Thank you for joining, and welcome to Paytm's earnings call to discuss our financial results for the quarter and year ending on 31st of March, 2025. We will start our call with Q&A after introduction to the management. From Paytm management, we have with us Mr. Vijay Shekhar Sharma, Founder and CEO; Mr. Madhur Deora, President and Group CFO; Mr. Anuj Mittal, SVP, Investor Relations. A few standard announcements before we begin. The information to be presented and discussed here should not be recorded, reproduced, or distributed in any manner. Some of the statements made today may be forward-looking in nature, and actual events may differ materially from those anticipated in such forward-looking statements. Finally, this earnings call is scheduled for 60 minutes. A replay of this earnings call and transcript will be made available on the company website subsequently. We will start our Q&A now.
If you seek to ask a question, kindly utilize the raise hand feature on your Zoom dashboard. Please ensure that your name is visible as your name, last name, followed by your company name for us to be able to identify you. We will unmute your line and take questions in the respective sequence of the raised hands. First question is from Mr. Sachin Salgaonkar. Sachin, you may ask your question.
Thanks, Pranav. Good day, management, and congrats on the adjusted EBITDA breakeven. I have three sets of questions. First question is largely on lending. We did see the personal loan value decline on a QoQ basis, and I do understand it's basically on the back of tightening what we are seeing in the industry. Question out here is, should we continue to see this kind of a trend, at least in the near term, before things start improving? A related question is, if you could help us understand how many lending partners you have right now, and how should that number move going ahead?
Thank you, Sachin. This is Vijay. Personal loan disbursements did not grow quarter on quarter. Merchant credit definitely grew. Personal loan-wise, we are moving more and more towards pure distribution model where lenders pick up their own collection obligations, so to say. We do make same margin, surprisingly. Merchant-wise, we have grown healthily, and we continue to see that. Personal credit, unless something bigger changes, we will not see much larger growth. We have also started to work towards secure credit, secure based on various other items, and maybe that if that grows, we will see some numbers going back. Second part, Pranav?
On number of lending partners, for each of personal loan and merchant loan, we have between eight and ten lending partners. Obviously, there's some overlap, so I think the total number of lending partners is about 14. If I'm not wrong, give or take one. That continues to progress well in terms of getting more lending partners onboarded.
Thanks, Vijay and Madhur. Second question is on your expectation on MDR on UPI for larger merchants will be allowed in the near future. Just wanted to understand if you could help us understand how should one think about the monetization opportunities as and how this happens from a Paytm perspective. At some level, is it also linked to perhaps the UPI incentives decline, what we saw this year, and any thoughts on how the government is looking about the UPI incentive going ahead as well?
Obviously, we do not know much, and we will not like to predict how government is looking at it. We definitely see talks of MDR coming on UPI. We do believe that it should show up sooner rather than later. We do believe that based on what we are seeing in the current financial year, it could show up at any point of time. That would bring monetization of QR deployment, acquiring, and the consumer app both. I think the numbers, et cetera, and when and how is something that continues to remain to be discussed or to be seen. That will bring so-called monetization to UPI. We do believe that.
I don't have any question about UPI incentive. I think at least the way we are running the business is that we expect UPI incentive to remain low going forward, especially, as Vijay said, once the MDR comes in, then it would only be for very small merchants. It was never a very significant part of our business. Going forward, we expect that to be the lower number as indicated in the last year.
Just a quick follow-up out here. The finance minister did say that she wants 1 billion UPI transactions per day in the next two to three years. At some level, perhaps we are seeing a monetization which might add a bit of a friction to growth, and we have a higher target in terms of growth. I do understand that consumers will not be charged on UPI, but the perception sometimes in the market always is whenever an MDR comes, the consumers will be paying, and hence there is a bit of a friction. Do we still see this coming in the near future despite this entire target of 1 billion UPI transactions?
I do believe that there is a tremendous upside left and is ahead of UPI in the country. The finance minister is perfectly guided towards the size that we are expecting it. I do believe that it is the perfect target to chase. Consumers are not going to be charged like I said. I think in many cases, consumers' misunderstanding does exist. At the same point, I do not think consumers will be charged. At the same point in time, how MDR shows up, it is the work. I do believe that NPCI and other bodies are doing.
Got it. My last question, your thoughts in terms of how much AI could lead to cost reductions. I did see a statement in your press release saying that this quarter you did reduce some non-sales employee cost in the back of AI. Just wanted to understand the potential for AI and what kind of savings we could see in the future.
I don't have a percentage, but I do want to tell you that the amount of more and more automation is coming in. Overall, at large, more productivity per employee is showing up. We are not replacing the positions that get, let's say, emptied. We are clear about it that we will be not recruiting incrementally if somebody, let's say, goes out. Practically, it may not look like a drop, but it will continue to, as cost of people decline, I do believe, because more and more productivity is showing up. It is shocking to know what level of productivity can show up. I'm right now in Bangalore. We had a board meeting. I was yesterday doing my team reviews. It was shocking that level of insights, level of skill from a senior product manager that we typically expect.
We had a global expert product manager. It would be a dramatic improvement in ability and capabilities of companies. I do believe that cost will continuously reduce, but there is no sharp one-off, et cetera, kind of thing that we are expecting.
Yeah, I just want to add that what I'm really excited about is that we have really leaned into this, and we are doing a pretty good job of using AI's current capabilities. Of course, we can always do more. Obviously, the mega trend is that AI also continues to get better. Whatever opportunities exist today to become smarter, more efficient, leaner, those opportunities will be even more six months from now, a year from now. We just fully lean into this, and that I think is what really matters.
Thank you both, and all the best for the future.
Thank you. Thank you so much. Next question is from Manish Adukia of Goldman Sachs. Manish, you may please ask your question.
Thank you, Pranav. Hi, good evening, team. Thank you for taking my questions. Three questions from me as well. Firstly, when I look at, let's say, the business, the merchant side of the business seems to be doing really well, whether it's merchant acquisition, device installs, merchant lending, like you alluded to, Vijay. On the consumer side, you touched upon the personal lending business, maybe somewhat subdued. Even, let's say, the user base, which has started recovering a little bit after the NPCI approval to onboard new users, is still significantly below the number where we were, let's say, a year, year and a half ago. One, I mean, is there a path to recovering the user base to where we were 12 to 18 months ago, and what will it take to get to that number? Second, is that important at all?
I mean, do you really need MTUs? I mean, even if MTUs remain where they are and do not grow, does that really impact your, let's say, revenue growth, your EBITDA, et cetera? I would love to get your thoughts on that. That would be my first question, please.
Totally awesome way of looking at it, Manish. Really admire the way you looked at it. The truth of the matter is our future forward earning and bottom lines are protected by the people who stayed on the platform. Incremental users do not matter, but merchants definitely do. I do believe that if we do not do anything and simply keep focusing on the product, this improvement has come on dramatic lower cost that we would have spent a year back. It is purely product improvement that is bringing it back. I am very proud of the team that is working on our app, UPI, and other back-end and front-end technologies, that they are just solving the bugs, solving the features. There is a very incredible feature that many of you may or may not know.
Let's say you made a payment and you want to, in passbook history, right swipe, you can hide it. That feature is like growing like a wildfire for us. Now, these kind of insightful features give us capability to build more and more nuanced product that we will see over the period. I am very hopeful that even though as far as the future forward, next two years, I have to write, let's say, revenue and profit forwarding, we will definitely do it based on merchant growth and the current consumer base. Yes, the final question, it does matter to us. I do believe that in India, there are about 200 million consumers that matter, and we definitely will aim for 200-250 million customers on our platform.
I'm not talking about, let's say, GMV market share, transaction market share, but I'm talking about highly repeat usage of 250 million users because that is what material number of users matter on our platform. We are not, as you've seen, we have not said that we are going to overspend on marketing. I would rather overspend on technology or attention to the product.
Right. No, thank you, Vijay, for that response. Just trying to tie that response to, like you mentioned, disciplined marketing. I mean, can both things happen? Can you be disciplined on marketing and just with product intervention grow the user base by a substantial number?
Absolutely. In fact, I want to tell you that the growth in user base did happen without. In fact, we cut the marketing in these quarters to show only and give the confidence to the team that your product matters. As you are seeing the numbers, that is because of the good product and better product attention. I want to give you another surprise, Manish. It is lesser number of people, more attention to the product that has got this. Lower cost in people operating, lower cost in marketing, and get the growth. I do believe without gangbuster marketing expenditure, we would be able to get it back. I do believe and I am seeing it also.
No, thank you, Vijay. Appreciate it. My second question is on the comment in the shareholder letter on international markets. There again, as an outsider, it feels like there have been like a few changing strategies in the past. International maybe was a bit of a focus area at some point in time. You decided to focus largely on the India business over the years. Now, again, let's say you believe that some parts of your technology stack can be exported to international markets. I just want to understand what would have changed versus, let's say, the last time when you thought India was the bigger focus area for now you to again explore international markets and develop what you do stack. I would love to get your thoughts on that as well.
Manish, when we long back had come in public markets, we had called ourselves as a platform where we were saying payment, commerce, and financial services. As you know, over the period, we said payment and cross-selling of financial services. That meant that there is an ability and capability in the company of manpower, et cetera, technology, et cetera, that we created. As far as the technology product market fit is considered, we are very clear that what we have built in India, we saw it in PayPay Japan. We are seeing further products that we are developing and deploying with PayPay Japan and many other such similar partnerships that we are in conversation, that product technology can be monetized in other markets. I'd rather call it product technology monetization in other markets.
We are rather going to find out somebody who is locally doing it and extend that. Internationalization is not about that we are launching consumer Paytm app in other markets. Internationalization is about we are helping somebody in a local market to build either consumer side or merchant side that we are talking about systems. In that way, we have further monetization of product and technology platform. It also came about the number of people that we had. Because we had enough number of engineering and product people, and I love the capability that we leveraged using efficiency, using AI, and skill using AI, we are able to modernize much faster than earlier. At one point in time, we were like, oh, we would not rather spend anywhere else but attention to the domestic market, which is perfectly continuing.
Right now, because of the assistant code generations and all sorts of things like Cursor, Replit, et cetera, we are able to modernize the code and extend it for another market. Incrementally, very little technology product investment, which rather is not even further investment, rather reutilizing or utilizing internal resources and getting a market expansion because you are able to partner with someone who is doing a local market. International for us is not launching Paytm app in different markets. International for us is expanding partnership or product and technology with some people in that local market. Mostly, we are seeing merchant side relationships are far better for us because there is a nuance of what we have built in ability to see it in many markets being incoming instead of consumer side. Maybe we will see it like that.
Thank you. Just my last question may be directed towards Madhur. I think, again, please pardon me if I get the numbers wrong, but two or three quarters ago, I think Madhur, you had called out medium term the business can potentially grow at 30%-35%+ on top line and 15%-20% was the EBITDA margin target from at least a near-term perspective. Would you like to share any updates in terms of from the next two, three-year perspective, what is the sustainable revenue growth that the business can look at and where can, let's say, margin settle in the next two or three years? Any thoughts or color would be helpful. Thank you.
Yeah, I think the ranges that I mentioned earlier that you referred to, Manish, is what we are targeting for the next year as well as in terms of growth as well as longer term. Yeah, the margin target for the next two to three years remains in that range. We do think that the business has that much earnings potential, especially like what you mentioned, our indirect expenses have come down because of all the AI that we have leveraged. Getting to higher EBITDA margins is a lot easier in some ways because of lower cost structure.
Thank you so much. Very helpful. All the best.
Thank you, Manish.
Thank you, Manish. Next question is from Sachin Dixit of JM Financial. Sachin, you may ask your question.
Congrats, team on decent set of results across the board. My first couple of questions are with regards to MDR. Let's say MDR comes up anywhere, whatever 25, 30, whatever the number it comes up. How much do you expect Paytm is likely to benefit from it in terms of your GMV? If you think of, let's say, 25 basis points MDR, can you get five, seven, eight basis points out of it?
Logically, yes. That's rather conservative, but yes.
This is largely in line to how you pay incentives for being distributed.
Incentives also have a lot of restriction on kind of payment they factor in. For example, they do not factor in utility merchant, this merchant, that kind of merchant. So incentive distribution of transaction and dips per transaction will not be indication of MDR in my opinion because MDR is a wider payment piece.
One critical difference between incentive and MDR is that incentive is only on transactions less than INR 2,000. Just keeping that in mind. Obviously, there will be detailing. I think it is slightly premature for us to talk about exactly what the number will be because there will be detailing as a part of this finalization of what the MDR framework looks like. Based on that, we will be able to talk more. Vijay has already given an indication.
Sure. Second question would largely be on, let's say, right now on surface level, it feels like because the cost of incurring this business are already there in the P&L, whatever MDR comes, it should directly fall all the way to EBITDA. But when I'm also thinking of it, let's say monetization is allowed on UPI MDR, it might result in heightened competitive intensity and a number of people might try to gain that market share. So is it safe to assume that the margins will be significantly lower than 100% or it will be closer to 100% is how it will be?
When we think about what the likely scenarios are, and of course, like I said, it's a bit premature because we don't know exactly which segments we are talking about and so on. We do factor that for the larger merchants, there will be some competitive intensity and you may not be able to exactly charge the cap or whatever that is. Vijay gave an indication keeping that in mind. Yes, it does factor in that you're not able to charge. It is similar to what we today do on credit cards and debit cards. We are quite familiar with how that works, which is to say on which merchants are you able to make a slightly higher net payment margin and which merchants you make slightly lower net payment margin.
Yes, there is an understanding of competitive intensity and how it relates to net payment margin within the construct of an overall cap.
Got it. My second question is with regards to your business as it stands. When you look at your business and maybe the reason why Vijay also alluded to that product is how you want to differentiate in terms of customer acquisition. Do you also target some sort of output per customer, which is the driving metric behind how much you go about and try to invest behind acquiring a customer? Or are you generally going to take the tech-led approach and let the consumer sort of affinity shape up wherever it shapes up?
No, we do bother about it. That's why we are not randomly spending money in acquiring customers when we got UPI customer acquisition permission. Like you heard me say, 200 million customers, that's a fairly small subset of the potential consumer base that UPI will have. I would rather have the material useful customer on the platform than to have a race of what do you do with this customer.
Got it. All right. Thanks so much and all the best.
Thank you.
Thank you. Thank you, Sachin. Next question is from Rahul Jain of Dolat Capital. Rahul, you may please ask your question.
Hi. Hope my line is okay.
Yes.
Yeah. The question may sound a little repetitive, but just trying to understand from a growth point of view, what are some of the opportunities that could be the bigger driver for us to be going into next fiscal? Are they going to be the same set of two or three segments which need to do a bigger lifting in 2026? Or do you think some of the current segments which are not performing so well with consumer side or personal loan side or any other thing that could pick up to add growth traction in 2026?
Yeah. I think, Rahul, I'll probably break that up into two logical parts. On the merchant side of the business, we see the same trends, really. If you look at the second half of last year, of course, in the first half, our deployments were lower. If you look at the second half of last year, that's a pretty good indication of where the business is headed in terms of gross deployments, GMV growth, highly engaged merchants, and then merchant loans. All of those are very powerful drivers. I think most people tell us that that part of the business, they see structural advantages of Paytm and very good momentum more or less uninterrupted. On the consumer side of the business, I would say that last year was a cyclical low.
On the one hand, for about six or seven months, we were not adding new customers. On the other hand, the monetization levers were slightly lower, partly due to credit cycle and so on. If you think about going forward, Vijay has talked about consumer growth and how that is going to come, product-led, and then eventually maybe we make slightly higher investments, but initially product-led. On the monetization side, we see opportunities clearly on if there was, for example, an easing of the credit cycle, that would have a positive impact on personal loans and credit cards. If we see continued growth in trading volumes in India, of course, last three or four months, there were some regulatory developments for the industry, which lowered the trading volumes, but now the business is growing again.
Paytm Money, which is our equity broking platform, we feel very interested in. Finally, advertising, where we think there's a lot of opportunities for us to make more advertising revenue. On the consumer side, we're starting the year with a lot of optimism, both on the base, which is the consumer, highly engaged consumers, a number of transactions, and so on, as well as the monetization opportunities through those three or four areas of upsell that I talked about.
Right. Just one more question. Just to understand how usage of this DLG has led to increase in the take rates of what should be the changing evolving mix of DLG, what should be the ideal take rate for this segment? Secondly, how it is changing the perception of the lender in terms of approving the whitelisted potential merchant or client from our perspective? Has that increased the threshold for the lenders?
Yeah. On the second question, I do not think we necessarily ask our lenders to change their behavior just because they are DLG. We also hope that they do not do that because we do want eventually to target a range-bound and predictable expected credit loss. We think that is a fundamental indicator that you are building a high-quality franchise. Ultimately, as we have said enough and more times, it is the lender's decision. Obviously, we do some filtering on our side, but eventually, it is the lender's decision to say yes or no to a loan. We do not see a change in behavior, nor do we encourage or request or expect a change in behavior. The expected credit losses on merchant lending have been quite positive since April, May last year. We do not have any concerns that FLDGs are making them less disciplined on credit losses.
I think that's the good news. I think in terms of take rates, if you look at our historical take rates, they should be about 3%-3.5% higher on the merchant loan side, which on a blended basis probably means about 2% higher for financial services because obviously there's a percentage of it, which is personal loans.
You're saying 200 basis points more than the past? I could not follow that.
200 basis points more than the past, i.e., compared to the period when we were not doing DLGs.
It ideally should go higher as the mix improves, right?
Higher or lower would depend a little bit on PL versus ML mix and FLDG versus non-FLDG mix. Merchant loan does make us a slightly higher take rate anyway compared to personal loans. There would be various factors, but yeah.
Overall, it doesn't make commercial difference in a different direction.
Yeah. Just to be clear.
It is not a higher net rate, actually.
Just to be clear, merchant loan, when I say 2%, I mean the reason I say 2% is because not all loans have FLDGs. For loans like-for-like, loans that do not have FLDG versus loans that have FLDG, if we are giving about, let's say, 3.5% FLDG, then we expect to make 3.5% more take rate. Maybe more, but 3.5% more take rate through the life of the loan. The 2% number I was giving you is because not all loans have FLDG. When you are talking about take rate and literally taking revenue divided by loans, then you expect that to be called at 2% because call it 50%-60% of the loans might have FLDG.
Right. Just a clarification, you said 3.5, that is the at-least number, right? If the performance is better, it could be much higher than that.
Just to be clear, 3.5, I'm saying assuming same ECL, same partner, loan without FLDG, loan with FLDG of 3.5%, the revenue would be 3.5% higher. Of course, we would have FLDG cost of 3.5%. That's the point that I was making. Yes, depending on the performance of the loan, we do make collection incentive anyway, which at the same ECL would be the same whether it's a non-DLG loan or a DLG loan.
Okay. So there's no extra incentive for doing a DLG for the same performance or outcome?
We do not do DLGs from the perspective that a DLG loan will make us more net take rate. We do it because our lenders, in some cases, lending partners rather, in some cases have a preference for it. As a result of that, the volumes tend to be higher. A partner who may have done X, if there was no DLG, may do 30%-50% more if there is DLG.
Right. So it's a volume advantage versus price. Thank you. That's it.
Yep.
Thank you. Next question is from Piran Engineer of CLSA. Piran, you may ask your question.
Yeah. Hi team. Congrats on the quarter. Just firstly, on payment processing charges, we've seen a good decline in the past two, three quarters. Is it just a function of mix or are we able to negotiate better rates with our partners?
It is a bit of both. I think compared to last quarter, obviously last quarter had faster season versus not. That Q3 to Q4 tends to work a certain way. There is an element of just continuously doing a better job on processing costs with our partners. I think you saw that trend in 2022 and 2023 as well. We just continue to work on that.
Is there scope that this goes down further, assuming mix remains stable?
is always that effort, but I would point back to the net payment margin and payment processing margin discussion, Piran, which sort of normalizes for this. Our effort is to continue to improve payment processing margin across instruments and across merchant types. Payment processing costs sort of take care of itself. It is actually something that you have to work on constantly to make sure that you are able to be competitive and attractive to your partners while maintaining and improving our payment processing margins.
Okay. Got it. Just secondly, I do not mean to harp on this MDR thing, but if you could just give us some sense of right now, what are the talks like with the government? Is there a particular pushback that they have, which is why it has not yet happened? Or is there sort of an in-principle approval right now, but the concerned parties such as y'all and other fintechs are discussing the net?
Yeah. Clearly.
We are the client of the network, not the network.
Clearly, we're not the network.
We are the client of the network. Network is NPCI, who works with all these partners.
We do not discuss all those things. Clearly, the powers that be are discussing this. I will go back to what we said a couple of months ago, which is that the industry is expecting this to be a thing. We will hear back on this hopefully soon. We will have a little bit more clarity to share in terms of how whatever that framework is has affected our business. We will share that quickly with our stakeholders.
Okay. Fair enough. Just on Paytm Money, if you could just broadly highlight what is the revenue right now, if it is meaningful, and how do you think about this business over the next three years?
Hundreds may have, java niyeh. It's not very large. We do believe it's a great upside. It has a customer lock-in also. We have gone into mutual fund distribution. We are trying to find out MTF kind of margin trading, etc., kind of monetization. Those have come out positive. It does not take investment anymore, but at the same point of time, it is a great opportunity. I can see that it is in so-called less trading quarters, if you will, last couple of quarters, thanks to both F&O and normal trading being reduced, it has been able to turn around well.
Okay. Vijay, could it be say at least INR 200 -INR 300 crores annualized in terms of revenues?
Ha. Man sakte ho agre.
Man sakte.
That's about it.
Yeah. That's about it.
We are not that far away.
That's about the scale. It has a very good mutual fund business, which helps us, like Vijay was saying, with customer lock-in. It is a fantastic trading platform where we make most of our revenue. We have also launched MTF in December of last year, which is scaling up nicely. We are very positive, the customer retention is good and outputs are good. We are very positive about scaling that business over the next two to three years.
Got it. Okay. This was it from my end. Thank you. Wish you all the best.
Thank you.
Thank you. Next question is from Vijit Jain of Citi. Vijit, you may ask your question.
Yeah. Thank you. Congratulations for the break-even, even excluding the UPI incentives. My first question is on the consumer business side. Can you comment on the prospects of return of wallet? I know some of your peers have introduced wallets recently. I have also noticed the app has gone through a lot of product changes, seems a bit more simple, significantly more simple. I just wanted to get your thoughts on what's driving that. Is that an objective to kind of make the app light, increase user base through making it speedier, lighter, and those kinds of things? If you can broadly talk about that.
Thank you. You're a user. I'm glad. It was long due. We've been very crowded, cluttered for long enough time. Among various things, as housekeeping exercise, my personal interest was to make app as simple as that we started this business with. Right now, I'm glad that you're calling it out light because surprisingly, no traffic or no internal businesses have less traffic, if you will. In other words, the lightness is rather not costing us any growth line item to cross-sell off other line items. That's the approach. My theory is if customers love you impeccably well, and keeping payment-led super app concept is better than calling super app first, payment second. Payment first, super app roll second versus super app and payment second. That is the approach that we took. We are seeing good results.
You saw the uptick in the number of consumers that come back also. When you talk about wallet, I really wish we would have had it by now, as in terms of one way or other. We may be near a breakthrough or some solution to way forward. We are just trying to keep it finger crossed and see. We have multiple options on the table, and we could decide not many months ahead in future what is the call that we'll take. We had a board meeting today. We did discuss about it. We have something to discuss as management and come back on.
Got it. Thanks, Vijay. My next question is on the shareholder letter also notes that you've applied again for the payment aggregator license to RBI. Do we have any additional inputs on that? Do you expect that to also come about in the near term? Yeah, I'll just follow up with a quick question on MDR after that. Thank you.
Yes, we do. There were some next steps that RBI suggested us to do. We've been doing those.
Got it. Great. Thanks. My last question is on the MDR incentives for the quarter, right? I know the government has obviously slashed the incentives that they gave. This is almost moot now given MDR is actually being expected. The UPI incentive, sorry, is being slashed. Your share of UPI transactions, obviously, in 2025 also went lower. Still, INR 70 crores seemed a bit low. What I wanted to understand is, did something change here? Or did your share of small merchant, small ticket transactions was lower this year? Is that what drove the INR 70 crores number? Relatedly, because I see that the payment processing charges are also significantly down quarter on quarter, I'm just wondering if I should just look at the net payment margins here and not look too much around that INR 70 crore number because that just seemed low to me.
Yeah. Most of this is the reduction on incentive overall. What GMV is eligible, how much does the industry get paid, all of that has been reduced, right?
Right.
Quite meaningfully. Like for like, we would have made a little bit more. The two factors that have affected us is that while we're doing really, really well on merchant payment side right now, if you just take the average market share through the year last year versus the previous year, it would have been slightly lower.
Right.
Because in the first half of the previous financial year, we did have some market share dips. Obviously, we shared that very candidly. We talked about 8 lakh to 10 lakh devices. Obviously, it was apparent from our GMV data as well. If you just take the average GMV, it would have been lower. Obviously, we are talking about the entire year's UPI incentive. The second is that there were small changes to acquirer share versus the rest of ecosystem share in the new framework, which is to say the acquirer share was slightly lower. That affected us marginally as well.
Got it. Thanks.
This number would not have been, yes, compared to INR 288 crores, it looks like a low number, but it would not have been like INR 150 crores or something, right? It would have been marginally higher if those two things had not happened.
Got it. Understood. Thank you.
Thank you, Vijay. Next question is from Anand Dama of Emkay. Anand, you may please ask your question.
Yeah. Thank you for the opportunity. My first question is on the PL business. That is still declining for us. Is it that the decline is attributed to most partners reducing their business with us, or is it that few partners were lumpy in nature? That is where basically we are seeing a decline. By when do you expect the disbursement number to largely bottom out? I think you talked about in the presentation that possibly later part of the year, we should see some pickup in that business. If you can just talk about that, number one. Number two, your financial services customer base has declined quarter on quarter to 5.5 million. Is it more seasonal in nature, or is there something more to read into that?
On the personal loan business, we are technically moving from distribution plus collection business to pure distribution business. There are partners, growth integrations, and in due course disbursements have been continuously growing. I can say that we believe that there is demand and supply in the market based on credit cycle. The part where we also do collection as an obligation is something that we will bring back on the table once the market or credit cycle turns around. In a way, we right now are doing the business, which is pure distribution, like a marketplace distribution. We have added a few more line items, like loan against mutual fund, etc. Those will have started to pick back. That is the reason of personal loan not same as QoQ.
At the same point of time, we are not much going to aggressively go any which ways in personal loan distribution business, where we do believe that there is a large amount of stress in the overall market, which is getting eased out. Instead of being aggressive, we let it be that whatever the lenders need and whatever the policy and pricing lenders are doing, the market is behaving like that. There is not much different from our side that we are doing less or more.
On the number of users, it was partly because of personal loans that Vijay just talked about and the volume disbursed number that you have seen. It was partly in terms of active users in the equity broking industry, which Paytm Money is a part of. As you might be aware, call it from December to February, largely.
There were some regulatory adjustments because they wanted slightly less trading, if you will. They increased, then reduced the number of settlement cycles and so on in the industry. Overall, there has been a lot of press coverage that industry volumes are down about 30%-40%. The number of Paytm Money monthly active users would have declined along with the industry. Those were the factors. We are very positive that this should start growing going forward.
I'm going to take a question from chat window where Ravi BR has asked this question. I think, Anand, after your question, rather, I would wait for your second question.
Second question is on the DLG cost. Is it possible for you to share how much is the DLG cost in the current quarter? There is some trail income also that I've talked about on the DLG front. What is that? Any new partners where you've gone for DLG in the current quarter? One more question is on the ESOP cost. Earlier, you used to provide the ESOP cost schedule. I think you just provided for the first quarter how much it is going to be. Is it possible to provide it for the next two to three years?
On the ESOP cost, because we're sort of still finalizing certain grants right now, we didn't want to share quite a number. The INR 75 -INR 100 crores that we have talked about is for the next few quarters. We expect that to be in the range. When we do the next quarterly filing, which will be two odd months from now in July, we will share the updated ESOP cost schedule. That is a feature that we have this quarter. We didn't have it, and we put this range because it was sort of work in progress. With respect to DLG cost, it's a slightly commercially sensitive information, so we don't share that. We have indicated on previous calls that blended, it's about 3%-4% DLG that we give. That is not on all lending. It's largely on merchant lending.
It is not all lending partners, but it is a very substantial majority of that. Based on that, you could probably get some estimate of what that number is, but we do not want to share exactly what that number is.
Sure. Any new partners you have tied up with on a DLG front?
We currently have three partners on DLG. There'll be a DLG disclosure that will go up on our website, which talks, so which is already on our website, sorry, I've been told. It is already on our website, which talks about, it's a regulatory required disclosure, which talks about how much AUM you have under DLG under different, they call it portfolios. Each portfolio indicates for us a type of loan with a type of partner. Portfolio one would be partner A, call it merchant loans. Portfolio B might be partner B, merchant loans, and so on. That is already on our website.
Thanks. Thanks a lot.
Thank you, Anand. Vijay will take one question from the chat window.
Yeah. I just saw this question from Ravi, who is from Bangalore and a long-term investor in Paytm as an investor. I'm more interested in Paytm showing profit as early as possible. As you're not able to show profit this quarter because of exceptional expense of INR 522 crores related to ESOPs, did you consider splitting this expense to multiple quarters so that it could have resulted in profit this quarter? Is there any compelling reason why you booked this full expense this quarter? Ravi, this is all audit matter. Auditor decides. We follow. The way auditor suggested, we did it. As you can see, this exceptional charge is something which everybody logically should see is a one-off, one-time and exceptional in nature. We are at a verge of pet profitability.
If we were to see every other expenditure and thing, I'm very sure that in next quarter onwards, if everything goes as we are seeing, it could very well be a PAT profitable quarter.
Thank you. Next question will be the last question. This is from Prateek Poddar of Bandhan Mutual Fund. Prateek, you may please ask your question.
Yeah, just a couple of questions. One is when I look at your key financial services customers, the data, I mean, on a sequential basis, there's a decline, whereas the financial services revenue income has gone up. I just wanted to check what has happened over there.
Yeah. Our financials, I think I just mentioned this a little while earlier. The financial services customers have decreased largely in two segments. One is personal loan, where obviously there is a disburser data to also look at, which we have shared. The second is in Paytm Money, on a quarter-on-quarter basis, these numbers have reduced because from December to February, there were some regulatory adjustments from the capital markets regulator, which affected the F&O industry overall. There is enough and more news stories about how much trading volumes have gone down and so on. We do expect that to recover, and we are already seeing recovery in that. It definitely looks like it has bottomed out. Financial services revenue has grown because the highest margin and the highest ARPU product, if you will, which is merchant loan.
Merchant loan, yeah, I would have like.
Continues to do very well. Yeah. You already got it.
Yeah. Last question, when I look at software cloud and data center cost on a sequential basis, that has declined by 10%. I just wanted to check if there's any correlation with total number of transactions because that seems to have gone up. Has there been some efficiency gains over a year, or what has led to this 10%?
Yeah, yeah. Actually, that is what I've been continuously putting up. This is classic AI. When you give AI an opportunity to review things, it goes beyond human logic that you typically use. You very well pointed out, and it is a very sharp eye. I must congratulate. This is attributable simply to putting AI in every process and cost line item, that what do you think we should be doing, kind of practices we are doing, are following, what else we could do. I'll just give you a clue about it, things like, let's say you have a cloud where the machines are dedicated so that any spike, you are able to take care of the minimum sort of permission.
AI was able to say, based on your pattern, I suggest that from this hour, typically in the night hour, you could just reduce them to dramatically low volume. It is like day-end closing balance, float revenue kind of thing in compute industry also, where if you're not using compute for those hours, you can do it. Similarly, internally, we are picking up AI inferencing in a way that we start to use the downtime of our peak systems or the time when the peak traffic is not coming to do the inferencing. There are tons of insights. I mean, I'm glad that you pointed it out, and I'm going to point back that yes, it is efficiency by the team's effort on finding cost efficiency.
I just want to make two other quick points.
One is that when we did the migrations in the first half of last year, obviously the most important thing was to do the migrations, right? Since then, using AI, the team has been working hard on finding places where, because it was a time-bound activity, finding places where we could have done things more efficiently if we had more time. They are solving those things. Second is, while we are very pleased with the improvement, I would just slightly discourage us looking at quarter-on-quarter trends too much because there is sometimes a little bit of volatility here and there. We are quite pleased that our tech teams and our DevOps team is very focused on very cost-sensitive. That is a good place to be as an organization.
Got it. Fantastic and best wishes for the future. Thanks.
Thank you.
Thank you. I'll take a few more questions from the chat window. Laksh Tavtari has said that in the past, companies' core business faced significant challenges. Despite these disruptions, companies have demonstrated remarkable resilience. Currently, there seems to be renewed focus on strengthening the core business. Given the unpredictable nature of the market, do you believe it's strategically sound to double down on core, or would a diversified approach, exploring adjacents or alternate business segment, offer a safety net for long-term stability and growth? Very, very good question, Laksh. My answer would be that in India, we have an obligation to focus on the core because that is what the business model has got scalable, profitable, identified, learned, and so on and so forth. The best part I can tell you is that we are able to see that result as you are seeing.
As far as adjacency and alternate is concerned, we have tried to find out software services, software that we can expand to the other fintechs, banks, or other people, which we also found out in neighboring geographies also. That is our alternate additional market or incremental revenue that we found out. It's very simple, no incremental, much cost, and you got more revenue on the bottom line side. Laksh, that is where it is. I can see Srinath asking, share your three-year vision on innovation on this platform of payment and financial services. What new product can we expect?
Srinath, I'm going to say that when we look at three years, the best thing is that the products that we are talking, I mean, in other words, it's like saying you can continue to expect payment and cross-selling of financial services continuously going much deeper in the last three years. The cost and the innovations of the quality of product will be very, very different. As you are aware, we started to build new products and services, app you saw, consumer side, you will see and devices you saw. Tons of machines and AI-based capability will be in all workflows. I'm especially, I mean, not going to say the particular feature right now in this call right now because this is a more earning call, but you can expect us to build continued innovations in consumer and merchant sites as we have done in the past.
What we are building, I'm very, very proud of and very, very excited about those things. Can you comment? Would you be probably $100 billion business by 2035? Thank you. I mean, this is a learning call. When will ESOP reduce shareholder will get dividend or share appreciation? I think ESOP cost, as you are aware, we had one-time charge, and overall ESOP costs have reduced quarter-on-quarter. Next quarter onwards, that will be much lesser, all because of this one-time charge that we have incurred in this quarter.
I'll propose Vijay gave up his ESOPs. Instead of INR 169 crores last quarter of ESOP charge, going forward, we have currently given an indication of INR 75 no more than INR 75- INR 100 crores , and we'll update that guidance in the next couple of quarters. It is going to be a significantly lower ESOP charge going forward.
Thank you.
Hey.
With that, we come to an end of this call. A replay of this earnings call and the transcript will be made available on the company website subsequently. Thank you all for joining. You may now disconnect your lines. Thank you.
Good night. Shabba khair. Bye-bye.