Good afternoon, ladies and gentlemen, and welcome to the MobiKwik earnings call for Q2 FY 2026, hosted by Investech. As a reminder, all participant lines will be in listen-only mode, and there will be an opportunity for you to ask questions after the presentation concludes. If you have any questions, please raise your virtual hand, and I will unmute you. Joining the call from MobiKwik are Ms. Upasana Taku, Chairperson, Executive Director, and CFO, and Mr. Bipin Preet Singh, Managing Director and CEO. I now hand over the conference over to Ms. Taku and Mr. Singh. Thank you, everyone. Do remember, this call is being recorded. Over to you. Thank you.
Hello and very good afternoon to everyone, and good evening to those dialing in from outside India. My name is Upasana, and I'm here to speak about our Q2 financial performance. I'll keep it very simple. In December 2025, we got listed. I would like to say that MobiKwik has delivered one of its best quarters from an operational discipline point of view since our listing a year ago. And why do I say that? In both our businesses, payments and financial services, GMV and margin have grown nicely. In our foundational and core business payments, we are now amongst the top three fastest-growing UPI apps in India. Now, this is no easy feat, especially given that we are so focused on delivering on the bottom line.
In terms of the financial services business, while disbursals have grown, the real hero for me is the direct cost, which is the lending-related expense, which has significantly come off from 7.3% last quarter in Q1 to 4.4% in Q2 as a percentage of disbursal. As a result, the financial results look like this. Total income in Q2 is steady at INR 79 crore, in line with the previous quarter. Direct cost is down 10%, resulting in a contribution margin of 34%, which is substantially higher than what we've been reporting for the last several quarters. Fixed cost has been controlled tightly and is down 5.7% quarter- over- quarter. Because of these reasons, we have delivered an 80% improvement in EBITDA. EBITDA is still negative at INR 6.4 crore. However, we have delivered a INR 25 crore upswing from negative INR 31 crore last quarter.
You may recall that from Q4 to Q1, we had delivered a swing of INR 15 crore, and this quarter we have delivered an upswing of INR 25 crore. We are definitely working hard to get the company back into the green. Loss before exceptional items stands at negative INR 16 crore. We have booked an exceptional item for a fraud-related incident that we faced in this quarter. We have recovered 70% of that exceptional item, and the balance we have fully provided for. In a nutshell, I would like to say that from the highs of last summer, 2024, and having lived through the lows of the last three quarters, the company is now delivering a strong operational comeback with leaner costs and much, much stronger margins. We are hoping to get back into the green very soon. Thank you.
Thank you, Ms. Taku. We'll begin the question-a nd- answer session. Anyone who wishes to ask a question, raise your virtual hand, and I will unmute you. Participants are requested to use their handsets while asking a question. We'll wait for a moment while the question queue assembles. Thank you.
Yeah, Upasana, I think we have enough questions. I will first ask Mr. Harshit Shah to unmute himself.
Yeah, Mr. Harshit Shah, can you hear me? To unmute yourself and ask your question.
Am I audible?
Yes, you are.
Oh, thank you for the opportunity. My first question is regarding, we are doing a lending business through some third party, or we are, can we do a gold loan business through our app? Is it possible?
Hi, Harshit. Thank you for asking that question. This is Bipin Preet Singh. I am the MobiKwik CEO. Currently, most of our portfolio where we are disbursing loans on the MobiKwik app is unsecured personal loan given by different NBFCs and all banks. We also have introduced loan against mutual funds, which is already live in the app, and it is getting some traction. Currently, we do not have gold loan distribution, but it is something that is being planned right now. Currently, we do not have it, but it is possible. The way we look at our business is we are like a distributor of these loans. If we see enough interest in the partnership with gold loan companies, we are happy to participate.
Okay, thank you.
Thank you. The next question, I'll ask Mr. Ankush Agarwal to unmute himself. Thank you. Mr. Ankush, can you hear me?
Yes, I can. You. Am I audible?
Yes, you are.
Yeah, yeah. Thank you for taking my question. Firstly, can you talk a bit about the contribution, the payments business? This quarter, sequentially, the number is broadly stable at around INR 600 crorer versus last many quarters wherein we have been seeing a strong sequential improvement in the payments contribution margin, and that has been our driver for the EBITDA growth. Can you talk a bit about why that has not grown in this quarter, and how do you see that contribution for the payments business going ahead? Hello.
Yeah, can you hear us?
Yeah, yeah, hi. Yeah, so you know the payments business has delivered a good contribution. In fact, the gross profit in the payments business has gone up from INR 59 crore to INR 61 crore. And in terms of gross margin as a percentage, it has gone up from 27.9% to 29.4%. There is an improvement at the margin level as well as at the GMV level. The revenue in payments is not grown, but that is because we have seen massive growth on the UPI side. As you know, UPI does not generate any revenue.
Yeah, that is clear. What I'm trying to understand, say, a few quarters back, we were around INR 30 crore that improved to like INR 60 crore in three quarters. This quarter is broadly stable on INR 59-61 crore. That's what I'm trying to understand, that the growth has been lowest in the last, say, five-six quarters in terms of sequential improvement in payments contribution business. Where do you see that? Was there like seasonality which led to lack of growth in this quarter or something?
Hi. Hi, Ankush. There is some bit of obviously seasonality. As you know, July or September typically is the kind of leanest quarter when it comes to payments, if you see past few financial years also. That is one factor. Because October-November-December and January-February-March usually typically you should see more festive spending and more spending overall in the ecosystem. We do expect that is one of the reasons. Also, you have to factor in the fact that it has grown significantly. From a margin point of view, we are sitting at clearly close to 30% with industry-leading margins of 14 basis points. We do not know how much more it can expand given that UPI is expanding for us. However, we do have some areas where growth is going to come both from customers and maybe later on more from merchants also. That will start showing up both in the top line and in the contribution over the next few quarters.
Okay, got it. Secondly, would it be possible for you to give a rough split of, say, which are the payment areas which currently contribute to revenue? We know that UPI doesn't, bill payments does, wallet does. So broadly, if you can give a sense of which are the areas which are profitable, like which generates revenue, and what would be the gross GMV split if that would be, if that you would be able to share?
We have, for the first time, put some numbers out in terms of what is the pure UPI numbers that we are seeing. That is disclosed in the earnings PPD. That is about 40% of the GMV. The remaining 60% is where we have wallet and bill payments, those categories, where we do make revenue. Primarily, we have the industry-leading wallet with highest amount, as per the wallet data that is available on the RBI website also. That is where we actually make most amount of money. We do not have the split of wallet and bill payments, but still it will be wallet 80% out of the remaining 60%.
Okay, okay. Got it. And Zaakpay would be included in this 60%, right?
Yes.
Okay. That was helpful. Thank you.
Thanks, Ankush. I will ask Mr. Akshay Gupta to ask his next question. I'm allowing him. Yeah, Akshay, can you unmute yourself?
Hey, hi. I have two questions. First question is like, what specific lever beyond cost of optimization, like will sustainability drive EBITDA profitability, and how confident are you of maintaining margin once the marketing and the lending volume scale up again? Second question related to post this fraud, how has your merchant onboarding and risk scoring model evolved post this incident?
I'll take the first part of your question. Look, I mean, what you have to understand is MobiKwik is still a, even though we have achieved good scale. Given the size of the payment system ecosystem out there and the financial ecosystem out there, we still have a lot of growth left. We look at both payments. We have disclosed the UPI numbers. We have opportunity to grow significantly in users and payment GMV, which we have been demonstrating. We are one of the top three fastest- growing UPI apps. Now, all of those users who come for UPI, well, direct UPI, P2P, and all those things do not make money. There are some ways to make money. Some of them end up using the wallet. Some of them start using bill payments. Some of them start taking loans from us. That has been the business model of MobiKwik.
When we look at payments, certainly there is good growth in payment GMV as well as users and transactions. That is reflected in the UPI numbers as well. As far as loans are concerned, you can see that where we used to be in the financial services business, it was easily above INR 100 crore of revenue every quarter. At 40%-45%, even 50% of margin. This quarter, after recovery from previous couple of quarters. Until, let's say, Q4 of FY2025, we were seeing a decline because last year unsecured lending was very tight. Lending did dry up because of the partners not willing to give loans, unsecured loans. It is on the mend again. There is also a change in the way how we do accounting or how we have historically done accounting.
Currently, the revenue that you see, INR 60 crore, is coming again back at 40% plus margin, which is the place we really wanted to be in. Because if you have a business where you can make 40% as your take rate, as your margin, then all we have to do is ensure that we scale it up responsibly, properly. It has grown from INR 690 crore of disbursal last quarter to INR 800 crore. There is a lot more headroom of growth, keeping the margin the same. That is where I think a lot of the juice on the bottom line is going to be. Because clearly this is much, much below the level that we ourselves have been historically from a scale point of view on the digital lending side.
When this fires along with the payments, then I think you can do the math and you can see that it makes profitability inevitable.
I think, Mr. Akshay, if you have no further question, I'll move to the next person. If Mr. Akshay has, I'll request him to ask again. My next person is Mr. Rahul Jain. Mr. Jain, if you can hear me, I'm unmuting you. Please go ahead with your question. Mr. Rahul Jain, if you can hear me.
Yeah, yeah. Is this audible?
Yes, you are audible. Thank you.
Sure. Firstly, congratulations on good execution. My question for the lending business is, why are the take rates lower in this particular quarter? Is there a mix change in the business in terms of some secured part or any other element? Secondly, there was a marked reduction in the lending cost. Are these pertaining to any residual cost pertaining to the ZIP business, or is this more to do with some alignment on absence of FLDG cost or any other factor that would have supported here?
First question is very straightforward, Rahul. Basically, see, as we evolve. Ultimately, when you distribute unsecured loans and you do FLDG kind of risk arrangement, that's when you get the highest margin. For better discipline and for various reasons, you can't give as a MobiKwik, you can't give loans of 10 lakhs of rupees or even 5 lakhs, 7 lakhs of rupees and take risk sharing arrangements. There we typically tie up with companies and do pure distribution. When we do pure distribution, the margins are typically top line itself is 2%-4%. Because that is getting added on to the FLDG arrangement, that's why aggregate you see that there is a slight decline from 8.4% to 7.59% on the overall take rate of the lending business. We do believe that the sweet spot for us is going to be this only. Ultimately, the main thing is what is the bottom line? The bottom line is that out of 7.5%, we get to keep 3% plus in our pocket as a profit from the lending business. That is what we want to continue.
Within on the cost part of it, what has led to this cost drop? Is it the FLDG element which was relatively much lower this quarter?
I'll tell you, since last quarter, if you see what lending is, it's a strange business where if you don't do the business, then you only get the cost, but you don't get income. If we see from the last quarter, let's say just before IPO, our disbursals were reducing, especially on the EMI side. It hit a bottom about two or three quarters back, I think Q4 FY2025, it was the bottom. Since then, it is increasing. As it increases, basically, the cost of the older book is reducing and the income from the newer book is coming. That is something that we have explained earlier also. Clearly, that is what is happening right now. I would say where we are today is this quarter and upcoming quarters is a more stable outlook of margins, which we expect that we will continue.
Like you just alluded, this quarter we are at 2.8%. Basically, the lending margin is what you are saying is the right way to look at it. The current level of margin in the lending business is the most sustainable run rate.
Yes, that is true. What we see today is the lending margin is at 3.17%. Historically, also if you see when we were operating at scale, it was 3%-3.5%. There is obviously more we can do. We can do more cross-sell. This is a sweet spot. 3%, 3.5%, 4% is what this business makes. If you disburse INR 100 of loan, especially on unsecured loan, you can expect to make 3%, 3.5% as your net profit in the business.
Right, right. And secondly.
Sir, may I request? Sorry, sir. There are other people in the queue. Can I ask you to come back and ask the next question? Maybe I can take the others.
Sure.
Yeah, thank you. I will ask Mr. Sunil Jain to unmute himself to ask his questions. Thank you. Mr. Sunil Jain, if you can hear me, you can unmute yourself.
Yeah. Am I audible?
Yes, you are.
Yeah. My question again relates to financial services. You said that the take rate is around 8% and then margin is at around 3%. What will be the growth driver? If we see your credit partner AUM, which is around INR 1,200 crore, it is there since the last three quarters. What will be the growth driver for here?
Growth driver is simple. Sunil, that basically you have, if you have good users and more good users on the platform. Then our credit partners want to disburse more loans. It is very as simple as that. They want to select good quality customers to give loans to so that they can have a credit cost which is controlled and therefore can expect good profits. That is the on that we are aligned with them. As we source most of our users from our payments business, what we said is that we have seen significant growth in the payments business in terms of the transactions. The share on the UPI is increasing. We expect that many of those users who are using our app for UPI for payments will be eligible for the loans. It could be unsecured loans with FLDG. It could be unsecured loans just purely on distribution.
It could be other secured products like we have loan against mutual funds or like one of the gentlemen was asking about gold loans. Some of those products we do not have right now or are very, very early. That is how we will be cross-selling these products from our lending partners to our customers and make margins.
Ultimately, it's AUM which need to grow.
A lot of our business comes from disbursal, not just necessarily only AUM. AUM is one part of it. I'll give you an example. If you disburse INR 100 crore, you do end up making between 3%-4% purely as distribution, even if your AUM is not growing. That's one. Second is AUM is relevant only when we do FLDG kind of business. When we do purely distribution. Like for example, for some of the NBFCs, we do disburse loans where we don't take any credit risk under FLDG. That doesn't come in credit partner AUM.
Okay. So if I talk about FLDG, then how much disbursement might have happened or how it is growing and how you are targeting it to grow?
Just specifically to your question, 80% of the disbursal has been under the DLG model and the balance 20% is on a distribution model.
I think one way to look at it is again, I would bring it back to what we are disclosing. You please look at how much disbursal we are doing. If we are disbursing, let's say INR 800 crore last quarter, like Q2 FY2026, then we are saying our unit economics is we are making top line 7%-7.5%. Right? That is inclusive of both FLDG and distribution. Currently, we are not disclosing the split, but maybe going forward we will look at it. Currently, as Upasana is saying, it's 80% is FLDG and 20% is distribution.
Okay. This disbursement, whatever you had done like INR 800 crore plus, is there anything in your mind how much more it can grow and how fast it can grow?
It can grow a lot. I mean, there are our peers, like there are digital lending easily doing INR 800 crore, INR 1,000 crore a month. And we are doing INR 800 crore. People have been doing INR 800 crore a month last year, right? We are still only INR 800 crore a quarter. We have many more customers. We have taken a more disciplined approach towards this because, like I said, we want to grow this in a structured fashion while preserving the margins because we know that we need to grow it only a little bit more in order for us to become profitable. From there on, the journey will continue. We are not in a hurry to grow this very, very aggressively at the cost of the portfolio.
Okay. Great, sir. Thank you very much.
Thank you. I would now ask Shlok Kakolya to unmute himself. Thank you. Shlok, if you can hear. Yeah, thank you. Yeah, go ahead, Shlok. Okay, we cannot hear Shlok. Maybe I will move to the next person and perhaps Shlok can join again. I'm moving, the next in queue is Mr. Bhargava. I'm unmuting you, sir.
Yeah. Good evening, everyone. I've got one question with respect to the exceptional item that the company has presented. With respect to the fraud that has been identified. Just would like to understand what has actually happened during the period and for how much period was that fraud has taken place. And why the internal controls in the company couldn't detect. Hello?
Yes, sir. Thank you for that question. The incident took place specifically on 12th of September. It was caused due to a technical bug in our system, which is an inadvertent mistake of our people as well as our processes in terms of the software development change management process, where it should have been caught, but it was not caught. The specific code release had gone out on 9th of September. While the bug was there from 9th to 12th, it did not impact the company from 9th to 11th, and it is substantially exploited in the wee hours of 12th morning by about 2,400 merchants, registered merchants of the company from an area in Haryana called Nuh and Mewat.
These people figured out the bug where, when a customer was making a payment on a QR code using where the customer was a MobiKwik app customer and the QR was also deployed by MobiKwik, even if the transaction had failed on the customer side and the money was not debited from your account as a customer, even then on the merchant side, it was showing that the payment is successful. Therefore, the amount got accumulated. In the early hours of 12th, they were able to get a payout for that, an unauthorized payout for these transactions. Of course, promptly in the morning, as soon as the company discovered it, all payouts were shut down. We have reported this matter fully transparently to the stock exchanges on 16th of September to our regulators for our various licenses.
As a matter of fact, from a financial perspective, I would like to give you an update. Initially, in our FIR registered against these merchants, the estimated amount of unauthorized settlements was INR 40 crore. Out of that INR 40 crore, the company has so far secured INR 28 crore, of which more than INR 21 crore is in the bank account of the company recovered from the merchants. For the balance, we have court orders, and the credits to the bank account will come in the short term. After removing the secured amount, the net estimated amount is about INR 11 crore. From a perspective of abundant precaution, the company has taken this as an exceptional item in the current quarter.
While we continue to make aggressive progress in terms of legal recovery process on this amount as well, as and when we collect this money month over month, quarter over quarter, it will get reported in the financials of the company.
Yeah. Thank you for the clarification. We appreciate the company's transparency with respect to this. At the same time, keep the control at bay so that nothing happens in the future. Thank you.
Yes, yes. I was just about to get to that. The company has taken this matter very seriously, and to that extent, we have appointed a third-party advisory to help us analyze and identify the gaps in terms of the processes of the company, the org structures and the people of the company, as well as the policies of the company. I can tell you some of the early steps that we have already taken. For example, we have blacklisted certain PIN codes and geographies in the country where we will not be onboarding merchants. We have enhanced our guardrails in terms of newly acquired small merchants, what are the velocity checks for them, the spikes in terms of GMV and payouts for them. We have also made significant updates in our software development process where additional quality checks as well as code reviews have become mandatory.
Outside of this, we have also, from an organizational change perspective, decided to create a separate risk function or department in the company. Although we have merchant risk and payment risk teams in the payments business and credit risk teams in the lending business, we will bring the entire ambit of enterprise risk as well as a third-party risk under one umbrella of a CRO for which we are in the process of hiring.
Okay. Yeah. Thank you. Thank you for the detailed explanation.
Thank you, sir. I will ask Mr. Sanjay Laddha, who's next in the queue to unmute. Mr. Laddha, can you hear me? You can unmute yourself, sir.
Hello. Is my voice audible?
Yes, you are.
Thank you for the opportunity. I just wanted to know, in the last call as well, we have said that our payment decreed will fall or not fall further. It will stabilize at 60 basis points, 55-60 basis points. In this quarter, the payment decreed has fallen to 48 basis points. I just wanted to know your thoughts and what is the fully target or is that one-off, or do we see the decreed will go up to 55-60 basis points again in the year itself?
Yeah. Hi, thanks. Thanks for asking that question. You are very right that the decreed in payments has come off from 56 to 48 basis points. I think we also, in the previous slides in the payment section, have reported that UPI is growing very rapidly for us, where from a 35% share of our GMV, it is now 40% share of our GMV. Because of that, our decreed is coming down. I would also say that, look at the net payment margin, which is below the 48 basis points decreed post our payment gateway loading cost of the wallet and the user incentives. We are still retaining 14 basis points of net payment margin, which is one of the highest net payment margin in the fintech digital payment sector.
I would say that while we are working with the growth in UPI, which we want, at the same time, we are trying to manage the bottom line. A few additional line items I will say here is that a good chunk of our UPI volumes, which we have reported for the first time as an individual item, are coming from our product Pocket UPI, which is where the user is paying via wallet on the UPI rails. While this part of the UPI GMV also does not make any revenue right now, there is an expectation that a revenue might start coming on that part of the UPI GMV, which will add to our decreed.
You rightly mentioned that your cost has been going down or it remained flattish. In a matter, and therefore your margin are 14 basis points, 14% of the net payment margin. In the same way, I just wanted to know in both the ways, in the financial service segment as well and the payment decreed. The decreeds are going down, but the cost has been quite impressive. You guys have done that on that side. Just wanted to know, these numbers, which we see at the bottom line of this, is the number maintained over the years going forward as well, or these are one-offs or it can go up as and when we see again. We wanted to increase our customer base on the payment or on the merchant side, and therefore the marketing and that expense will go up, and therefore things will go up. If you can comment on that side.
Yeah, I get it. I get it. No. So absolutely, let's take one at a time. If you see payments, we are showing you the net basis point every quarter, and you can see that it is in the same range between 13, 15, and 14 basis points. We are continuing to retain it in the same range. In financial services, if you will see, we used to report 3%, 3.5%, 4% as the net margin, and then last two, three quarters, we were hitting the rock bottom. This quarter is the first time we are back in 3% net margin in the financial services business. We expect that both these businesses will continue to operate with these margins, which are the new normalized margins. Also, if you will see, these margins led us up eventually to our contribution.
If you see our contribution margin, in quarter two last year, it was at 40%. After that, it has been in the range of 23%-27%. This quarter, we are at 34% contribution margin, which is exactly what we are trying to say, that both the margins are expanding. These are healthy margins. We do expect that in the coming quarters, we should improve our contribution in totality even further from 34%, and thereafter start delivering profitability at the bottom line. That is exactly what we are trying to say. These are not based on one-offs. This is actually the really normal position of the business, which was significantly impacted last three quarters because of the downfall in the lending business. The lending business is still making a comeback. While the cost has come down, the revenue from financial services, even this quarter, is about INR 60 crore.
If you check our quarters last year, we were reporting INR 100 crore, INR 120 crore, and even higher revenue from that business. We have still not achieved the best outcome in financial services. We are on the comeback is what we are saying. These numbers should improve further as we go forward.
This lending-related expenses, which is as a percentage of GMV, is 4%? Is the new normal you are trying to say that.
Exactly.
Okay. So just wanted to know that. Our business model on the financial service side is based out of DLG. That is. Not a very. Basically, most of the companies, as you scale up and as you figure out the business, that model is not a viable model for the longer perspective, if I tell you, because our peers have been defocusing that business model, and we are focusing that business model. That's one area where I want your clarification that this DLG, why. Because the lenders are not giving. Proper lending rate or something sort of that, or our risk parameters are not that place. So therefore, we are doing DLG model. If you can clarify on that side.
Hi, I think Sanjay. We do not agree with this point of view because. Look, I mean. The Reserve Bank of India has specifically approved. DLG as a proper compliant model of digital lending. There must be a reason why this has been approved. It's also now. The model is not the same as how it used to be, let's say, two years ago. Right now, there is a lot more transparency in the entire business. Even lenders are required to disclose their numbers when they work with LSPs like us. You can go and check on their websites. They are supposed to disclose what numbers they do with MobiKwik or any other LSPs. We are a lending service provider. There is also. Clear focus on customer protection with capping off rates or making sure that. A customer is not taken for a ride by charging too high of an interest rate or any. Charges which are not. Bad or anything like that.
Along with that, collections, etc., there is a clear code of how the collections need to be done. It is fully compliant. We believe that today. DLG is a big, big part of the entire digital lending scenario in India. It's not just distribution. For us, we will continue to pursue a healthy mix of DLG, FLDG , as well as, you know, o ther pure distribution mechanisms along with secured loans. Where the risk will be non-existent.
Thank you. We'll come back in the queue. Thank you.
Thank you. The next person in the queue is Darshil. Darshil, you can unmute yourself.
Good evening, team. Thank you so much for taking my question. Hopefully, I'm audible. Hello.
Yes, yes, you are.
Yeah, yeah. Firstly, congratulations on such a great jump in profitability. We hope that this continues. Like the way we are going right now, I feel we should be able to reach EBITDA positive by the next quarter. I would want to ask the further step, when do we see ourselves being PAT positive?
What I will say is that thank you, hi Darshil. You have hit the nail on the head. Look, I mean, there is about INR 6-7 crore of financing cost per quarter. I think INR 2-3 crore of.
Depreciation.
Depreciation cost. It is like total INR 8-10 crore of real cost below the EBITDA. You can do the maths and find out when we will be PAT positive.
This rate of improving by around INR 28 crore odd in EBITDA will continue, right? That's a rate that we can take roughly.
This quarter, we have improved by INR 250 crore. Previous quarter, we have improved by INR 150 crore. We want to say that this is the range in which we should improve. We are definitely trying to get to profitability as soon as possible, first at EBITDA and then at PAT level. That is our endeavor. We will be working hard next quarter also, just like this quarter. We do hope that we will turn profitable sooner than later.
That's really great to know. I just want to know that while we are doing great work on profitability, I understand our users and everyone's increasing and UPI payments are there also. Our revenue is in the range right now since the last few quarters. When do we see the push to revenue going for a higher growth rate? With that also, I want to know that our employee costs have also reduced. Are we reducing our headcount or what is that also?
There is, on headcount, there is no as such reduction. These are just what I would call as seasonal variations. We have a strong team, leadership team, and an extended team. We continue to work accordingly. I think there is obviously always minor variations in the number from quarter to quarter. On the revenue side, what I would like to say is I think what I need you to focus on is where we were last year, where payments were generating between INR 150 crore-INR 160 crore-INR 170 crore of top-line revenue, and another INR 130 crore-INR 150 crore was coming from the lending piece, from the financial services. Right now, payments have actually significantly grown if you compare to last year. Sequentially also, this quarter is seasonal, so it is a little low.
Payments have grown significantly, and lending has actually degrown because from INR 130 crore-INR 150 crore to now, it is INR 60 crore. Also, there has been change in the way we book the lending revenue, etc. Therefore, there is actually impact on top-line or revenue purely from the lending side, which as it will recover, first it will recover in the bottom line because it is highly profitable business, and then it will start impacting the top-line over the next few quarters.
Okay, okay. That helps a lot. So basically, I could summarize that. Q2 was a bit seasonally weak, and we had some accounting changes. H2 would be a better quarter in terms of revenue profits. We are, as it is, working very hard on it, and that's reflecting.
Yes.
Yeah. H2. Could we quantify how much, what is our target? I know it's difficult, so I don't want to go deep onto it. Yeah.
Darshil, there are a lot of people on the queue.
Just one last question.
I'll just take this last question. Yeah, just last question.
Yeah, thank you so much. I understand it's very difficult to quantify it, but when do we see our lending also business reaching back to where it was? I think right now, from all the microfinance companies, they are also starting to adjust to the guardrails and everything. How do you look at it? It doesn't need to be an exact number, but how do we look at it? Maybe in FY2027, we can reach back to where we were. Any just commentary on that growth would really help.
Look, while we are improving the disbursals, last two quarters, we grew the disbursal in credit by over 30%, this quarter by 16%. These are all high-quality disbursals in the long-term sort of 12-month loan product. You are well aware that as of April 1, we have discontinued our short-term BNPL product completely, which was a sizable amount last year in every quarter. From INR 60 crore revenue mark this quarter, it will take us time to get to first 100 and then 140. That was the high previously where BNPL was baked in. We do not expect we will reach that 100-150 revenue number in lending alone this financial year. It will be something that we can look forward to in the next financial year.
Okay. Thank you so much.
Thank you. I'm going to ask Shlok Kakolia, who has joined back on this call. Shlok, if you're able to hear me, please unmute yourself. Shlok, you can unmute yourself. We're still not able to hear you. Maybe you can send me your question in the Q&A. Meanwhile, I'll move to the next person. Sorry about this. I will move to Mr. Smith Shah. Smith, you can unmute yourself.
Yeah, hi. Am I audible?
Yes, you are audible.
Yeah. Congratulations on good improvement in the operational performance. My first question would be, how much is Pocket UPI as a percentage of payments GMV? A rough number would also help.
Yeah, we don't have that handy to disclose this time. We'll see.
What I can tell you is that you look at the wallet numbers in our website, in terms of GTV, that will tell you that is the upper cap of the Pocket UPI numbers.
Okay, okay. Got it. We were expecting some MDR or interchange fee on Pocket UPI. When are we exactly expecting this? Can you give us a rough timeline?
The update on that is that the industry body has already agreed on that revenue commercial. We are awaiting that circular to come from NPCI. We were also expecting that it would have come in Q2, but it has not come so far. We are hopeful to receive that circular at the industry level. As soon as the circular comes, we expect that within a couple of months, that revenue will start streaming in.
Okay, okay. Got it. And one more thing, like the digital credit GMV has grown 17% this quarter sequentially. If I extrapolate this number, and if you do a 15% sequential growth in Q3 and Q4, you get to an annualized digital credit GMV of somewhere around INR 3,500 crore. Now, considering that all the one-offs are behind us, and this is now keeping this as the base, by when do you think that you can double this, considering that it's a low base as compared to our competitors?
Good question. Look, I mean, I don't want to comment on your projections. You just draw a straight line on what has happened. What I want to say is that we don't want to be in a mode where we aggressively grow digital unsecured lending. We want to be systematic and disciplined about it, especially because there is also a risk component for the risk-sharing part that we are doing. We will see that happening in a structured fashion. We don't want to grow it extremely aggressively at the cost of the risk in the portfolio.
Okay, but like 15%-20% sequential. Yeah. Sorry.
Yes. I think that's a reasonable assumption.
Okay, okay. Got it. And just one last question. How many new lending partners have we added this quarter?
So we have about two new partners that have been added. Total number of partners is around 10, and out of which roughly half would be the major ones.
Okay, okay. Got it. Thank you so much, and all the best. I'll get back in the queue. Thank you.
Thanks. I'll ask Mr. Prateek to unmute himself. Yeah, go ahead, Prateek. All right. I think there's a challenge with Prateek joining us. I will come back to Mr. Rahul Jain. Mr. Rahul Jain, I've unmuted you. You can unmute yourself.
Yeah, hi. Thanks for the opportunity again. My question is related to the fixed cost side of it. We have seen significant saving, including the employee cost. If you could attribute to what are the one or two reasons of a major saving happening in the other expenses, as well as what could have led to the employee cost also going down sequentially?
Rahul, there's not much change. There is some change. It's a little reduction, about 5.5% reduction. We do expect this cost to stay stable. Also, I wanted to say, actually, AI will end up saving cost, and which it will, especially on the operation side going forward. Currently, we don't have any savings like that to talk about. We do expect that going forward. Maybe in a few quarters, we'll be able to demonstrate savings in fixed cost due to automation of tasks, especially operational tasks, which are manual in nature.
Right. And just last bit from my side, there was this page on the future opportunities that you have highlighted. If you could talk about what are the timelines and revenue potential we are expecting from that, and especially on the collection side of the offering that we have, will it be pertaining to the lending that we will distribute, or it could be offered as a SaaS to even other bank or non-bank partners?
On the collection side, what we are envisioning is we have built our own in-house collection system, which we are using, and we are adding a lot of intelligence and AI on top of it. We believe that once we have good confidence in this particular product, which we completely use, so we do not use any external software for managing the collections that we do. This is a completely homegrown product. We do expect that we will be able to make it very good and very attractive, and then bring it to the market and offer it to the industry, especially banks, NBFCs, and even other digital lenders, who can use it as a SaaS or a hosted model in order to leverage the same features and functionality that we are building for our own use case.
In terms of your other question, Rahul, in terms of the value unlocking of these future opportunities, I think we've listed them in the order in which we expect them to pan out. Zaakpay can be the first one that can start delivering in terms of numbers, followed by the wealth or the broking side, whereas we do have a wealth tech offering on our app, but we have not yet launched the broking platform, and it is under development. So Zaakpay, followed by broking, followed by FX Retail. Like Bipin mentioned, we are using the QuickCollect AI first to bring efficiencies in terms of collection on our own business, and then we will look to see if we can monetize it externally.
Sounds exciting. Thank you. That's it from my side, and best luck for the time.
Thanks. Upasana and Bipin, there are a couple of questions on the Q&A chat box. I'll take them one by one. This is from Shlok Kakolia, who couldn't unmute himself. He's from Xylem PMS. He's written, "Congratulations on a solid quarter." His first question is, "Could you elaborate on the long-term vision for Zaakpay and how much capital do we deploy here annually? And what's the roadmap towards its profitability and any monetizations?" That's question one. The second question is, "As the highest cost in payment MDR is towards payment gateway, how are we trying to integrate Zaakpay as a payment gateway to reduce overall costs?"
I think the first question I'll take first in terms of Zaakpay and how much are we willing to invest in this business. I would say that we have just gotten started. In fact, I would urge all of you to check out our new website, zaakpay.com, where we are making the experience of onboarding super easy and convenient, especially for first-time internet founders. We are just getting started on that. We don't expect that it will give us very solid outcomes in terms of the MobiKwik top line and bottom line. I do expect that where it is, because it's coming off a low base, it's a small business right now, we do expect that it will grow nicely. In the next year, it should start giving us some meaningful numbers in terms of consolidation to the top line and the bottom line. Zaakpay by itself is operationally just slightly negative, a couple of crores plus or minus. It's not really a big drain on the overall financials of the company.
As the business is scaling up, we do expect that it will break even also in the next few quarters. Your second question on the payment gateway cost, that is for MobiKwik and whether we are using, how do we use Zaakpay to bring efficiencies? I want to tell you that we are already using Zaakpay as one of our main payment gateways that we use for all of MobiKwik's business. Of course, because MobiKwik's business is at significant scale, we also have three, four other payment gateway partners, but Zaakpay continues to be in the top two or top three partners at all times. We do exert effort in terms of the integrations with banks and the alliances with banks to continuously bring down the payment gateway cost. You can see this quarter also, we have delivered strong improvement in the payment gateway cost as a percentage of the total payment GMV that has been processed.
Thanks, Upasana. I'll take the next question again in the chat. Could you elaborate any of the insurance, or do you have an insurance cover for digital frauds?
We do have insurance for digital fraud. We will be utilizing. All of these opportunities, whether it is the legal recovery process or the insurance process, to bring back the exceptional item of INR 11 crore that we have taken this time.
The next is from Saeed Jafri. The next question he's asked is, "The analyzed GMV per user for non-UPI has been flat at INR 5,500 per user for the last five quarters. How should we think about this? While we have a large user base, what is our MTU and your thoughts on activation rates?"
In terms of MTUs, firstly, we do not disclose that as a KPI. We hear you in terms of the metric that you have revealed, INR 5,000 per user. I would like to say that we have registered a lot of customers over the years. In the recent past, we are now working harder to acquire higher quality users so that they would do a minimum of three, four, five payment transactions. All the platform and sort of first increase their sort of GMV or transacting value per user, and then look at their revenue per user. From payments, take them into the other verticals in terms of cross-sell. For a UPI user, take them into bill payments or wallet payments and lending and wealth so that we can improve our lifetime value from the customer. All of this is from the recent time. It will take some time to translate into the derived KPIs that you are talking about.
From Smith, there is another question in the chat box. He has asked, "What's the status on the NBFC license?"
The NBFC license work is in process. I think it was reported publicly that we had infused the required net worth capital, as in we had infused the capital required for the net worth to make an application. The work is ongoing. As and when we have a firm update to provide, we will.
There are a couple of hands in the queue. I will just check if they have any questions. My first person is Mr. Harshit Shah. Harshit, would you be able to unmute yourself if you have a question?
Hello?
Yeah, yeah, Harshit.
Am I audible?
Yes, you are.
I have one question. We are doing two kinds of lending business. One is through FLDG, and one is through distribution. Just want to understand. What margins do we make if we make only distribution business, and what margins if we make after deducting the operating expenses and risk-related charges? Is it not profitable to make a distribution business more? This is my question, sir.
It's hard to give you exact numbers, but what we can tell you is that as a take rate, you end up making more in the FLDG business, which is why your top line can go as high as 7%-7.5%, which we have reported. In distribution, you typically make less, maybe 2.5%, maybe 3%. If it's a secured product, it's even under 2%. What we are reporting currently is consolidated over two, with 80% being in the FLDG business, so it reflects more the reality of the FLDG business. In distribution, you typically don't make more than 3-3.5%, even for unsecured loans.
Sir, just on that point, we are not carrying any risk in the distribution part. In this business, if the portfolio goes on a toast due to market condition, then it will have an impact on the profitability, sir.
There are two different things. One is, there are certain kinds of business that can only be done in distribution, and there are certain kinds of business which is better done in FLDG. I think that is what I would like you to understand. It is not that the choice is always there. For example, a lender may want to do, we work with a lender today who does average ticket size of 5 lakhs of rupees . Now, that 5 lakhs of rupees we are not willing to underwrite in FLDG. There we do a distribution, but there, this is, let's say an unnamed lender, but there my distribution income is only 2%. I am happy to do it because I do not want to take the risk of owning a loan of 5 lakhs of rupees . Then there are other customers where you can give loans up to INR 70,000-80,000, or INR 50,000 even.
That business is better done in the FLDG mode because nobody will want to do a distribution because ultimately there you will make money by building the relationship with the customer. Absolute margin will be lower, but you will grow and you will do repeat loans over a period of time with that customer. There is more to it than what you just said. There is also about what kind of customer it is, what kind of lender wants to do that business, how do we look at certain customers, what is the profile and distribution of those customers on our portfolio.
It will be a mix of both. If I understand correctly.
Mr. Harshit, sorry, Mr. Harshit, would that be your last question?
Yes, yes, yes, ma'am. That's my last question. Thank you.
All right. Upasana and Bipin, in the interest of time. There are a few questions, but I think we can take them offline if you permit me.
Yeah, that's fine. Yeah, all right. I think there are no further questions. Otherwise, if there is anything to write into me, I can pass it on to the management. So on behalf of Investech, thanks everybody. Upasana, I would request you to make your closing remarks before we end this call. Thank you, everyone.
Thank you, Swapna. Thank you, Investech team, and thank you to all the interested analysts and investors who joined the call. Like I mentioned at the beginning of the call, we had a very strong wicket in terms of EBITDA profitability and growth performance before our listing. Last two, three quarters, we have been struggling with the sentiment in the market on the unsecured lending side. This quarter is the first quarter where we are truly happy with the kind of operational performance we have delivered. It has brought us closer to the EBITDA break-even mark, and we are working hard to make that happen sometime soon. Thank you so much.
Thank you, everyone, and you may now end this call.