Ladies and gentlemen, good day and welcome to the 2Q FY 2022 earnings conference call of Infibeam Avenues Limited, hosted by InCred Equities. 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. Sreesankar R . Thank you and over to you, sir.
Thank you, Ritika. Good evening, ladies and gentlemen. We welcome the management, welcome the participants for the 2Q FY 2022 results call. We have with us representatives from the company, Mr. Vishal Mehta, the Managing Director, Mr. Vishwas Patel, the Executive Director, Mr. Srikanth Rajagopalan, Group President, Mr. Hiren Padhya, the CFO, and Mr. Purvesh Parekh, Head of Investor Relations. I now hand over the call to Purvesh Parekh, and later we'll follow with a question and answer session. Vishal Mehta, over to you, sir.
Thank you. Thank you very much. Good evening to all of you and, a very warm welcome to everyone to our FY 2022 second quarter earnings call. We are very, very happy to announce that Infibeam Avenues had the strongest quarterly performance ever. We have outperformed on several parameters, be it payments, including bill payments, marketplace platforms where we serve clients like government e-Marketplace, GeM, as well as enterprise clients like Jio. The newly launched secured lending business as well as all businesses that we are into which achieved the high and are experiencing a very, very strong traction. From a transaction processing volume of $19 billion in FY 2021, we are now at an annualized run rate of $40 billion, which is split as $25 billion from digital payments and about $15 billion from government e-Marketplace.
In an article by Financial Express this month, GeM had mentioned that they will easily achieve a gross merchandising value of INR 1 trillion, approximately $14 billion in FY 2021 itself versus $10 billion it targeted earlier, even without the integrations of Indian Railways and others. It will double its GMV to INR 2 trillion, approximately $28 billion in FY 2023. We are accelerating towards our own guidance that we gave earlier to process the total transaction volume of $100 billion. We are happy to announce that we added 1 million merchants in just 6 months of this year, with 500,000 in September alone. Our entire tech stack, payments and platforms together, is now used by over 4 million merchants. We have also onboarded some of the marquee merchants in the payments business this quarter.
We will continue to build a very strong merchant pipeline, and we are soon going to launch a product called Tap to Phone to target offline retail merchants in the payments business. This is perhaps the last leg of retail merchant segment that we currently do not cater to. As a reminder, all the transaction processing volume that we report and we currently cater to is online only. The launch of Tap to Phone allows us to get into the offline merchant category to capture payments. Offline retail will open many, many opportunities for us as our tech portfolio is broad-based, including platforms which we allow, the cross-sale opportunity of some of our products and features. We've also launched the standing instruction module and will be relaunching multi-network card and file tokenization solution, both as per RBI guidelines.
On the strategic front, we continue to build on the payment stack and broaden the platform stack as well. There are ample opportunities for us in this space. We continue to invest in very high growth opportunities, and lending is one such space where we aim to monetize the growing merchant data and the transaction data that we have. The number of merchants will only grow as digitization becomes a de facto choice for merchants and enterprises. To monetize this data and the data that we will gather from these transactions over all these years, we've initiated investment toward building a very strong artificial intelligence-based credit lending platform, and we've been making this investment for the past few quarters.
We will work towards narrowing the credit gap that exists in India today, which is worth over $250 billion as per World Bank. We have established a very structured process to set up a new team comprising of industry and domain experts to steer this business of lending platforms. Partnerships with banks and NBFCs is also progressing well. Please note that we are not taking any exposure on lending. It's a zero liability and a zero risk business for Infibeam Avenues, and it is a profitable business model given that we are the prime integrator. We are only going to be an enabler for the partnering lenders to use the analytics from our systems. We should be able to launch this business this quarter itself, which is before December 2021. By then, we will provide more updates.
Another piece of lending is the buy now, pay later product. This is a consumer-facing product, and we are seeing growing demand of BNPL, which is buy now, pay later in the market. Our bank partners as well as market research suggests growing acceptance in usage of BNPL payment options. In this regard, we are enabling our CCAvenue payment platform, some of the industry-based BNPL service providers like HDFC Bank, Bajaj Finserv, ICICI Bank, ZestMoney, MobiKwik, et cetera. We act as an aggregator and earn an upfront MDR, which is a transaction processing cut across all the market lending BNPL options without accumulating any NPAs or any collection worries. Once again, we do not intend to get into the lending business or the consumer lending business, as we do not know this business internally. Our forte is technology, and we will continue to build on this.
As a first step towards lending, we launched a secured lending business exactly one year ago as a profit driver. We are currently doing this from our own internal accruals. Secured lending is secured against successful payment transaction for which money has already been received by us in our nodal account. Our secured lending business is seeing a very strong traction already. We disbursed on average $50 million each month in Q2 versus $50 million in the whole of Q1, so it's almost grown by a factor of 3x. We are at an annualized run rate of $600 million compared to our earlier guidance of $200 million. We aim to do $100 million a month as we exit FY 2022 and achieve an annual run rate of over $1 billion.
In other words, we have just increased our guidance from earlier $200 million to $1 billion this year itself. Please note we continue to make profits in our core payment gateway and marketplace platform businesses. We generate 60% EBITDA margins and 29% PAT margins, and hence new business launches and expansion in additional revenue and profit drivers for us. Every investment is incrementally forward investment but profitable, as this money does not go in covering losses for customer acquisition and other areas. We have been able to reach to this stage without any additional funding support. At the same time, in Q2, we have fully repaid any and all debt of about close to INR 15 crore-INR 20 crore we had in FY 2021. We are a zero-debt company as of today. We are also seeing a very strong traction in our B2B business.
That is where we are building into a neobank framework for corporate customers. It integrates well into our strategy of offering complete neobanking experiences to corporates, including balance checking, opening of bank accounts, collecting payments, making payouts, bill payments, lending, and many more. We have direct customer acquisition strategy and also through white label partnerships with HDFC Bank, we intend to take this forward. We are targeting to onboard thousands of corporates on this platform going forward and process high transaction processing volume through this platform. The TPV process under B2B does not form part of the total transaction processing value that we report today. We are serving many large corporates, including IOCL, Mahindra & Mahindra, Hyundai, Bajaj, Ashok Leyland, Bisleri, Landmark, PUMA, Cathay Pacific, you name it, and more. This B2B platform independently competes with some of the other payment companies only focused on bulk processing.
As a reminder again, the processing volume from this particular B2B platform is not accounted for in our transaction processing volume guidance. On the subsidiary front, the GoPayment subsidiary incubated in our office has now expanded into payment issuance, and it is built on our own payment issuance switch. It is working on some of the large projects with multiple top banks, including HDFC Bank, Yes Bank, and more. Our investee company, which was earlier called RemitGuru and now called Fable Fintech was incubated in our office, and it is also set to grow at a very strong path in B2B as well as B2C remittances. In the platforms business of a partnership and relationship with large enterprise clients like Jio and others continue to grow. We have made marketplace platform live for JioMart last year.
In second quarter, we've integrated payment as well in JioMart. Jio's faith as well as many of our large enterprise clients' faith to use more of our technology platforms is a testimony of the scalability of our platform business. Even top private and international banks in India have white-labeled our payments platform, while some international banks use our enterprise payment platform for card processing. This speaks highly of our systems, processes and services that we offer to large-scale-based enterprise customers. To strengthen and expand our technology offering and to capture the upside in the fintech space faster, Infibeam Avenues is planning to raise capital, primary capital. We have never raised money in this scale post our IPO in 2016, and since then, we have continued to build a profitable and a scalable business.
The cash generated quarter after quarter from operations has been used to fuel our growth. We see ample of opportunities for us. We have built a very unique business model with very strong moats that drive both growth and profitability for us. As we build a superior ecosystem of payments, from payments acquiring to issuing domestic and international remittances, neo banking, lending and cards build on a global payment network as well as the payment network internationally. We need to apply a larger investment to these businesses as we aim to be one of the top fintech companies in the country. In this regard, we are looking forward to raising capital through primary mode as growth capital. With this, I hand over the call to our CFO to quickly update us on the quarterly performance. Over to Hiren. Hiren, all yours.
Good evening, everybody. India offers huge headroom for growth in digital transactions. The digital payments market is poised for a strong growth, and mobile payments is expected to grow at a CAGR of 45% for the next five years to touch $3 trillion. COVID has accelerated the pace of digitization after the demonetization. This is early days for India. We expect high growth to continue in this sector. This decade will be dominated by the fintechs. It is important to capture the underlying growth in this sector, and we have built a strong, scalable and sustainable business to capture the upside to the fullest. Infibeam in the last few quarters has been focusing on growing its top line and at the same time ensuring profitability. We have proven time and again through our business model and our business strategies that growth can be achieved with profits.
The company in this quarter has accelerated growth and achieved a record total processing volume of INR 64,300 crore, that is approximately $9 billion and is at the run rate of $40 billion. Gross revenue was up 44% on quarter-over-quarter basis and 109% year-over-year basis to INR 311 crore, that is $42 million. EBITDA margin excluding our subsidiary Go Payments was 60%. Go Payments is contribution positive. Company's profits from continuing operations grew 33% quarter-over-quarter and 55% year-over-year. We will continue to push the limits in all the businesses to keep achieving higher TPV and hence higher revenue and at the same time ensuring profits. We achieved higher growth without significantly compromising on the take rates as we added few large merchants and offered preferential take rates to them.
Our India payments and platforms business are predominantly part of standalone accounts, contributing over 90% of the total revenue, where our EBITDA margin has actually grown to 63% in Q2 versus 61% in Q1. We have outperformed in our core business. We are debt free now, have a cash conversion ratio of over 100%, consistently generate positive free cash flow and in standalone business we continue to generate higher ROE year after year. Our performance in the quarter has been exemplary and we have shared it in detail in our earnings presentation and our press release. Now I request the moderator to now 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 the touchtone telephone. If you wish to remove yourself from the question queue, you may press star and two. Participants are requested to use handsets while asking a question. Ladies and gentlemen, we will wait for a moment while the question queue assembles. The first question is from the line of Unnati Bhavekar from KRChoksey. Please go ahead.
Good evening, everyone. You've been giving this split of net revenues between transaction revenue and other operating revenue. I believe the transaction process-based revenue represent the net payment gateway and platform-based services revenue that accrues to Infibeam. I just wanted to understand what is this other net operating revenue that it comprises of? Does it or will include all new business revenue such as your AI-based credit platform, neo banking services, then GoPayment services and software as a services revenue? That is my first question. Second is, by when do we expect the other net operating revenue to become a sizable portion of the total revenue? Or do we continue to believe that, you know, the transaction-based revenue will be the dominant driver over medium to long term?
Yeah, you are right. You are absolutely correct with this, Srikanth. The other operating revenue is basically, we have services revenues, we have derivative works revenues, we have, you know, support AMCs, VAS-based revenues, and so on and so forth. These are all non-transaction based. This is also linear actually to our models, and it is not linear to our people, but it is actually business model. It's actually a growing model. We have our existing large enterprise accounts signed up, and for which the revenue will get accrued actually to the company.
With respect to the you know, in order to educate the investors actually more from our business model perspective, we made out this chart saying that, you know, what is going to be our net take rates driven revenue in terms of transaction based, both for our payment business and for our platform business, and of course, non-transaction based revenues. Both the revenues are our two spin-off business models, and they are in line with our industry patterns and also in line with our nature of our business.
We've been hearing this, that, you know, over a period of time as the value-added services will become a sizable portion of the business, it will kind of, you know, lift up the margins and it will make it more consistent. That is the reason we question. Do we believe that this non-transaction-based revenue will become a sizable portion in the near future or will it take its own time or it will remain at the same kind of a proportion?
Right now, at the moment, you know, we are focusing on the TPV-based revenues more on the TPV because as an organization, as a business, we are fine-tuned actually for the TPV increase and the throughput is basically a measure of success. We always believe that higher the TPV, higher the revenues and so on. Therefore, you know, having said that, we will not discount the non-transaction-based revenues. That will also grow. Maybe the rate of growth in non-transaction-based revenues like subscriptions, license and setup fees and AMCs and stuff like that may not be as similar to the transaction-based revenue. But having said that will also grow.
Okay. I've been trying to compare your market share with the RBI-given data set. Is it fair to say that, you know, you've actually kind of grown the market share while, as of fiscal year 2021, the digital payment transaction value has actually fallen for the entire country. But then in your case actually it has been growing and you've been actually capturing the market share. Is it fair to compare your TPV with the RBI-given data?
To a large extent what you are saying is right. You know, I think while on one side we don't look at the market size and market share and so on and so forth as a measure of our performance. At the end of the day that is a driving factor. We are focusing actually on our own business and our own TPVs and so on, so forth. I think over a period of time that you know that is a resultant factor of market share will automatically a byproduct result that will come. As of now, yes, we are growing actually exemplarily very, very well, and our progression is actually you know on a geometric side and not on arithmetic side.
Okay. As you said that you've been trying to gain the corporate clients for bulk payments and so on, and you've been offering them a better rate. Will it not continue to affect the take rates going forward in the immediate future?
That is the model of our business and that is part and parcel of our business model. As a B2B model, actually that, you know, that is something which we will have to really do that. As Vishal mentioned in the speech actually that, you know, we are not including TPV of B2B actually in our TPV calculations. In terms of net take rates, yes, because it's a nature of the business and it will continue to happen that way.
Do you plan to kind of report it as well, the bulk payments that you do for the corporate in the total TPV?
That may be a need actually. It's a competitive info and competitive data, and as and when there is a need, we will definitely do that.
Okay. Thank you so much.
Thank you. Reminder to the participants to ask a question, please press star and one. The next question is from the line of Deval Shah, an individual investor. Please go ahead.
My question is to Mr. Vishal Mehta. He has told regarding that he will be raising capital. I want to know how much capital we are raising and from equity or debt, from which mode we are raising the capital?
Sure. When we talked about raising of capital, we are a debt-free company. In fact, we have cash and cash equivalents in INR a few hundred crores. Whatever conversation and commentary we had provided in terms of capital raise is equity capital, not debt capital. Srikanth, you wanna take over in terms of
Yeah.
what we will be utilizing the capital for?
Yeah. Sure.
Yeah.
Sure. Deval Shah, see, the primary capital, as we talked about earlier, that this is the growth capital and this is not required for our working capitals and so on. This is basically required to accelerate our growth in terms of technology upgradation for our enterprise payment platforms, technology upgradation for our GeM platform. I'm sorry, marketplace platform. New country expansion, but for the COVID, probably we would have started definitely one more country by this time. But I think that is we are little bit lag behind that. You know, once the COVID situation settle down, then we will be definitely starting country expansion actually, so for that growth capital. You know, lending actually is a huge business.
We did not visualize that, you know, we will touch $1 billion by the end of this fiscal. I think we may be touching actually $1 billion as a secure lending itself in this business, in this fiscal, by the end of this fiscal.
How much you are planning to raise the equity capital?
Sorry?
How much you are planning to raise the equity capital from INR 200 million-
Yeah, I'm coming to that. All put together that, you know, we have not fixed any specific number actually in mind. Because we are really trying to really attract some marquee investors who will be strategically and financially actually beneficial to the company. Therefore we are fairly flexible actually on that. Depending upon the investors actually that, you know, that kind of a numbers may marginally vary here and there. Having said that, this is going to be used actually for our growth of the company.
It will be a rights issue or is the liquid issues will be issued to the new investors?
It will be a primary capital. By and large, actually it will be by way of strategic investors and financial investors who is best actually for the company's expansions and company's growth actually.
Okay. Can I ask second question?
Sure.
Do we have neobanking license or is there any procedure we are going on the process of applying it?
Say it again. I couldn't understand the question.
Do we have neobanking license? Because we have started neobanking services, right?
Yes. Let me take this, Srikanth.
Sure.
There is no license required for neobanking. Neobanking acts as a wrapper over the existing banking interfaces.
Okay.
It's like an aggregator of all banks' screens. It does not require a payment license.
Okay. Okay. Got it.
a neobanking license, I mean.
Okay. Thank you.
Thank you. The next question is from the line of Ravi Mehta from Deep Financial. Please go ahead.
Yes, thank you. This is Manav Vijay. First of all, sir, am I audible?
Yeah, yeah.
Yes, you are.
Okay. Thank you very much. Sir, I have one question regarding the net take rate that we have. Now in this quarter, if my calculation is correct, we have come down to around six basis points compared to, I believe, seven basis points last quarter and close to maybe eight basis points last year. Now, considering and obviously we continues to be yeah profitable. Now, considering the hyper competition that we are having, plus the capital that we intend to raise, the aim is to grow yeah profitably continuously?
Let's say you would want to maybe let's say take the profitability slightly later, but actually grow disproportionately over, I mean, let's say over next 1-2 years, or let's say maybe for next few years?
I will take this first question, then possibly Vishwas can handle the second one. You are absolutely correct, Manav Vijay, that, you know, the net take rates have come down by 0.6 actually bps in terms of net take rates. There is a specific reason for that. Last quarter it was 6.6%, and this quarter is 6% actually. You know, fundamentally that the same quarter of last year, it was same 6.6%. By and large, if you really look at it, actually our volumes have actually gone up 1x forward and possibly 2x forward. For the entire FY 2021, our TPV value was $19 billion.
Today, we are at the run rate of actually $40 billion on an annualized basis. Despite that, you know, 1x growth, 110% growth, I think, we are able to really manage the net take rates drop actually only by, you know, 0.6 basis points actually, because of the competing reason. You know, on one side that, you know, we can stick to our 7 basis points take rates and 6.5 take rates and so on. But probably we may have to really compromise little bit of actually our TPVs. Therefore that is a balance one has to really take in the entire business so that we don't lose that kind of an opportunity.
Value is the game, volume is the game, and we believe that, you know, by retaining more and more customers and more and more merchant addition, about 1 million additions in a span of 6 months is not a joke actually, Manav. That has been done actually with a little bit of compromise on the take rates. We also believe that, you know, the travel sector is not fully opened actually in the country. The moment travel sector is completely opened in the country, there may be a slight or moderate actually traction on the net take rates as well. The strategy is to really grow the business in terms of overall business size, so that the profitability will be the derived factor actually.
Sir.
From what Srikanth said, Vishwas here. Taking on from what Srikanth said is that the reason of us going aggressive is that the numbers of the new merchant additions has already been told. 10 lakh merchants in less than 180 days is what we have been able to onboard. I think that merchant addition and other things by little bit compromise on the take rate, which anyway the main sectors like entertainment and travel numbers will come in good numbers in this quarter, as you're aware, as people travel more and go out more. So that way the take rate will also increase better for this quarter.
Having said that, the new merchant additions, the main idea here is that the money that we are making from a payment business has to be supplemented with something bigger. That's where the lending piece comes in and many other value-added services that we are planning for corporates and SMEs is where we are gonna earn. The whole idea here is to go aggressive, get in the merchants, tie them up, and then offer VAS, lending and all the other stuff. That's where the real monetization will come in. That's where the real money that will come in over and above the take rate that we are talking about, which we are already doing at scale, will improve further. Manav.
Sure. Thank you very much, sir. Thank you.
Thank you. Before we take the next question, a reminder to the participants, anyone who wishes to ask a question may press star and one. The next question is from the line of Arvind Datta, an individual investor. Please go ahead.
Hi. Good afternoon to everyone. I have two questions. The first question is that in terms of the market share in the TPV business, how do we compare to other players in the payment gateway business? Are we among the top three players? What is the difference between the industry leader and us? My second question is: Is there any update on the new umbrella entity license and when is the RBI likely to announce the licenses to new players?
Vishwas would you like to take that first go?
Right. Okay. The TPV business, which other new start-ups are claiming and many others, is a bit question mark. While we are a listed entity, we only discuss the real electronic payments that have moved from a customer's bank account into our account and then to the merchant. What some of the competitors are also doing is that bulk payout that they're doing by just uploading a file, like, say, if Dream11 winners are there after a match, and you just process that file to do the payouts to all the winners, they're counting all that as their processing volume, which is not the case.
Same thing, that's why, when Vishal said in the B2B business, the new banking business, when we do the process, when we do the payouts, to all the vendors or to all these kind of stuff, we don't count them as processing volumes. The TPV word is very, very, what you call, very lame because we are the only listed entity in the country today. The others are start-ups, so even an internal transfer from one account to that account or like even if we are doing the merchant settlement, they will count, that as the processing volumes. TPV, no one knows for sure what's the real metrics, how they count it. We are counting a clear-cut payments that moves from the bank, from the customer's bank account to our nodal bank account to the merchants. That's real processing.
Having said that, TPV-wise, different numbers are floating. Definitely now with PayU BillDesk being one of the biggest players. We are the second, we believe. There are a lot of new startups like Razorpay and Cashfree also claiming. Since they are not a listed entity and not in the open domain, how they calculate their transactions, while it's just a bulk payout also as a carrier count that as transactions or others is a question mark. We firmly believe we are the number two players there in the market as far as the TPV is concerned. As the profitability is concerned, yeah, we are only listed fintech in the country and a profitable one at that.
Right.
Regarding NUE, basically that is, you all know that, as NUE license is concerned, yes, there are four or five parties, consortium that have applied. We have participated in a consortium with, Reliance Industries and two other, foreign majors. To this, the RBI is looking at the application. That was the last update that we got. Maybe RBI will be scrutinizing the applications and maybe form a committee and other things going forward. But as of now, all we know is that they are just scrutinizing the applications. That's the status from RBI.
Thank you and best wishes for the future.
Thanks. Thank you very much.
Thank you.
The next question is from the line of Hemal, an individual investor. Please go ahead.
Hi. Thank you for giving me this opportunity. I have a very quick question regarding this quarter. As you're saying that in your new banking, the merchant, as you explained, as you're getting the merchants onboarded and then cross-selling, one of the things that you're doing is merchant lending out there. This quarter, can you please, maybe it's there in the presentation, I can't find it. How much lending did we do to the merchants and what was the potential revenue from it?
Purvesh, would you like to read the data?
This quarter, we've done secured lending to the extent of INR 156 million. That's 3 x what we've done in the quarter one. We've given a guidance of INR 1 billion by the time we exit the financial year FY 2022. This particular segment, sorry, we're not reporting it separately in terms of revenue. But this secured lending is growing month-on-month for us, and the traction is increasingly there from the merchant side.
Yeah.
Okay.
In addition to what Purvesh has said, that, you know, we started this lending piece actually in September 2020 from, practically from zero level. End of the last year, that is March 2021, we ended with $100 million actually of a loan size. Then we guided the market that, you know, we will do by the end of this fiscal $200 million, which is 2x. Based on our Q1 and Q2 performance, our present run rate is about, you know, roughly $50 million per month, actually. This would mean that, you know, we are already doing $600 million on an annualized basis, which is 3x of our guidance number.
Therefore, we believe that considering all our workings and considering the relationship with the merchants and so on, by the end of this fiscal year, we will be little crossing actually $1 billion. That is what we said in the speech earlier, that we will do actually 5x of our guidance number. We are energized actually with this kind of a growth, and this is one of the growth driver actually for the company from the, from the bottom line perspective.
Thank you, sir. I'm just trying to understand. As I understood, this was where you're paying the merchant faster than the settlement or clearing and settlement would happen, where this is one way of getting the money faster, and for that many number of days you generate through your fintech partner or banking partners where you generate some incremental revenue out of it. Is that the model out here? I mean, is it? Am I correct?
That's right. Basically that, you know, under regulation, depending upon the merchants, we have T plus X number of days, which is permitted, permissible days for settlement. In this kind of a case that we may do it actually T plus zero, so there will be a faster acceleration of settlement and therefore that, you know, for that we will charge some bits actually extra from the merchants. Our cost of capital is practically, you know, I would say very, very minuscule. Therefore that would be the profit driver for the company.
For us to think of as a metric to, I know the volumes are definitely important, but these are very low short-term lending, high volume churn. That's one way to think about it, right? What would be a potential objective, like in next two or three years, given the number of merchant base you have, given their volumes, you know, what penetration and what volume size would you be aiming for, given what you know from your internal data?
Yeah. I will give you a little bit of data. We are right now doing INR 800 crore per day, let's say, or INR 600 crore per day, let's say, in terms of processing. What we are doing actually for $1 billion means INR 25 crore per day. INR 25 crore per day resulting into $1 billion loan size. Out of our capability of INR 600 million. INR 600 million, INR 600 crore per day to INR 225 crore per day. That is basically the growth opportunity in this piece.
Got it. You're saying merchants are liking it a lot and are willing to pay extra for it. Is
Absolutely.
Is what I hear.
Absolutely. Why would they say no to that? Because they are getting cash on the day one, right? So.
Correct. Thank you, sir. This is all. This is my question. That's it. Thank you.
Having said that is just one part of the lending. If you see, there is a whole slide that we have put in on the entire new lending mechanism, the platform with the AI-based this thing, that will, you know, this kind of express lending will morph into many other things that is there, be it invoice factoring and other things. We already, if you see our presentation, there's already a whole slide to it. It will go further to that, to merchant invoice discounting, to other things in the coming days. Not at liberty to say more, but, the entire platform will morph to not just this, express lending, but many other things also.
Excellent. Thank you, sir. Understood.
Thank you. The next question is from the line of Supratim Basu from Americorp Capital . Please go ahead.
Thank you. I was just looking at the numbers and trying to make sense of some of these changes that have happened quarter-over-quarter. Two comments that I have, and then if I could get your explanation on that. One is that at the gross revenue level, the take rate seems to have gone up from 42 bps to 48 bps on a from Q1 to Q2. If I were to look at gross revenue this quarter, second quarter, versus gross revenue last quarter and EBITDA of this quarter versus EBITDA of last quarter, it looks like all the incremental revenues that you have accrued this quarter has come at half the margin of the previous quarter.
It looks like the take rate, net take rate on the incremental revenues has gone down pretty dramatically. You know, could you explain this disconnect, please?
Yeah. Supratim, let me just take this question.
Yeah.
If you would have really seen that, our merchant size is 2.4 million, and our present merchant size is 3 million, and our addition is 1 million more in the last 6 months. That means there is an attrition of 4 lakh merchants actually. The take rates effect is also there actually on that 4 lakh merchants. Having said that, in this particular quarter, especially post-COVID, considering the competition reason, we are actually have to really balance the take rates at the gross level and also at the net level, considering the fact that there is a bulk payments, there is the new customers are at the different pricing altogether.
At the same time we need to really manage the overall net take rates. We should not really drop it actually significantly below the marks on water levels and so on. We have in a way, you know, drawn up our water level actually, and we manage the system actually based on that. However, the additions of customers have come at the cost of little bit of compromise actually on our pricing, as Vishal mentioned actually a few minutes earlier. I think the trend, our strong belief is that the hospitality segment and the travel segment, where we make actually significant traction in terms of gross rates and also net take rates, and that has not been.
Even today, it has not been fully opened, both in the international sector's point of view and also from the Indian sector's point of view. Therefore once it gets opened, and even some of the post-COVID situation is not actually fully over. Once some of the sectors are getting actually over, we believe that these take rates will go northwards, upwards actually. Having said that, what is really happened in the last quarter and also in the quarter prior to the last quarter, is that there are certain sectors where we were very, very weak. For instance, education sector, we were very weak. But I think this COVID really helped us to really improve the education sector in terms of our business verticals. This is actually one of the reasons our education sector is not actually based on B2B-based.
It is based on fixed fee base. Therefore, that is also another reason why you are seeing actually.
That will, Srikanth, explain the variability on the EBITDA side. My first,
No, no, even the take rates also. Even net take rates also, because that is only on the fixed fee level.
No. Okay. At the net take rate also, but the question really is, does this gross revenue that you're reporting, INR 311 crore, that correlates one-to-one with INR 64,300 crore of TPV, correct?
Right.
Right. INR 311 crore on INR 64,300 crore vis-à-vis INR 216 crore last quarter on something like INR 56,630 crore, something like that, right?
Right.
When I look at that, your gross commission, the gross take has actually gone up from 52 bps to 48 bp s. There are two factors that I'm seeing here. One is that actually the payment gateway has been able to charge more on a consolidated basis or your client mix has actually improved in the TPV. You mentioned travels coming back, hotels are coming back, et cetera. I'm assuming that because of that, because their share has gone up, this gross take rate has gone up 42-48 bp s on a QoQ basis. But the EBITDA numbers have gone completely the other way. That doesn't make sense to me.
It looks like you are collecting more from the merchant, but you are actually paying out more than standard to everybody else within the ecosystem.
The answer is yes and no, Supratim. Another factor which probably we have not maybe articulated in the press release or maybe in the presentation is that the gross revenue includes actually some of the license revenues actually from our platform business. So therefore, on an apple to apple basis, in order to determine the real take rates actually on the payment side and on the platform side on the license-based revenue.
Unless I split the license-based revenues out of my gross revenues, the numbers will dance in a different manner also.
Yeah. That's what I asked you first, right?
Yeah, yeah.
That's what I asked you first, that whether this gross revenue corresponds one-to-one with the TPV.
That it's subject to a license fee. There is a license fee component, there is an AMS component, there is a support component, and there are certain amount of installation fee component that is also included here in the gross revenue, for which it is not actually translate exactly to the TPV.
Okay. Okay.
That is the reason why the numbers are actually dancing in a different manner. I can walk you through actually on an offline basis actually.
Sure. Okay. No, that's good. Okay. Thank you.
Yeah. Yeah, yeah.
Thank you. Participants, to ask a question, please press star and one. As there are no further questions, I would now like to hand the conference over to Mr. Sreesankar R for the closing comments. Mr. Sreesankar , please go ahead. Your line is unmuted.
Yeah. Maybe Purvesh, you can give a closing comments.
Thank you, everybody, for being a part of this call, and we look forward to seeing you in the next quarter.
Thank you.
Thank you all. Thank you all for your time.
Thank you.
On behalf of InCred Equities, that concludes this conference. Thank you for joining us, and you may now disconnect your lines.