roadmaps somewhere.
But I think that's where we think that we want to spend our opportunity on. As far as how it increases efficiency, if you look at the world and say that AI will replace all desk jobs, which is very possible, you know, given the productivity and many things that we are looking at doing in that front.
And when I say replacement, existing the way people do it, and not necessarily the job specifically, we think that the role of the manager, if you train the framework to be able to start looking at how things get done, and then it is already happening in software development, but even in other places, I think, you know, security, cleanliness, many things that potentially are facilities as far as the supervisory or the manager role, that potentially is somewhat replaceable in some ways, we feel. So, you know, in, in, you know, for us, we think that if we are able to open up the platform and allow more and more... So CCTV camera is just security, if you will.
But if you look at anything and everything that people do, everything is about management of a facility. If it's a retail store, it's a facility, and whether it's a coffee shop, it's a facility. And in that facility, you've got customers, you've got inventory, and if you're able to go and train the models to understand several of these activities, then it can bring significant amount of efficiency, and you know, just follow in some ways, you know, allow you to follow the SOPs that have been described. So that's very interesting to us. We think that our models are learning by the day. We've opened up the pilots, and we are continuously working on those pilots. And, you know, you have to iterate a lot, in this. And the faster you iterate, the better.
But I think that we've got a much better handle in terms of, you know, perhaps how we need to think about it compared to what we-... Because earlier we were solving technology problems, now we've gotten to a point in pilot where we are looking at business problems. And, and I think that's a big shift. And, and we've got a-- we're getting a much better handle in terms of how to think through this. Hopefully, this helps.
So, what do you think that make it different from other platforms like, Theia?
Theia is a general purpose model. Many of the platforms, some you'll find some open source framework which will only identify faces. So facial recognition is the only thing that the model will do. And similarly, you have other models that potentially only, you know, perhaps, look at attributes in some ways of certain things. Theia is actually general purpose. It does all of that. So it's a single model, a single framework, I would say model, single framework that, you know. And, and we've opened up the APIs to software developers. So theoretically, you can utilize it and build out your own expert model on top of Theia. That potentially allow you to do a lot more than what you're doing before.
Okay, and-
You have to think of platforms and applications. What I'm saying is that we are building out the platform. Theia is a platform, and then there'll be applications, and you can have N number of applications that are on top of Theia.
Okay, another question is that, what terms of transactions are we seeing on the platform, other, for non-GeM segment?
Sorry, can you repeat that? Can you repeat that?
On platform revenue perspective, what transactions are we seeing in non-GeM segment?
See, we have signed up international clients on the platform, number one. We already have many international clients using it, and we are working on, you know, one large, key client as well. So I just mentioned earlier that we cleared out the fact that intellectual property belongs to us. Without that clearance, we would not be able to give such similar frameworks to many clients. So, you know, with the clearance from both GeM as well as with us, there is no dispute about that anymore, that IP solely belongs to us and not to GeM.
Okay, okay. Thank you. Thank you. Thank you so much, sir.
Thank you. We have our next question from the line of Majid Ahamed from Smart Sync Investment Advisory. Please go ahead.
Yeah, so my question is, what is the primary driver-
Sorry to interrupt, sir. May I request you to use your handset to ask the question?
Am I clear?
No, sir. Your voice is very muffled.
Okay, now am I audible?
I think you should try to ask the question. Yeah.
Okay. What is the primary driver for improving the ROE and ROE considering the current year? Additionally, how much of that impact we are expecting in tomorrow's results?
Sir, we are unable to understand you. I would request you to come again in the queue.
Okay.
We have our next question from the line of Grishma Shah from Envision Capital. Please go ahead.
Good evening to the management team, and thanks for taking my question. I wanted to know, how was the competitive intensity in the Indian payments market, given that we had one major player, you know, experiencing a serious problem? So how did we see the competition on the ground, and were we able to gain more market share, therefore?
Grishma, it's Yash. So, look, we have already reported very, very strong numbers, and, from a regulatory perspective and others, definitely, we have the gold standards, that come in, even from the regulator's mark, that, we are the gold standards, when it comes to compliance and norms. So from that perspective, we have always scored and, always been, on the right side. And that definitely, if you see even on the online space, two, three of the biggest competitors or four of the biggest competitors could not onboard merchants for over a year, and same happened in the offline space.
But our growth continues as I said, when we initially in my comments, I always said about the viability and the respect over this, over the last 22 years, the CCAvenue brand has. Yes, that's the, that's the, what do you say? That builds a good goodwill and brand recognition to all the new merchants as well as the existing merchants. So that has helped us on the other growth. And as we see regulators becoming more and more aggressive, right, it is on the existing incumbents to scale up and go on. So from that perspective, I'm pleased to report that your company has always been the front leader as far as, you know, on the compliance and risk and every other thing complete good.
So even we have let business go, if we even have an iota of doubt on the merchant credentials and other things. So yes, that has contributed, while others have faltered, and I think that should give us a premium everywhere where we go on the best practices and other things that is there. So it has helped us. You've seen the numbers, so I need not comment more on how that helped on that.
What's the market share right now?
Market share is a very, this word, what we can say is that what is a digital transaction or what is a fintech also definition, we've not been able to get that. So market share, there are too many different options. There are different things people reporting. People doing, like we said, that we are not RuPay, reporting the RuPay or UPI transactions, right? Those are expanding that numbers and other things that is there, right? So the reason is that profitable transactions is what we are reporting, but we actually make a revenue on every transaction is what we are reporting on things. So market share is a different thing. People who are just doing a mass payout, they're uploading a file, counting it as a special transaction.
So, market share is a very ambiguous word as far as the payment system is concerned, so, we cannot give an exact figure that this is 8%, 10% or 30%. So, to add to what Mehul said, our thesis is that it's anywhere between 10%-15%, based on our understanding of the market.
Okay. Okay, and wanted you to elaborate on our partnership with PayPal. I mean, what's the kind of partnership that we have, and how is it going to unfold?
So the PayPal partnership is restricted to the Middle East region as of now. Middle East, PayPal did not have any presence, and since we had a significant market share in the U.A.E. region, so they wanted to tie up with us to offer PayPal as options there and also give services to local markets there. So we have given our merchant base the option to, you know, accept PayPal via this partnerships, which gives us some good revenues also, be it on transactions also and some other marketings and initiatives also.
But we have our own product as well, right?
Yes, yes, we have our own product, but then PayPal has some 400-500 million plus PayPal wallets across the country. So that adds as an additional option to the Mastercard, Visa, and the other option, the American Express and the options that we have, have an additional PayPal and the revenue out of it. So that helps. And specifically, U.A.E. being such a global financial center, right? So a lot of payments coming through and back to PayPal wallet. So an additional option is also good from the merchant perspective, that it gives all the reasons for their customers to make payment to them.
Okay. Okay, thank you. Thank you so much, and good day.
Thank you.
Thank you. We have our next question from the line of Deepesh Sancheti from Manya Finance. Please go ahead.
Yeah, hi. Am I audible?
Yes, you are audible. Please go ahead with the questions.
Yeah. Firstly, the projections which were given in FY, FY 2025, can we have... Can you repeat those projections? As I, we mentioned that INR 175 crore PAT, if we can have that projections again, please.
Hello?
Yeah.
Sunil this side. So we have targeted, we have given the estimate of gross revenue in the range of INR 3,900 crore-INR 4,200 crore. The net revenue in the range of INR 450 crore-INR 500 crore. EBITDA in the range of INR 275 crore-INR 300 crore, and our PAT in the range of INR 175 crore-INR 200 crore.
Okay. Okay. How do we plan to increase our ROE?
I think, so in terms of our, our positioning, one thing is that we are going to figure out how do our... Currently, our ROE, if you look at year-over-year, in FY 2023, it was 7%, and in FY 2024, it is at 9%. And, so I think that, you know, we've done a lot of steps to optimize our network. Our take rates have gone up in the business. I think, we're in a very competitive world, we have been able to extract and then generate profit. So since our profit after tax is expected to increase, we expect the ROI also-- ROE also to increase from that.
Okay. So you expect double digits by FY 2025? Will that be a fair estimate? I mean around 12%.
That's a fair estimate. Double digits.
Okay. Double digits. Okay. And, my next question is regarding the promoter shareholding. Now, since your brother has already been out of the promoter list, the promoter shareholding has gone down quite significantly. So, how do you plan to increase or do you have any plans to increase or raise capital by preferential or any other route to increase your shareholding into the company?
So much like every promoter, you know, we of course be doing the right disclosures at the right time. So, I don't have too much to tell you at the moment, unfortunately. But, you know, promoter shareholding traditionally would have been increased through many methodology, including, you know, grouping, acquisition, and many others. So having said that, you know, and that would also require capital to be able to deploy. So, you know, to answer your question, I don't have too much to add at this time. It's the beginning of the year for us. We've focused more on the business and how to grow back, and how to build it up for the next year. But anyway, I have more information, I'll be glad to tell you.
Okay. But going ahead, the promoters, I mean, you as a promoter want to increase your stake into the company, right?
Would that be common for most of the promoters? So-
No, there are some-
It's a rhetorical, it's a rhetorical question, right? It's a rhetorical question.
It is just for the intention of the promoter. That's it.
Yeah. Absolutely.
Okay. Okay. Fine. I'll get back into the line, if there's any other questions. Thank you.
Thank you. We have our next question from the line of Sanjana Shah from RRS Shares and Stock, Stock Brokers. Please go ahead.
Hi. So my question is with regards to AI, your video AI developer platform, right? So has this product been pitched to any governments to use on, let's say, airports or any other facilities for further monetization as of now? And, if not, then are there plans to pitch it in the future to any sort of government, maybe India or U.A.E. or any other government?
So it's a great question. And, you know, I'll tell you, it's not being piloted today at an airport, but there are multiple pilots going on across other facilities. And, you know, I think, you know, from a positioning perspective, government is very important because, what video AI platform does is security becomes core to that, and, you know, and solving security-related issues. And visual AI can play a very important role. So, the short answer is, yes, we'd love to offer that to governments. And, but today we don't do the airport. We don't have a pilot at the airport. That's what I can tell you.
Okay, thank you so much. Congratulations on a fantastic result again!
Thank you. We have our next question from the line of Pranay Jain, Pranay Jain from DealWealth Capital. Please go ahead.
Hi, am I audible?
Yes, sir, you are audible. Please go ahead with the questions.
Yes. So first one is, with the measures such as a merchant finance, that we are implementing, how much do you think it can really move the needle on the return ratios a couple of years, down the line? I understand we are taking a lot of effort on, expanding our merchant, base and also, partnering with networks. So, logically, it is going to do it, but just wanted to understand how much needle it can move on the return ratios.
See, the size and scale of the opportunity is tremendous. So you're right, we have a base of merchants and, you know, the products we don't need to define because the products are also there. So I think, you know, we are the pipes, and we need to actually drive those products into the entire network. And, you know, we understand aggregation very well as a company. So aggregating these products and being able to offer it is somewhat core to our philosophy of aggregation in some ways. So, you know, from other perspective, you know, express settlement was just one piece of what we did.
We were able to get a lot of value because merchants accepted that there will be some products that merchants will just use off the cuff, because, you know, it actually helps them expand, and gain business. There'll be other products that, you know, and in some ways, certain credit-based products, you know, they'll have certain propensity to be accepted very quickly. And there'll be others, you know, that potentially, you know, will be, will take a little bit of time. For example, any insurance-related product or some other products will have a certain take rate along with it. So, you know, to answer your question, I think the opportunity, final opportunity is significantly big, significantly large. And what we need to do, what we announced today, is that we'll build out a separate brand for it. And it'll be...
Going forward, we'll talk about in some ways, you know, merchant services. And, much like in artificial intelligence, we build out a brand called Phronetic. Similarly, in these kinds of activities, we will talk about it in terms of, you know, building out a separate brand and, you know, it'll fall under merchant finance services.
So, uh-
... Right now, in terms of what that means in the next two years, but yeah, once we'll announce the launch and talk about the brand, we will of course, you know, you know, give slightly more indications in terms of what we expect in the next few quarters.
That would be sometime next quarter, we'll be able to hear more on this?
Yes.
All right. And also-
End of this quarter or early next quarter.
Sorry, I didn't hear your last line.
End of this quarter or early next quarter.
Got it. And with the kind of authorization we have on the payment aggregator as well as BBPS, your presentation says that we are awaiting the retail payment network. So all of that put together, when do you think it's gonna start making a material uptick in our numbers?
... I think, Vishwas, yeah, the payment aggregator, we are already doing it, and the numbers that are reflecting today is due to that payment aggregator license, right? The UPI numbers also, we are there and pleased to report that now we have got a perpetual license, not a time-bound license, from RBI on the Bharat Bill payment systems, right? So those numbers are already reflected in the current numbers that you have before you, right? The NUE network is similar to a network license like a Mastercard or a Visa or a NPCI. So those were applied, a year or two back, and they are still sitting with the central bank. So there have been, different news coming in, but no official update.
We do expect that a lot of effort has gone in by the 7, 8 consortiums to put that license to apply for the NUE license. And, somewhere down the line, there is a thought that increasingly everything is being reliant on the single network that we have currently. So there needs to be a multiple networks. Just like U.S., there are 4 or 5 networks like Mastercard, Visa, American Express, Discover. In India, there is only 1 network currently, so dependency on the NPCI, on the sense there will be licenses opened up, but when is a question mark. So but as it is, we have already formed a consortium with 3 other players. I think we already reported with Reliance Industries, Meta and Google. And
Mm.
-and, if and ever RBI comes out, I think we'll announce it. But anyway, before that, I think the press is the first ones who will carry it.
Okay. Also, since you've already, you know, decided on pouring in, U.S., Australia and also Southeast Asian markets, would you be able to offer visibility by when we are going to do this in the year? And what kind of CapEx or expense will be required for the same?
So right now, the focus is on the Middle East. We already announced that we are present in U.A.E., Saudi Arabia and Oman. So Oman, even just this month, the third major bank in Oman also went live with our systems. That is Sohar International. So that is already there and in Saudi and U.A.E.. So once we have a good grip on the GCC markets, definitely, we also said in today's presentation that USA is very interesting for us, looking at enhancing investment into XDuce and other things, and putting our next-gen AI capability along with payment processing. So focused on doing those markets like US and Australia next.
But right now, this quarter, and this is closing on the funding round for this thing in U.A.E. and Saudi and making significant dent in the Saudi market. So that's the immediate focus.
I understand that is your priority. And these new regions of U.S., Australia, perhaps would be late into the year. I get that picture. But overall, what are the total investments and CapEx that we are planning for building our payments as well as platforms and any other initiatives that we are taking over the next 12-24 months?
So large regions... Yeah, go ahead, Vishwas. I think the large investments in CapEx, so you, it's reasonable to assume that it's about $5 million-$6 million per region, as a rule of thumb.
Got it. And so the adjacent things we are building around our core, it would take care of that, or is that going to be separate, on the platform side, on the AI side, all those things? I was asking cumulatively as a company, what are the investment and CapEx planned?
Yeah. No, so, a lot of things go because of every country wanting to issue a license.
Mm.
every license has a lot of requirements on data, data security, data localization. There are n number of boxes to check.
Mm-hmm.
And then beyond that, also, you know, putting all the compliances and stuff in place, to be able to report them on a basis. So I think, you know, when we talk about, you know, the framework that we build for each region, you know, we believe that there'll be revenue generating, when we build that out for clients. But they will not be, you know, more... It will be less of a CapEx but more of revenue generation for us. But yeah, I mean, I think this is all combined. It could be, only for one and not the other. And it's reasonable to assume that that's when, with the scale, there'll be slightly incremental additional CapEx, but that would be good rule of thumb to use.
All right. My last question is on the potential deals and receivables that we have estimated, such as the UPI dues from banks. While I understand on the GeM side, things may be a little gray, but what seems to be a reasonable estimate, which we think could come our way, maybe three or six months down the line? Or if you really think it could take longer than that.
We expect that will come within six months.
The potential deals or receivables, at least as a safe estimate, would be around?
few 100 crores.
Thank you so much, and wishing you all the very best ahead.
Thanks.
Thank you. Ladies and gentlemen, in order to ensure that the management is able to address questions from all participants in the conference, please limit your questions to strictly two questions per participant. Should you have a follow-up question, we request you to rejoin the queue... We have our next question from the line of Rahul from Dolat Capital. Please go ahead.
Hello? Is my line audible?
Yes, sir, you're audible. Please go ahead with the question.
Yeah, thanks for the opportunity. Firstly, just wanted to understand slightly more deeper into your guidance outlook. If you could double-click and share us the reason, lucky factor that would be driving the growth for you going into next fiscal. I clearly got the input that international could be the biggest driver of it, but if you could explain by pieces of the business that where you have the highest confidence from a growth driver perspective.
Sure, Rahul. So, you're right, international has growth potential. We expect to double on the international business. We've doubled it last year. Hopefully, we can, you know, increase it even further this year, and, with some capital infusion, opening up new geographies and so on and so forth, will potentially mean that we'll be able to expand. So Sunil is, positioning mentioned that we plan to make the share of international to 30% of our revenue in the coming years, compared to 10%, less than 10% that we have right now. So that becomes a growth driver.
But more importantly, for the coming FY 2025, you know, positioning that we have, we think that, this whole combination of, you know, in some ways, you know, merchants that we've added in the past year, and being able to continue building up from there, becomes an opportunity for us. That's one growth driver, which is additional merchants. Second growth driver for us is being able to offer certain financial products, that we have talked about in our presentation, today. Financial products meaning, you know, in some ways, credit, insurance, and many others, that, you know, we already do express settlements with merchants, but we can actually expand that portfolio. Just so that you know, we are not just looking at merchants who are, you know, currently on our network.
We'll be opening up to ones who are not on our network. Okay? TapPay is the third one. We think that, you know, the growth of TapPay, we will amplify it out this year. We've got some plans in terms of how we want to do it, and maybe we'll talk about it in the coming few weeks. But we think that that has a potential. And there is also, while we have not counted on it, but there is a positive upside on our, you know, ongoing matter with GeM. So I think with these three or four things, we think appropriately, conservatively, that we'd be able to achieve these numbers.
Right. And, on the platform business, if you could, clarify a little bit. Of course, this was a very bumper quarter, despite the GeM impact. Do you see... Is there a seasonality to the numbers that we have reported in Q4? How you expect, you said annual, it could be flattish, but will it be like, heavy on the Q4 and softer through the year building up into Q4? Is that the trajectory that you expect? And lastly, on the XDuce', when we expect it to consolidate, will it only be a minority interest, or will we intend to consolidate line by line, by taking a bigger stake in it?
So currently, of course, we are building out the business with them. And so, you know, it is a strategic interest, and as the business builds out, we'll be able to talk more. This is not a financial investment for us, so, you know, it's a good question, and we'll see how the progress is in terms of the synergies, and based on those, we will act accordingly. But, yeah, it is a strategic investment, and we'll talk about it, you know, as we go through in the coming quarters. That is as far as this is concerned. Your second question, sorry, the first earlier question was-
Platform, sorry.
So platforms. Yeah, platform is, if GeM was there, there was seasonality in that business. You know, because GeM had some seasonality associated with them. You know, if we don't have that, we've just figured out and we've taken acknowledgement because there is a little gray area in terms of intellectual property, the ownership of intellectual property, which was, in some ways, you know, quote, unquote, "disheartening for us," because intellectual property is what we live by as a company. But fortunately, with, with the progress that we have made, it is very clear in black and white and acknowledged by GeM, that all platform intellectual property or in free product, is belonging solely to us and not to anyone else.
So that is one, and that is a big, in some ways, achievement in terms of, you know, having that clarity in place. Once this clarity is in place, now we will open up the platform to 1 or 2 very large clients this year. So we don't expect a lot of seasonality. We do believe there'll be an upside, you know, if a few other things click in. But yeah, we expect that it will be flat to higher. Yeah, but we don't want to forward talk about because we have 0 agreements, you know, in terms of the commercials with GeM yet, and until we have that, we will not report any revenue.
... Just a clarification, since you have mentioned this particular aspect couple of time. I do understand the IP importance of having the complete control and assurance on it. But as far as the Q4 is concerned, we don't have booked any revenue even potentially from the new system integrator, or it is taken as a part of a non-GEM revenue in the current number?
No, we've not booked it yet. So we've reported zero revenue in Q4.
The INR 57 crore revenue in Q4 comes from our established client and any new client that we have added during the quarter.
That's correct.
And since you are not building any GeM and expect, you know, that to be a potential upside, if that has to click for you. And outside of it, you expect INR 220 crore, all which you did this year, should give or take, be around that number. So basically, this INR 55 crore kind of a run rate, with small movement here or there, should be the usual run rate for, all your 4 quarters?
Yeah, I think so. So, you'll have ±10%.
Yes.
So, but yeah, I think that we would, one would expect that that would be the case. Okay? And that will have an impact in terms of, the net revenue will be ±10% of that. Yeah.
Appreciate the color. Thank you so much.
Thank you. We have our next question from the line of Kartik Bogarapu, our shareholder. Please go ahead.
Yeah, hi. Can you hear me?
Yes, sir, we can hear you.
Okay, hi. So just wanted to... You have already mentioned that the Middle East is your priority market. Just wanted to know, what are your plans to expand to Africa, which is, like, the second fastest growing regions in terms of developing world? And, yeah.
Yeah. So I'll talk about it, and perhaps Ashok can join in. But what our thesis is that we want to... I think we are not important if we don't have scale in any region that we operate in. And so our internal bias is always to scale up, because otherwise we are not important. We are making a difference. Much like we have scaled up in India, Middle East becomes a priority and focus because we already have scale and we need to scale up even further. And so between going and covering more territories versus scaling up in certain specific regions, our bias is to scale up in regions first. And that defines our priority.
and we are not saying that, you know, we are shy about evaluating Africa or any other territory, but, you know, if the question is either/or, then we prefer scale compared to expansion across, horizontally expanding across geographies. Now, the good thing is digital does not have boundaries. And so, the other bias that we have is we follow our clients. Where if we find that our clients operate in more than one geography, then we find out where they operate in. And given that they trust us to operate in one region, then we can expand with them in other regions faster. So that will also define our prioritization in terms of where we would expand next.
And the third factor being, of course, external, which is that there is an opportunity that came up, you know, it's somewhat passive, not active, which allows us to open up. So much like what we've done in Oman, where we've given our framework to a bank, and the bank gives it out to others. We don't have a physical presence in Oman today. But we partner with bank, and we, in some cases, white label our solution for the bank so that they operate. That does not preclude and exclude us from being able to go directly also.
So I think the perspective is that if such opportunities come up, then it makes it much easier for us to open up and offer it to them, as opposed to, you know, not taking up the opportunity because we think that we are somewhat focused on scaling. So the platform is scale agnostic. It can potentially go to a bank and be offered to them. So we've done that in Oman. We may end up doing that in some of the other regions also.
All right.
But I can tell you that in FY 25, Africa is not on the horizon.
Okay. Yeah. That's it from me. All the best.
Thank you. We have our last, last question for today from the line of Satish Kumar, our shareholder. Please go ahead.
Hello, am I audible?
Yes, sir, you are audible.
Yeah. My question is regarding our... very recently, somewhere in Gujarat. So all the INR 100 crore investment, that is already completed?
Yeah. You're talking about the AI hub there?
Yeah, right.
Yes, the AI hub investment has been made. Yes.
Okay. Thank you. Thank you for the excellent results, and looking forward for better results in future. Thank you.
Thank you. We will hand over the call to the management for the closing comments.
Thank you all for your participation in our call, and we look forward to keeping you updated on all the progress about the company. Thank you all once again, and have a good evening.
Thank you. On behalf of Go India Advisors, that concludes this conference. Thank you for joining us, and you may now disconnect your lines.