Hi, good evening everyone. Welcome to the Q1 FY 2026 earnings conference call of One MobiKwik Systems Ltd to discuss MobiKwik's financial performance and address your queries. We have with us today, Mr. Bipin Preet Singh, Co-founder, MD and CEO, Ms. Upasana Taku, Co-founder, Chairperson, ED and CFO, Ms. Komal Sharan, Head of Finance, Corporate Development and IR, and Mr. Anand Kumar, myself, VP, Corporate Development and Investor Relations. I would like to hand over the call to Ms. Upasana for opening comments. Over to you, Upasana.
Hello everyone. Good afternoon. It's a rainy day here in Delhi. It's our pleasure to host, this is the third quarter after getting listed. Very happy to inform that the business has grown nicely. Our main and core business payments continue to grow nice and strong on all metrics: GMV, gross margin, all lifetime best numbers. While it is a strong growth in terms of revenue year-on-year, we also believe that more revenue streams will follow. Our lending business, which was doing very well last financial year, after Q2, we had a downturn in line with the sentiment in the market. As you know, we've been reporting last two quarters that we are trying to recover that business. This quarter, we have shown 30% growth in the disbursal there, which is on top of a 30% growth in disbursal that we also reported last quarter.
We are trying hard and we expect the recovery to be even stronger in the coming quarters. Overall, we are trying to grow our payments business, wallet, UPI. We are trying to recover our lending business. We have optimized on all costs. You can see the contribution margin has improved. EBITDA has also improved in contrast to the last quarter. We are well poised on delivering a strong year in terms of growth and achieving break-even EBITDA in the last two quarters of this financial year.
Thank you, Upasana. We will take a minute for questions together. Please raise your hand and wait to be unmuted, and then we will take the questions. Hi, Rahul.
Yeah, I hope my line is okay.
Yes, yes, we can hear you clear.
Yeah, thanks for the opportunity. Firstly, you know, the take rate question on the payments business. I believe the take rate has been coming off, which could be a function of UPI contribution in terms of total GMV going up. It would be good if you could share that, any insight on that part and if yes, what is the UPI, as a percentage of total GMV, in this quarter and last fiscal?
Sure. Hi, Rahul. This is Komal. Like you rightly say, the percentage of UPI contribution.
Komal, in case you're talking, I'm not able to listen to you.
Rahul, can you hear us?
I could not listen to your response. You began, but then.
I dropped off. I think there was some technical glitch. My apologies for that. Like you were rightly saying, Rahul, the contribution of UPI in our overall GMV has been going up every quarter. This quarter, UPI as a percentage of my GMV is about 35%. The same number last year back was just shy of 30%. This has been growing. In fact, we have seen almost an 85% growth in UPI in our network over the last year. In fact, we are the fastest growing UPI player in the country. To that extent, the take rate is getting impacted. I think as a company, what we focus on is the net margin that we are able to earn on every rupee that transacts through our network.
There, through a combination of reduction of both bank costs as well as incentives, we have ensured that our processing margins are about 15 basis points, which is actually industry-leading. Our contribution margin percentage is also 28% or so, which is our lifetime high. Our intent as a company would be to stay in that 22%, 23%, 25% range as far as margin is concerned. That is sort of the immediate pit stop. Secondly, I think there are a few things like interchange and Pocket UPI, which is also a very large and growing segment for us, which are not yet baked into our financials. We do know that regulatory clearance should come anytime soon. When that comes through, that would be an additional upside lever both to take rates and overall revenues.
Would it be possible to understand the revenue potential from this basis, the current GMV?
Rahul, unable to give a, you know, a guidance on the call, but I think suffice it to say that at the rate at which UPI and within that Pocket UPI is growing, it would be a significant number by the time it comes through and with the pace that we are growing.
Will it be retrospective, or will it be from the day when it would get announced?
Rahul, hi, this is Upasana. As you know, it is not possible to do it retrospectively, right? Once the transactions are done, they're done. We expect that as and when the notification or circular will come, which we are expecting should come soon, it will have a date, a launch date, and from that day onwards, the revenue will start accruing.
Understood. That's clear. Also, another question on the lending business. What is the potential for the take rates to go higher here? I'm assuming part of the uptick is because we're not doing the ZIP product. What could be the FLDG element at this point and the investment that has gone into the FLDG part? Any color on those aspects would help you.
Sure, Rahul. In terms of lending, if you see, we've reported take rates of about 8% and 8.5%. In general, what we have seen is in the past, gross take rates for this business can be as high as about 10%- 10.5%. We are currently in the FLDG sort of model where 5% FLDG is given to us as a fintech partner. We do expect that will continue, just given the fact that we have raised IPO proceeds for FLDG. At the end of the day, the unit economics or the cash that we earn from a loan does not change whether you're on FLDG or whether that risk profile is adjusted into the NIM. It is the same, right? Therefore, from that extent, yes, there is potential for the take rates to improve. We'll obviously get offset by FLDG kind of cost.
Net that we will earn on lending is a 40% margin, 40%- 45% margin. That we've demonstrated in the past also. We used to earn 45%+ margins as far as lending is concerned.
Komal, additionally, on the lending operational expenses, if you could give some color, we have seen sharp moderation possibly due to the cost related to the ZIP product. Is it safer to assume the current run rate is the recurring run rate, or is there some more cost which was there in Q1 but may not happen in Q2?
No, Rahul. That is like you're rightly saying, it is a function of, I think, one, the portfolio seasoning and normalizing, and therefore the upfront FLDG related impact, et cetera, getting more evened out. Secondly, us driving a lot of efficiency. Our collection efficiencies are improving, our underwriting capabilities, our risk models. That has meant the direct lending related expenses have gone down by 6% quarter-on-quarter. Now, if you see historically, for us as a company, this expense used to be in the 5.5%- 6.5% range. Our aspiration definitely is to drive towards that. Also bear in mind, that is a function of accounting, the regulatory policies like FLDG, and the overall macro. Longer term, that is where the business has to be.
Actually, just to recharacterize my question, I was talking about what we call as lending operational expense, which does not include the guaranteed part of it. Any specific thoughts there?
No, no. What actually comes, Rahul, in the lending operational expense is the guaranteed part only.
I think, Rahul, you should look at lending related expense, right, which you can track historical also, right? What Komal was saying in the previous quarters or years, if you see that numbers have been in the range of 3%- 4%, right? That includes everything. That includes my credit cost, underwriting cost, collection cost, et cetera, et cetera. If you even look at the overall number, that has been in the range of 3%- 3.5%- 4%.
Right. There is a specific item called financial guarantee expense. I thought that would be more related to FLDG nature, or you think it could be in both?
Rahul, two things. We are reporting in all our earnings collateral something called lending related expenses, which is directly a mathematical addition of lending operational expenses plus financial guarantee expenses. Both of these expenses are on the face of the P&L, and we add these to show lending related expense, which is the only direct cost in the lending business.
Okay, okay. I'll take this offline. Lastly, from my side, if I may, if I see the schedule which we have given on the utilization of the IPO proceed, I could see that there is a significant allocation towards the devices business, which still remains kind of untouched. Any plan here to scale this part? What is the right strategy? How should we see the revenue potential from the next 12 months in this business?
Sure, Rahul. I think, you know, the sort of devices and the offline merchant business for us, it is a small part of our business. That business has also grown 7x, 8x over the last two years, right? We do feel this is a very large market. There's opportunity for many players to play across different stratas, regions, products. We remain excited about this market, which is why the IPO proceeds were earmarked towards devices. I think what we have seen is Q1 is in general a little bit sort of seasonally softer and slower. We expect this trend in terms of both adding new merchants, devices, et cetera, to increase as we go along the year. You know, we are confident armed with the IPO proceeds to be able to accelerate this business.
Right, right. Lastly, finance cost for us has not been coming off despite there still is an IPO part with the proceeds part which is unutilized. Is this likely to go down or there won't be any change in that because we are getting the other income but finance cost may remain as is?
Look, Rahul, finance cost is a function of our debt, which actually is again more working capital or transient debt to take care of the T plus one sort of settlement cycles. I would expect that as GMV grows, while we will try to operationalize and synergize costs there, in terms of the absolute finance cost, it is a function of the overall rate environment, much more than us actually trying to bring it down. As we, of course, grow our business, we could look for opportunities to reduce it. I think for the immediate few quarters, I would actually model it to be in the similar range.
Just to give you one data point on this, like if you see our debt at the end of Q4 FY 2025, it was around INR 46 crore, and that has literally gone down to INR 32 crore now, right? The finance cost, which Komal was also talking about, is more like a working capital line that we use for our payment business.
Fair enough. That's all clear. Thank you. That's it from my side.
Thanks, Rahul.
Hi, Suhanshu. Can you hear us?
Hi, Ad[hish Branshuya from Phillip Capital]. Two questions. One is, what is the total percentage of FLDG that we have invoked? That is across how many lending partners? The second is that we had a product or an arrangement called Lendbox. What happened to the money, you know, we obtained from investors under the Lendbox arrangement? Thanks.
Sure. Hi. In terms of FLDG, as per the regulatory guidelines, we have to, you know, the default loss guarantee that is permissible to be given by the fintech partner is up to 5%. In most cases, in most of our contracts, we have 3%- 5% kind of FLDG that we have given. It's a pretty simple math. We report the credit AUA, which is the assets under management in a way, or the POS, if you like, of the loan book that we have. Roughly, you can say about 5% of that has been given as FLDG.
Is this across all lending partners? How many lending partners have invoked it?
In terms of lending, we have two models. One is the risk model where we share the risk and we get a portion of the NIM. We give FLDG and we also do collection. Across those lending partners, which is a really large part of our book today, we have given FLDG. There is also a distribution business, which is purely a risk-free distribution where it is just a legion model where a customer on our app gets redirected to the lending partner and completes the journey there. There is obviously no FLDG.
Right. How many partners have invoked it this quarter is what I was getting at?
Usually what happens is it's very hard to sort of triangulate that from the financials. In general, as a combination of the FLDG and the hurdle rates, et cetera, in general, the credit quality has been coming down. Therefore, the invocation is minimal.
Right. The second question around the Lendbox arrangement?
Yeah. Hi, [Shubhanshu]. This is Upasana. I'll take that. On the Lendbox arrangement, as you know, Lendbox is a P2P NBFC that we had partnered with for a product called Xtra. That is available on the app. All the investors who had invested in that product, you know, they are getting the proceeds of the collections back as they are coming. Every day, you know, there is collection happening on that and the money is going back to the respective investors in line with the new P2P guidelines laid out by the Reserve Bank of India.
Right. At a point in time, we were guaranteeing the IRR there, right, under Lendbox arrangement before the P2P guidelines?
There is no way to actually guarantee a number, but one can give a range or up to some sort of a commitment. That was in line with what were the market practices. Whatever Lendbox was able to promise was in line with what the other P2P NBFCs were promising in the market. I think something ranging between 9%-1 1%. Those were the kind of returns being given back to the user. As and when the RBI said that things have to change, I think they've changed across the sector. We are just a distributor. Just like we are a distributor of a loan given by a large, regular NBFC, similarly, we were a distributor even in the P2P NBFC model.
Thanks. Great.
Thank you very much. Hi, Vishal. Can you hear me?
Yeah, hi. Am I audible?
Yes, loud and clear.
Yeah, hi, team. I have three questions. First, on the lending take rate, which comes to around 8.4% in this quarter. Can you just highlight which are the key components in this, as in how much of this is contributed by upfront commission or sourcing fee, how much is collection bonus, etc.? That's the first part. Second question is, are we working on merchant advances? I think we were planning that this should go live sometime. Has it gone live? If not, what are your plans regarding that? Third question would be if you can just mention the net cash number that we have, current cash that we have on books.
Sure, sure. I'll take the first question. Last quarter, that entire disbursement happened on ZIP EMI, right, where the unit economics, we make net 4%-5% is the net we make. How the economics is, basically, there's revenue sources, interest, net interest in net interest margin plus processing fees, right? Then we deduct credit cost, underwriting cost, collection cost, et cetera. We make net 4%-5% on the ZIP EMI product. On your second question, on MCA, MCA is still very nascent. We recently started. We are building the infrastructure. Currently, it's live, but it is too small to report separately. On your third question, how much cash that we have on the balance sheet? As on 30th June, the number is around INR 475 crore.
Okay. This INR 475 crores doesn't include any guarantee-related Fixed Deposits that we would have kept aside, right?
That does not include, correct.
Yeah, right. Okay. Just one thing, you mentioned net of 4%-5%. That balance 8.4%, how does that add up to that, 8.4% on the margins?
8.4% that we show, this is a revenue as a percentage of disbursement, right? The revenue basically in this quarter, that is in last quarter, Q1 FY 2026, divided by the disbursement in that quarter. That's the take rate, the financial services take rate.
Right.
No, I think he's trying to understand the unit economics, that if you made 8, then you're making net 4, which makes.
I'll give you that split by revenue and cost. Our gross revenue, which is NIM plus processing fees, is roughly 10%-12%, right? That includes my processing fees and NIM. Processing fees will be roughly 4%-5%, and the rest, basically, it's a NIM in that 10%-12% gross revenue. Post that, there is a 7% credit cost. 6%-7% is the credit cost, and then 2% underwriting cost, collection cost, et cetera. The net we make is 4%-5%.
Sure. Okay, I think I'll connect with you later. I'm still not very clear, but yeah, thanks.
Hi, Vishal. Are you there?
I am done with my questions. Thanks.
Right. Hi, Siddhart. Can you hear me? Hello? Siddhart, can you hear me?
Go to the next person.
Hi, Fawaz. Please go ahead.
Thank you for taking my question. I have a two-part question for this. My first question being, you mentioned your gross take rate is around 9.5%- 10.5% in your distribution model. Would you be able to explain how you make those revenues in quarter one when you source? What is the percentage of revenue you recognize? Quarter two, quarter three, and at the end of collection, how do you recognize? I'm just asking you your recognition patterns over a year. That's my first question. My second question is, do we do lending to both merchants and customers, consumers? If so, what is your lending disbursement to both of them? What is your guidance for both of those sectors?
Sure. Fawaz, hi. This is Komal here. Maybe I'll take your second question first and then dovetail into your first question. We do lending to both customers as well as merchants. Like we mentioned earlier, the merchant loan part of our business is much smaller. Therefore, we feel it's too small to disclose right now. Largely, the number that you see in terms of credit disbursals is the sort of loans to consumers via our app. Again, mostly done in the risk-sharing model where we have to give FLDG and we get, you know, NIM against that. Now, coming to your first question, the way we recognize revenue when a loan is given, there is an upfront processing fee that we get, which is booked fully upfront, right, which is to the tune of 4.5%- 5%.
Thereafter, we keep earning a NIM over the life of the loan, right, which actually translates into the balance 3%- 3.5%, rendering our overall take rate to be 8%. There are also small elements of penal charges, late fees, et cetera. I mean, that's too small in the overall context. That is a general way in which we recognize and earn revenue on lending.
In this case, you only added up to 8%. If it was 12%, would the NIMs be higher?
What we meant was that the 12% number, which Anand spoke about earlier, was on the overall book. What I mentioned is the way we recognize revenue on the POS or the outstanding of the loan.
All right. Got you. Another question on the same one out here, which is, this you had said for a NIM sharing model. What if you're just a distributor, but you're not getting a portion of NIMs.
If you're just a distributor, we typically make 3.5% or so. There is no financial guarantee expense also against it. It's just a one-time revenue, which is booked upfront. It is in a way for generating that lead and just distributing the loan to that customer.
Okay. Thank you. One last question from my side, which is, what do we think about the whole FLDG situation? Are lending partners willing to contribute to FLDG?
We, as a fintech partner, have to sort of provide the FLDG. I know there's been a little bit of regulatory sort of changes and the industry and the sector is representing to the RBI on that. Like I mentioned earlier, at the end of the day, whether it is FLDG or whether that risk number is baked into the NIM, the unit economics of the loan does not change, right? The credit profile, the return that you make on a cash basis, that does not change. Of course, what happens is when you're in an FLDG model, a larger part of your cost knocks off in your P&L upfront because you've given that guarantee. That goes upfront, but the revenue that you're recognizing is over the life of the loan. In a way, both of these models equal out through the life of the loan.
In the other model, where you're not giving FLDG, your NIMs are lower because this risk number is adjusted in the NIM itself. Frankly, over the life of the loan, it's the same. Accounting-wise, the FLDG model gives you a hit first. We feel as a company that we've raised IPO proceeds for providing FLDG guarantee. It was also a regulatory directive, and it is also more prudent. I think we are right now on that model only with most of our lenders, and we expect that to broadly continue.
I totally get that. My question was, are banks and NBFC still continuing to go the FLDG model, or do they want to get back to the normal model because it's a whole regulatory situation out there? That was my question. Also, are they seeing any turbulence in the whole consumer segment, or are you guys seeing any turbulence in the consumer segment in terms of lending disbursement?
Yeah, I'll take that. Fawaz, this is Upasana. I don't believe that there is any problem with banks or NBFCs willing to work in the DLG/FLDG model with fintechs. In fact, that is the predominant model, and that is a model that the Reserve Bank of India has also, you know, very nicely documented now in the guidelines. As you can see, we have grown almost 31% in terms of disbursal this quarter. Last year, last quarter, we did 32% growth in disbursals under the same model. We are not facing any challenges in disbursing under the DLG model.
While at the same time, we are also, because we cannot cater to all of our users under the DLG model based on underwriting principles, we are also doing the lead gen model on cards as well as personal loans where there are certain users where we may not be able to give them a loan under the DLG model, but some other lender is willing to take that lead and give them the loan. We are very happy to book the lead gen fee in that case.
Got it. Thank you.
There are a few questions on chat as well. We will take the first question from Urvashi Mishra. Your payment GMV has hit an all-time high of INR 384 billion, up 53% year-on-year, but net margins are still at 15 bps. What is the roadmap to improving monetization here, especially in the zero MDR environment?
Hi, Urvashi. I think we spoke about this briefly at the top of the call. We do believe that at 15 basis points, the payments margin is quite healthy. It is probably amongst the highest, if not the highest in the industry. While UPI contribution is increasing, we are trying to optimize the other costs and ensure that this margin that we are able to earn for ourselves continues to stay. I think as we go forward, the other drivers of take rate being higher will continue to, of course, be revenue growth, more wallet growth, which we feel is a differentiated and strong use case, more devices growth, which we also spoke about, saying that we're coming off a low base. Also, you know, sort of regulatory interventions like interchange and Pocket UPI, which could have an additional revenue upside for us.
The second question is, gross margin for payments rose to 78%. Could you break down the drivers behind this jump?
Payments business, I mean, the gross margin is a function of the net margin or the net take rate of 15 basis points that we just discussed. It has increased from below 25%- 28% this quarter. We do expect it to remain in this 22%- 25% range. It is a function of the traffic mix, optimization of costs, et cetera. Broadly, it will stay in this range.
Yeah. If you see, Urvashi, if you see quarter-on-quarter expenses, that's a direct expense on the payment side. There are two direct expenses that we have. One is the payment gateway cost and the other is user incentives. Both the costs were optimized in the last quarter, that is in Q1. Our user incentive actually improved, that is reduced by 57%, while the payment gateway cost reduced by 27%. That's the main drivers for better gross margin in the payment business. The third question is, fixed costs have remained steady for five quarters. With users and merchants' growth, what are the cost pressures you are anticipating over the next two quarters?
Urvashi, I mean, appreciably, I think the fixed cost, like you're rightly saying, has stayed the same. In terms of pressures, be it user or merchant growth, I don't think we are expecting any great increase in fixed cost. I think this is a business which has a significant amount of operating leverage. As revenues grow, upside of revenues come through, you know, your direct costs like bank costs, et cetera, are controlled. There is not a significant need to expand the fixed cost base. Therefore, we feel incrementally the operating leverage in this model is quite high. We are well invested for growth, right? In terms of be it customer acquisition, merchant acquisition, I think the existing machinery is there. From a capital perspective also, the IPO proceeds are there. We do not anticipate a significant amount of pressure on fixed costs.
Any of that growth will also be revenue accretive and margin accretive. Therefore, it would stay in the same range for the next couple of quarters.
Okay. There is one more question we will take. There is a question from Deepak Ajmera. The question is, how do you see your expenses in upcoming quarters for the lending business? Also, give the reason for the same.
The lending business, I think, like we are saying, quarter-on-quarter, we are seeing improvement in disbursal. Plus, there was also an accounting change, which basically meant that a large part of the credit cost was booked upfront. Revenues were actually rear-ended. We are expecting that by September, which is when the one-year impact of the lending-related accounting changes gets seasoned, we will get back to the 40% margin as far as the lending business is concerned. What you see today in terms of the lending gross margin at 14% or so, we expect that to secularly improve and reach 40% by H2 of this year. That will also have an impact on the overall company EBITDA. We do expect that basis that recovery, the overall company will become break-even at an EBITDA level.
Of course, profitability from thereon is inevitable as a function of the fact that this business has significant operating leverage.
Hi, Siddharth. Can you hear us?
Yeah, can you hear me?
Yes, yes. Loud and clear. Please go ahead.
Okay, apologies for earlier.
I just had maybe some clarification questions. Is volumes under Pocket UPI, are they counted in this 35% UPI number that was mentioned or is that separate?
Yes, it's under this 35% number that we mentioned.
Got it. I think as your UPI volumes went 30%- 35%, but it seems the take rate, just looking at it, reduced a lot more from 68 bps to about 55 bps. Was there anything else impacting that?
No, look, at the end of the day, Siddharth, the take rate is a combination of the various products that we have, right? Like BDPS is a product which has lower take rates, etc. It is just a mathematical outcome.
Correct.
I wouldn't worry too much about quarter-on-quarter trends, but more in terms of the longer duration trends. I think more importantly, the net payment margins, which is actually, you know, in fact, slightly improved this quarter to a little bit over 15 bps.
Yeah, no, fair.
My last question, I think you had spoken about it just previously on the 40% margins in lending coming back. Just to clarify, that's not dependent on the ZIP product coming back or the shorter tenor products coming back and disbursals happening under that?
No, Siddharth, that's not dependent. Like I also mentioned, that's actually more dependent on the book seasoning and the accounting changes in a way becoming more normalized. Because till now, what had happened is, consequent to the changes in September 2024, what I'm given that the book size was smaller because the macro had become weaker, a large part of the cost was hitting upfront, but the revenue was not kicking in. Now, with macro also recovering, disbursals increasing, and that cost getting more stable, that is what is going to cause the 40% margins to come back in.
Got it.
Okay.
That clarifies it. Thank you so much.
Thank you, Siddharth.
Thank you, Siddharth. I think there are no further questions.
Let's see the chat box.
There is one question from Harsh Mehta. Why has the gross margin in financial services gone up from 4%-1 3%? I think we have already addressed this. The primary reason is the lending-related expenses as a percentage of disbursement has gone down and the take rate has improved from 7.4%- 8.3%. Hi, we are just going through the chat. We are just making sure that we don't miss anything. There is one question. When do you expect to be break-even?
Yeah, hi, this is Upasana. I think we mentioned this at the beginning of the call, but I'm very happy to reiterate. What is happening in the business is that the business is growing nicely and we are doing very well in payments every quarter. We've done exceptionally well in Q1 last year and Q2 last year on both payments and lending business. Subsequently, in Q3 and Q4, the lending business had taken a huge beating because of the slowdown in the market itself. We are working hard towards recovering that and we are seeing recovery quarter over quarter. Today, where we stand in the current quarter, we've reported a 30%+ improvement in EBITDA and overall EBITDA is also negative INR 31 crore with a swing of INR 15 crore from Q4 to Q1.
Mathematically, if we are able to achieve a similar swing of INR 15 crore, then in about two quarters, we should break even. On a conservative basis, let's say we are not able to achieve that. Let's say we are able to do, let's say, INR 10 crore of swing in the next few quarters, then also we should break even. We are quite confident that in this financial year, either in Q3 or Q4, we should be able to break even and then work towards building a far more profitable growth engine in the next financial year.
Thank you all. We have covered all the questions. We have gone through the chats as well. Thank you, everyone, for joining the call. Have a great day.