Good afternoon, ladies and gentlemen. I am Akash, Moderator for the conference call. Welcome to 5paisa Limited Q1 FY 2027 earnings conference call. We have with us today Mr. Gaurav Seth, the Managing Director and CEO; Mr. Gourav Munjal, Full-Time Director and CFO. As a reminder, all participants’ line will be in 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 touch-tone telephone. Please note this conference is being recorded. I would now like to hand over the floor to Mr. Gaurav Seth. Thank you and over to you, sir.
Thank you so much. Hi. Good afternoon, everyone. Thank you for joining us. Today I want to take you through three things. The strong operating performance we delivered in quarter one, strategic context around where we continue to invest, and the differentiated opportunities that we believe 5paisa is uniquely positioned to capture in the Indian capital markets and finance market. Right. First, let us talk about our Q1 performance and financial momentum. Let me start with the numbers. Total revenue grew 14% year-on-year to INR 88.4 crores with a PAT of INR 11.6 crores. Our customer base now has grown to 52.6 lakh customers. What is more important is the quality of that growth. Our average client funding book which includes both NTS and the T+5 offering, which is also a related offering.
I mean, for the last quarter stands at, now it is much higher, but it stands at INR 422 crores, which was an increase of 10% quarter-on-quarter. This basically represents that it is not just user acquisition, but also wallet deepening that we are focused on from a customer standpoint. Our mutual fund assets under management reached INR 2,073 crores, which was an 18% increase quarter-on-quarter. Again, it shows that our customers are not just trading in isolation, but they are also building portfolios with us. We believe that is the foundation of a sticky, high lifetime value customer base. More importantly, on the product and technology side, over the past few years, we have built deep institutional knowledge of retail investors, what they actually trade and invest and combining that with the tech expertise in AI, now stands to become a competitive advantage.
I want to focus on three things there on product. First is making overall leverage and funding more accessible which is demonstrated by the growth in our T+5 book. We have expanded the T+5 offering, which is essentially when you can hold a stock for five days to 2,500 eligible scripts with interest rates starting at 0.045% per day. We have also extended NTS to 1,500 scripts with funding limits which we have increased up to INR 25 crores. These are addressing real gaps in the Indian trading ecosystem and how investors want to operate.
Second, we are radically simplifying our F&O/derivative trading obviously for serious traders, but also for non-professional traders. Our recent launches which was the profile on charts, one-click execution, and the launch of AlgoSpace, which is the name that we have given to our algo trading platform. The idea is to reduce friction and democratize structured trading.
AlgoSpace in particular is also a bet on retail adoption of algo trading. People who do not necessarily have the wherewithal to code the algorithms themselves are able to use this in structured size and package size algos to their advantage. That is part two. Part three is that we are actively working on, in fact, already on our way to embedding intelligence throughout the platform. As an example, we launched AI insights on the app to surface both stock level. Folks who are not on, a humble request, if people who are not on talking can go on mute, or I think you need to mute it for everyone, operator. Sure. Yeah. On the app, we've launched both portfolio and stock insights.
If you have a portfolio or if you have a stock, you're able to use AI to uncover insights on that, and we've seen very encouraging response. We were actually one of the first brokers to launch an MCP integration with a major LLM provider last year itself. Investment can actually execute, analyze, execute, and potentially do anything that you can do on the 5paisa app via using the conversational interface. We're building more on this and you can expect a much more simplified version, much more easier to access version of this MCP integration. I want to cover where we are headed, the strategic initiatives that we're investing for scale. The reason that I'm highlighting these products is that they're all moving to production in the next few months. There are multiple platform upgrades, complete revamp platforms, this is happening.
In our early beta stage testing, we've seen very encouraging results. Besides the individual product calendar, we have multiple strategic levers in motion. One is as you all probably who follow our company understand that we raised about INR 468 crore in the rights issue as capital in the month of April. This has strengthened balance sheet and which we are going to use for obviously continued investment in the product and tech talent for improving and taking our product to the next level, plus partnerships and plus growth marketing. That is one. Second, we are also very actively looking at the right partnerships in the AI ecosystem to accelerate our AI journey, both within the company internally for improving productivity and unleashing creative forces, but also more importantly for our customers where they can leverage the power of AI to make them better investors and traders.
Third, of course, we continue to selectively evaluate inorganic opportunities as well in the market, which can accelerate our journey and give us additional speed and talent to move forward as an integrated platform. Just a few words on where we are at and what is the sort of long-term opportunity. I think the long-term opportunity in the Indian market remains very robust even though past few months have been volatile or the past year has been very choppy. We think Indian capital markets, the journey of retail investors is still in early innings. There is a lot of financialization that is happening in the economy and people are coming to the market.
The retail audience, whether it is an investor persona, whether it is a trader persona, or whether it is a combination of both, is a very serious segment and a very robust and growing segment of customers in the market. This was not the case five years back, this was not the case 10 years back. On top of it, obviously the level at which AI is transforming tech platforms in almost every facet of life where it is becoming almost a lifestyle feature more than anything else, makes us very confident that the combination of a very strong Fintech Plus financial services offering coupled with AI, we can completely transform the market and we can do various multiple things which provide a value add to our customers. That is the bet we are making for differentiation at 5paisa.
Over the next 12 months, we are focused on setting up user engagement, adoption, and monetization for all of our new app and feature uploads. As I said, early-stage beta trials are very encouraging as we transform the platform. We are looking to also make meaningful improvements to our unit economics to improve our margin and overall tag. The idea is to get to a state very quickly where we have operating leverage from it, because at the heart of it, we are a tech platform to get to operating leverage very quickly. From there onward, the scale becomes very easy. We are very incremental, we do not have incremental costs. That is the area we want to go in. Also look at expansion into adjacent areas to organic, whether it is done through investment services, through organic product development, and both organic and inorganic ways.
I will continue to report on this over the next quarter meaningfully, and that is all I had today. With that, happy to take any questions, please.
Thank you, sir. Ladies and gentlemen, we will now begin the question- and- answer session. If you have a question, please press star and one on the telephone keypad and wait for your turn to ask the question. If you would like to withdraw your request, you may do so by pressing star and one again. Ladies and gentlemen, if you have any questions, please press star and one on your telephone keypad. The first question comes from the name of Mr. Jatin Sahani, an individual investor. Please go ahead, sir.
Gaurav sir, thank you for giving this opportunity and congrats for building up a great tech platform. We have been going on a couple of conference calls now. We realize coming from tech, I understand you guys have set up a really good tech platform. I have a couple of questions from the financial perspective. We had a good base in Q3, and then in Q4 we were really in that groove that we were doing good. There has been some slowness in this quarter. I just wanted to understand whether this is a one-off because of all the incidents that have been happening, and those probably start from Q2 onwards. I just wanted to understand how should we look into this from you so basically we can have a better perspective.
Sure. Your voice is a little muffled. Part one of the question is on slowness or what else? If you don't mind, can you-
Sure. What I'm saying is that we had a good base in Q3, and we really did good in Q4. This quarter has been kind of a bit slow. I just wanted to understand, basically, is this a one-off because of all these incidents which are happening? Can we just see growth picking up because you guys have set up a great tech platform and operating leverage is just right. This result has been really nice. Can we see growth from Q2 onwards? All right. I just wanted to understand how should we look into it?
Okay. Yeah. There was a little bit of moderation in Q1. It's slightly coming. Overall, revenue-wise, yes, we've grown. Given the volatility in the last quarter, there is obviously some rub-off effect on us as well. I mean, I won't comment forward-looking statement, but we do expect growth to accelerate from there and then from the base that we have now. We're doing all the right things on the product side, we're doing all the right things on the growth marketing side. I think in our business, those are the two most important things. I think the first one is the most important, which is continual intense focus on improving the experience. I do believe that from this quarter on, you can see an acceleration in growth.
Okay. Thank you, sir. First, my next question is, I've been also going through the presentation and investor deck that you guys have been publishing. I have noticed that ADT of growth and even the customer retention is kind of tapered off here. I just wanted to understand what steps are we taking to increase basically ADT of growth. We as an investor, we constantly monitor that. Similarly, the customer acquisition. Q3 we had kind of slowed off, and in this quarter also we have slowed off. What steps we are taking to look more robust, if I have to say.
Yes. Okay. That's a good question. Our focus, even earlier but now more so, has also been quality, obviously quantitative acquisition, but more important, qualitative acquisition. That is already getting reflected in our numbers when we look at unit numbers, right? Better RTC or revenue per customer we've seen for the last few months, in fact, for the last quarter as well, where our RTC or revenue per customer actually grown. That continues to be our focus because ideally, we want to acquire customers at a decent cost, but at the end of the day, for us, it is RTC and long-term value that the customer generates today. We've seen this with data multiple times with a lot of, obviously, experience on the platform that better RTC customers, better LTV customers give you higher retention rates.
Vice versa, the higher retention give you a higher LTV. That's really our focus, that reflects in the kind of product we're building, how we are positioning marketing, what kind of customers we are acquiring. Our positioning, the people that we try to attract to the platform are all synced to the same philosophy. Long answer to your question is that in the metrics, we're already seeing improvement in both RTC and LTV, we'll continue to do that. Now our focus is that we are able to also bring in a higher number of customers with higher quality. That is our approach, rather than just focusing on headline number of how many customers are coming in.
Okay. Sir, what about ADT growth?
ADT growth, the overall exchange ADT was down actually for Q1. It was a slight dip for us on F&O and on the cash side, it grew. Overall, I mean, except this quarter and forward-looking, I don't want to make, see the ADT growth for us also depends a lot on the kind of customers that are there on the platform. What is their average order value? What is the kind of pattern that they have? Typically, the kind of customers, our long-term customers with higher F&O have contributed to higher ADT growth for us. That will continue to be the focus because customers drive ADT and ADT drives revenue and higher value. That continues to be the focus and that's something that we're looking to do also. Not change that and be consistent with that.
Sir, just last one from my side. Private last question. Basically, 5paisa team in the market, we have couple of large players. I just wanted to understand your software. Do you think we guys are taking market share from smaller players or smaller players are still active in the market and they can regain those territories that they have lost?
Yeah. See, everybody has their own strategy. Depending on the kind of customers that I mean, scaled-up players have a different strategy, and others might have a different strategy. Yes, there could be some cross points where you ask me to say that, are they taking customers away from X, Y, and Z? Usually what we're seeing, I think in the past, I would say one and a half year or so, after the F&O changes came in the month of October 2024, there was a moderation across the board on players who were major sources of revenue from F&O. A lot of them are diversified. That is their strategy. Our strategy is, again, quality customer acquisition, not quantity. Retaining them for over a longer period of time to drive higher revenue share.
Obviously, also offer existing value-added products to them. A good example of that is MF. MF for us has grown through a lot of our existing customer retention because typically in MF cycle is that it doesn't grow with new customers, it grows with the older customers. They touch your platform and over a period of time they try out the offering. For us, it's shown encouraging growth and we really doubled from last 15 months also. Yes, there might be some moderation in terms of overall volumes, and because of that, we will see that some people have gained market share, some people have lost market share. Long-term opportunity and the long-term, I mean next three to five years is very positive that the market is going to grow and there will be enough for everybody to go after.
Okay. Thank you, sir. I would really wish you guys really well going ahead. All the best. Thank you.
Thank you so much. Thank you.
Thank you, sir. Ladies and gentlemen, if you have any questions, please press star and one on the telephone keypad. I repeat, if you have any questions, please press star and one on the telephone keypad. Next question comes from the line of Mr. Amit Mehendale from RoboCapital. Please go ahead, sir.
Okay. Thanks for the opportunity. I just want to check on the capital raise. You have raised almost INR 250 odd crores now. How do we plan to deploy it? What are the top two, three items where the money will be deployed?
Okay. The number is INR 468 crores. We mentioned that in our rights issue as well. There are the top three areas that we are deploying it or already taken action. Gourav can talk more about it. One is the exchange margin, second is around our NPS book, and third is what we call general corporate purpose, which is investment in product and tech and marketing. Of course, if we see if there are some interesting opportunities in the market and organic opportunities. Those are the main three areas. Gourav, you can get down more to specifics around pre-back position.
Sure. Amit Sir, out of INR 468 crores we have deployed capital first in exchange margin purpose, which is INR 227 crores because with effect from the 1st July, RBI said that banks can't do any interest facility to the broker, hence every broker has to raise the money. We were lucky that we got the money on the right time, hence ultimately we increased our margin. We are ready for the next phase with this. Second, we had repayment of loans about INR 150 crores to different banks and the CPs. The third is general corporate purpose, which is INR 88 crores. Overall, it is coming up to INR 268 crores.
Great. Thanks for that. The second question is on the revenue growth. We have been almost flat last three years or so. Now what things you have to fall in place so that we start growing at a healthy pace?
I think the biggest bet is for us is completely revamped product. That is happening. There's a lot of work that has gone in the last few years and specifically, especially in the last 15, 18 months on the product. Obviously, I can't talk about all the details, but that's the story and we have completely revamped or completely redone the product. Because when we felt that there was obviously a large base of customers who are on the current platform, but they feel very strongly that there were major improvements to be made and that's something. That is the biggest bet and I think we're very confident of looking at the initial data and adoption metrics that this will make a significant difference to us, our standing in the market. Obviously, the second-order effect will increase both marketing spends, et cetera.
Now we're in a good capital position after the capital raising north of INR 1,100 crore with net worth and so forth. We can strategically deploy for the right position, right book marketing and brand building which will get a boost. I think in the past, last year also there was a lot of things that happened in the market also which affected overall volume, and obviously we had an F&O heavy base.
Like many other players, we also want to not diversify away completely, but deepen the stack, product stack for this F&O base, but also then look at some of the other revenue generators. I can't talk about everything, but there are a couple of other things in the pipeline which should be meaningful revenue generators for us in the next coming quarters. Obviously NPS which is already there has shown significant traction for us, which is also getting reflected in the numbers.
Right. On the customer acquisition channels, are we broadly will maintain the same channels that we are doing currently, or is there some change expected there as well?
Customer acquisition, I mean, currently there are four or five channels running organic, referral partners, and affiliates and so on so forth. I can give you all the details, but rest sure we want to go after quality acquisition and whatever channels fits in, we do believe that organic works the best, but it does take time. That is one part of it, that building organic channels takes time. It's not that it is not there, it is already there. We have a machinery in place. Going forward, that will be our focus. Quality paid, quality organic. Organic actually covers a lot many things. It is not just SEO. I mean, multiple other things in terms of how you reach your intended audience.
Our positioning now is very clear on who we have to go after. We make the right investments in marketing to be able to do that. Yeah, to answer your question, yes, without specifying how the channel mix will change. Yes, the channel mix will change. Percentage-wise, we keep refining where to put money and how much to put money on a quarterly basis, depending on what kind of CAC plus ARPC metrics we have in each of these channels.
Right. Thank you. If I may squeeze in one last question. Just wanted to check on your third-party distribution. We don't seem to be doing any third-party distribution barring mutual funds, fixed income or any other thing. Any plan to start doing that? I mean, if you look at just a group company, IIFL Securities, you will see that there's a fairly large 3P income there. We don't seem to be doing much 3P. Any color on that? Why has this not been doing in the past, and what is the thought process there?
Yeah. I think at some point in time, I think we did try a couple years back. Right now, to answer the question, in the very near future, no. In the mid to long term, we potentially might see if there are synergies to be exploited and to be leveraged, we will do it. In the very near future, no, because I think our hands are full with what we are doing. We want to do a very good job at it. This is our core platform. Once that is done, we can look at some of the other third-party decisions. We do think that products related to your core offering are the first port of call, like NPS, which is already there, then potentially LAS and LAMF, those kind of things, then look to other things.
I mean, absolutely at term, no, we're not doing it. Midterm, we'll consider it.
Got it. Thank you. That's it from my end. Thank you very much.
Yeah. Thank you.
Thank you so much, sir. Ladies and gentlemen, if you have any questions, please press star and one on your telephone keypad. I repeat, if you have any questions, please press star and one on your telephone keypad. Ladies and gentlemen, if you have any questions, please press star and one on your telephone keypad. Since there are no further questions lined up for this time, now I hand over the floor to the management for closing comments.
Okay. Yeah, thank you so much for your time and listening in. If you still have further questions, please send us an email that gets separated. Gourav, what is that email label? ir@5paisa.com. If you have any further questions, please send an email to this email ID, and we will respond. Thank you again. Thank you so much.
Thank you, sir. Ladies and gentlemen, this concludes our conference for today. Thank you for your participation and for using Chorus Call's conference call service. You may disconnect your lines now. Thank you and have a pleasant day