Ladies and gentlemen, good day and welcome to Zaggle Prepaid Ocean Services Limited Q4 FY 2025 earnings conference call hosted by Equirus Securities. As a reminder, all participant lines will be in the listen-only mode, and there will be an opportunity for you to ask questions after the presentation concludes. Should you need assistance during the conference call, please ignore and operate the waveform starting zero on your touch-to-end phone. Please note that this conference is being recorded. This conference may contain forward-looking statements about the company, which are based on the beliefs, opinions, and expectations of the company as of the date of this call. These statements are not a guarantee of future performance and involve risks and uncertainties that are difficult to predict. I now hand the conference over to Mr. Rohan Mandora from Equitas Securities. Thank you, and over to you, Mr. Rohan.
Thanks, Avirath. Good evening, everyone. Thank you for joining the call. I extend a warm welcome to everyone. On behalf of Equitas, I welcome the management of Zaggle Prepaid Ocean Services Limited to give a brief update on 4Q FY 2025 results and address investor queries. We have with us from the management team, Dr. Raj Narayanam, Founder and Executive Chairman, Mr. Avinash Godkhindi, MD and CEO, and Mr. Aditya Kumar, CFO. We will now begin with a brief opening remark from the management, post which we can have Q&A. Thank you, and over to you, sir.
Thank you. Thank you, Rohan. A very good evening to everyone. Thank you for joining the earnings call for Zaggle Prepaid Ocean Services Limited for the fourth quarter of fiscal year 2025. On behalf of the company, I extend a very warm welcome to all of you. On this call, we are joined by Mr. Avinash Godkhindi, MD and CEO, Mr. Aditya Kumar, CFO, and SGA, our investor relation advisors. The financial results, press release, and investor presentation are uploaded on the stock exchange and on the company website. I hope everybody has had a chance to look at it. Now, I would like to give you the Zaggle business update. FY 2025 has been an outstandingly remarkable year for Zaggle as we achieved our highest-ever annual performance.
Talking about the quarterly performance, comparing Q4 FY 2025 to Q4 FY 2024, the company reported a very healthy growth in revenues at INR 411 crore, growing at around 51%. Our Adjusted EBITDA increased to INR 38 crore, growing at about 40%. The PAT surged to INR 32 crore, growing significantly at 67%. Talking about the annual performance, comparing FY 2025 to FY 2024, the company reported a healthy growth in revenues at INR 1,303 crore, growing at around 68%. Our adjusted EBITDA increased to INR 125 crore, growing at around 46%. The beauty was the PAT surged to INR 88 crore, growing significantly at 99%, well above our earlier guidance. I would want to give you an overview of Zaggle's investment and investments and acquisitions. Our inorganic growth approach is aptly reflected in the words of Salesforce CEO Marc Benioff. When you combine two companies or more, you just do not get scale.
You get a new story. Inorganic growth continues to be a key pillar of our growth strategy as we build a comprehensive bouquet of spend management solutions to further deliver value to our customers. During the year, we closed the acquisition TaxSpanner, completed the strategic investment in Mobilewear Technologies, and have received board approval for a strategic investment in TaxSpanner . These investments are helpful in enhancing our client-servicing capabilities in tax, UPI, and payment solution segments. We see massive growth opportunities TaxSpanner in FY 2026, with one such promising opportunity in the gig worker ecosystem where we have launched a solution called ZUGS, Z-U-G-S, Zaggle Unified Gig Worker Savings. Nearly 20 million low-income blue-collar workers in India face critical financial challenges.
Despite having TDS deducted from their income, many do not file their income tax returns, preventing them from claiming tax refunds that could amount to nearly two weeks or more of earnings, a sizable amount for these blue-collar workers. ZUGS are a comprehensive solution featuring a DIY journey with multilingual support to enable gig workers to claim their refunds in a seamless manner. While last year was a consolidation year TaxSpanner where we invested a lot of time, money, and effort in the product, the growth was a little bit subdued at about INR 33.5 million crore. This year, we look at a growth of about 60%-70%, which we expect that we will be able to do it with relative ease. Mobilewear estimated revenues grew from INR 17.06 million crore in FY 2024 to INR 33.89 million crore in FY 2025, representing a remarkable YoY growth of 98%.
In FY 2025, we signed marquee customers like IDFC Bank, Easebuzz, Catholic Syrian Bank, and CamsPay, amongst others. The largest growth contributor was the implementation of API banking layers in Suryodaya Bank, allowing multiple merchants to take advantage of our UPI payment ecosystem. The stellar growth in FY 2025 not only strengthens Mobilewear's ability to onboard new banks in FY 2026, it also enables Mobilewear to command a higher price point, improving the overall financial literacy. We continue to explore M&A opportunities in adjacent spaces in domestic and international markets with a focus on opportunities in payment solution, loyalty management, mission card software, and so on and so forth in the payments domain.
We focus on targets that have stellar management teams, sound business health, are product-accurate, and easy to integrate across the Zaggle ecosystem to establish a strong strategic foundation that aligns with our long-term objective of scaling to INR 1 billion crore in annual revenue. I am happy to announce that we have also signed an MOU with Mesh Payments, a U.S.-based AI-powered travel and expense management platform backed by a seamless technology exchange. This partnership not only reflects our offering to Indian customers looking to streamline and manage their global expenses, it also unlocks access to global go-to-market opportunities. While we continue to consolidate the market in India, this partnership gives a boost to our international expansion plans. Now, I would like to give you the industry and Zaggle product update. Building on Steve Jobs' classic idea, innovation distinguishes between a leader and a follower.
We at Zaggle have reimagined the idea as AI-powered innovation, separating the disruptors from disrupted. We aim to fundamentally transform how businesses approach spends by becoming the default spend management infrastructure for companies and establishing ourselves as a truly SaaS company, AI-powered SaaS company. We are transitioning from static rule-based systems to a dynamic, intelligent, context-based platform that continuously evolves and self-optimizes over a period of time. We are seeing the emergence of model context protocol, MCP, within the agentic AI. Agentic AI does not just support decisions but takes autonomous action. MCP is an open protocol that acts as a bridge between applications such as Zaggle and the large language models. MCP standardizes how agents would interact with other tools, data sets, and associated environments within the Zaggle ecosystem, which would translate into a faster onboarding, accelerated revenue realization, and a greater satisfaction and retention.
We are implementing these AI workflows across our EMS, Zoyer, and Propel offerings to keep delivering innovative solutions that set a new benchmark in the industry. Currently, in the pilot phase, Zaggle Co-Pilot would serve as an AI assistant for our finance teams, streamlining workflows and enabling smarter, faster decision-making and reducing human interface. We are currently leveraging advanced conversational AI technologies to fundamentally reshape the way we engage with customers and users, delivering multilingual, personalized, and real-time interactions at scale. Looking ahead, our strategy is clear: focusing on intelligent automation, investing in product-led growth, and scaling responsibly. We are building capabilities for global enterprises while delivering long-term value to our stakeholders. Now, I would like to give our guidance for FY 2025-FY 2026. Amid global geopolitical uncertainties and macroeconomic volatility, we currently project our standalone, and I repeat the word standalone, FY 2026 revenue growth to range between 35%-40%.
Last year, FY 2025, our guidance on standalone EBITDA margin was between 9%-10%, and we are happy to announce that we are upping our guidance to 10%-11% in the coming year in FY 2026. Hopefully, our entire goal of achieving 12%-15% EBITDA margin over the next three, four years, this year would be a deciding year for that goal to be achieved. I now hand over to our CEO, Mr. Avinash Godkhindi.
Thank you, Dr. Raj, for your remarks. This year has truly been a landmark year for Zaggle. Reflecting on our journey, I'm pleased to share that Zaggle now serves over 3,455 customers across diverse industries and sectors. We continue to maintain a churn rate, which is below 1.5%, highlighting the strong trust our customers place in us and the reliable value our platform consistently provides. Our growth engine remains strong and predictable. We are harnessing the power of AI to drive strong, scalable, and sustainable growth to unlock new business opportunities. Our AI-led approach positions us to stay ahead of the curve and create long-term value across our core markets. Today, we are proud to report that we have over 3.28 million active users using Zaggle Power Cards and Platform Software. This isn't just a milestone; it's a clear validation of our platform, model, and execution.
We have launched the new Zaggle App to simplify expense tracking, wallet management, and incentive monitoring. Our goals are to scale, enhance customer engagement, and increase automation, positioning Zaggle to drive financial innovation in India and beyond. Coming to numbers, during this quarter, our SaaS platform fee contributed INR 9.3 crore. Our program fees contributed INR 157 crore, and our Propel Points contributed INR 245 crore. Not just that, we signed multiple marquee clients, including Indus Towers, Honasa Consumer , which is Mamaearth, Forbes Marshal, Truecaller International, Aster DM Healthcare , and many more, expanding our client base. To elaborate further on how we are helping our clients, one of our clients is providing in-house meals to their employees while deducting the cost from their salaries during payroll. This client faced challenges with manual tracking and post-month reconciliations, which made employees unhappy due to the deductions being applied to their post-tax income.
To resolve this, we implemented the Zaggle Save solution, which provided tax benefits for their employees and automated the transactions, improving operational efficiency by eliminating the need for reconciliations. As we continue to pursue our platform-based approach, we anticipate rapid growth driven by a strong pipeline of new client acquisitions and effective cross-selling strategies. In Q4, we were able to cross-sell to a number of clients, including Tech Mahindra, Neuroglia Health, Physics Wallah, Zepto, and Wonder Home Finance, amongst others. I'd like to touch upon a couple of these examples. Tech Mahindra is an existing customer for our Save solution. We recognize the potential for further collaboration, and we successfully plugged in our Zatix solution along with a corporate credit card to enable seamless payments with complete visibility.
Likewise, for Physics Wallah, which is an existing customer of our Save solution, we were able to extend the BROME solution, which is a branch recurring operating monthly expenses, to streamline and manage their 850 branches across the country more effectively with complete visibility. During the quarter, we announced key collaborations. As a part of the ongoing growth strategy, we entered into strategic collaborations with GIFT City, where we are launching a co-branded prepaid citizen card designed to streamline payments and deliver a seamless user experience across a range of services within the city. Additionally, we will implement a robust visitor management software system aimed at enhancing administrative efficiency across the GIFT City ecosystem. These initiatives position us as a key enabler of GIFT City's Smart City Vision, which also is opening up long-term revenue opportunities through recurring transactions and data-driven service enhancements.
We've also partnered with Thomas Cook with the aim of transforming the global travel experience, corporate travel experience, by leveraging their comprehensive travel management expertise to complement our AI-driven expense solution. This will help us provide a seamless integrated offering for domestic and international corporate travel with streamlined workflows and complete visibility. We are also co-developing an innovative employee benefit solution, the Smart Employee Purchase Program, Smart EPP, in partnership with Reddington Limited, which is in collaboration with Google. This offering will be a tailored solution for corporate clients of Zaggle, enhancing our value proposition in the employee engagement and benefit space. I'm also pleased to share with you that Zaggle has been empaneled by Bank of India as an authorized issuer of prepaid cards, further strengthening our presence in the banking ecosystem and expanding our distribution network.
Overall, as we build and scale Zaggle into a truly comprehensive fintech platform, I'm proud to share some key milestones this quarter. First, we received the TPAP approval from NPCI. This means we can now facilitate UPI-based payments directly through our app and our platform, impacting and enabling over 3 million users across all our services. This is a truly significant step in our mission to create India's most seamless and integrated fintech ecosystem. Secondly, I'm delighted to announce that we have been recognized with an industry accolade. Zaggle has been named Financial Institution of the Year at Franchise India's fifth edition of the Success Spinner Awards. This recognition again reflects the innovation, impact, and trust we continue to build across the ecosystem.
As always, our focus remains clear to deliver a comprehensive offering in the spend management space, expanding our reach to new clients while increasing wallet share amongst existing ones. With every step, we move closer to becoming the platform of choice for companies across India. I now hand over to our CFO, Aditya, to take you through the finance update. Thank you.
Thank you, Avinash. Good evening, everyone, and thank you for joining today. I'm delighted to report that the company has delivered another quarter and year of strong performance with robust revenue growth coupled with margin expansion. I would like to give you an overview of our latest quarterly results first. In the Q4 FY2025, we saw a robust revenue growth of 51% YoY, reaching to INR 411 crore. This growth has been across all revenue streams, with the Propel platform raising up by 91% YoY, while program fees grew by 15% YoY. Other expenses increased primarily due to higher sales and marketing spend during the quarter. Employee costs remained stable on a sequential basis but increased YoY basis, driven by additional headcount to support business growth. This quarter also included certain transactional and legal expenses related to our inorganic expansion.
Our adjusted EBITDA grew by 40%, reaching to INR 38 crore this quarter compared to INR 27 crore in the same period last year. The increase in depreciation expenses is primarily driven by product capitalization during the year, which includes our new office building as well. Our cash pack, which includes net profit along with depreciation and ease of expenses, saw an 86% increase YoY basis, totaling to INR 39 crore. Furthermore, our PAC rose by 67% from the previous year, reaching to INR 32 crore. For FY 2025, our revenue from operations has increased by 68% YoY basis to INR 1,303 crore. Our Propel platform saw an increase of 71% YoY basis, and our tax fee saw an increase of 12% YoY basis. We observed a 70% YoY increase in the interchange fee, which has become a significant contributor to our revenue.
This growth is largely driven by the performance of our Zoyer and BROME solutions, along with organic growth in the Save and Propel businesses. Additionally, there has been a notable rise in credit card issuance under the Zoyer offering. Our Adjusted EBITDA surged by 46%, reaching INR 125 crore. PAT rose significantly, totaling INR 88 crore, which represents a 99% YoY increase. Additionally, our cash pack experienced substantial growth, increasing by 66% to INR 111 crore. During FY 2026, we anticipate recording ease of expenses in the range of INR 9 crore-INR 10 crore. Our cash flow generation has improved significantly compared to last year. The cash flow from operations to debt was INR 19.8 crore in FY 2025 compared to a negative number in FY 2024. Our DFO improved from 82 days last year to 60 days at the end of this year.
With that, I would like to conclude my update, and we are happy to open the floor for questions. Thank you.
Thank you very much. We will now begin the question- and- answer session. Anyone who wishes to ask a question may press star and one on the touchstone telephone. If you wish to remove yourself from the question queue, you may press star and two. Participants are requested to use handsets while asking a question. Ladies and gentlemen, we will wait for a moment while the question queue assembles. The first question is from the line of Swayam from PinPoint X Capital. Please go ahead.
Hello, am I audible?
Yes.
Siir My question is related to our program fee growth. As we know, one of our main focuses is on the growth of our program fee. Is there any reason why suddenly growth has been at 15%? What is your outlook going forward? How are we going to increase the transaction volume in this segment going forward?
Thank you. Thank you for your question, Swayam. As you see in the year, we grew about 70% on program fees, correct? I think you're looking at a quarter-on-quarter basis where we grew by about 15%. We've been focused on growing in a profitable way where we are able to increase our overall margins. That has been the approach while working on improving our cash flow position. We want to grow, of course, but we want to grow profitably, and we want to grow in a manner which allows us to improve our cash flows as well. Going forward, also, we see very strong growth in program fees. Overall, we have given a guidance of 35%-40%. We see program fees also growing in line with the same assessment for the year.
My second question is on the Propel part. The gross margin of Propel, which is almost 10% this quarter, assuming mainly due to the ORCs, but if I look at that on the FY 2025 basis, it is somewhere around 6%. Can you please elaborate why these margins this year are at these levels? Also, in previous investor meets, we were mentioning about acquisition of merchant platforms. Can you briefly tell how this is going to help us in this segment going forward to increase the margins?
As explained in the last call as well, we were expecting the margins in Propel Points to go up to 6%, and we were able to achieve that because of the ORCs, as you rightly pointed out. Margins, as this line of business has grown, will stay in this range of 6%-7% for the coming year as well. That is how we have estimated it. This is where the margins we anticipate to be. On a standalone basis, of course, the acquisition would help, as and when we are able to close that, because that allows us to be able to actually start issuing the gift cards for various merchants and dip into commissions from the merchants for issuing those vouchers, which is a SaaS income, as well as expanded margins through breakage, etc.
Right now, the guidance that I'm giving of 6%-7% is on a standalone basis, assuming that the acquisition would happen as and when it happens.
Okay, sir. I'll get back in the queue, and all the best for the future.
Thank you.
Thank you. The next question is from the line of Devesh Kasliwal from Antique Stock Broking. Please go ahead.
Yes, good evening, sir, and congratulations on a good setup. Next question was from the Mobilewear acquisition. This, as far as I understand, includes UPI payments for our platforms going ahead. How is the revenue going to be recognized? What is our take on it, as in what will be the margin for this integration of our products with the UPI platform?
Mobilewear is an investment. We have about 38% shareholding today there. They have a very comprehensive, robust platform for a variety of NPCI technologies, obviously UPI being the first, but IMPS, AEPS, BBPS, etc. They work with over 90 banks today. Obviously, post our investment, it has been a plus for them to be able to acquire these banks and other fintechs.
From our perspective, we are today also acting as a customer of Mobilewear, where we are using their pipes to be able to connect to NPCI for both our TPAP and our BROME solution. That is how we look at it. Of course, we support the company through our relationships and our connections to be able to increase their business.
Okay. Thank you for that. Second question. In terms of customer acquisition cost, what was the number this year for the entire financial year? Additionally, the cash sitting on our books. How are we going to deploy that over the current financial year, FY 2026? What plans do we have on that front?
Customer acquisition cost, it's around INR 360 crore, which we have spent in the current year. The cash sitting on the bank account side will be used for our regular working capital requirements, which needs to be regularly invested on the product optimization and all other stuff. Otherwise, the money what we had in terms of rate for QIP, that will be placed towards the respective objects, mainly towards investment activity.
Acquisition.
Acquisitions.
Okay. Okay. Thank you so much, sir. I'll jump back in the queue for additional questions.
Thank you. The next question is from the line of Jalaj from Svan Investments. Please go ahead.
Yes. Hope I'm audible.
Yes, yes, you are.
Okay. Thanks for the opportunity. Avinash, delving a little deeper, specifically on the platform, sorry, on the program fee. You said that we are looking for a profitable business. Does that mean that we are saying no to a few transactions or some sort of business just to ensure the profitability? On what parameters is exactly that decision, or what is it deciding? I thought that it will be a standard margin product which is being sold right now. Could you talk a little about it?
Yes, yes. Look at it in conjunction with the incentives that we give. Incentives we give to both users in Propel and Save, as well as incentives that we give at times to corporates in Zoyer. For the growth, which has gone up from INR 1.37 crore- INR 1.571 crore i n program fees, our incentives, on the other hand, have come down from INR 1.1 crore- INR 1.08 crore, right? While the program fees have gone up by INR 20 crore for the—I am doing a Q-on-Q comparison here, Q4 FY 2024 to Q4 FY 2025—the incentive number has actually gone down. That is what I was trying to allude to. Thank you for your question. You see the top line has grown, and the costs have come down, right?
Okay. Okay. And then specifically on the program fees or intercharge, how is the traction specifically on these Zoyer cards? Because as per our understanding or whatever discussion we got, that the product was a superstar product and should have started to see a lot more traction. Are we seeing that, or how far are we from that inflection point in the Zoyer product? What sort of traction are we seeing right now?
Traction is very good. We are continuing to grow there. The whole idea is to be able to, as I mentioned, optimize on profitability, optimize on cash flow while we grow, right? There is no point in our view to grow blindly without looking at these two other factors. That is why we are trying to balance it out.
Okay. Anything specifically, is there a pressure on the take rates that are different on a Zoyer product versus the Save or the Save product per se? Is that the reason why the growth isn't as quick as we were expecting? Because ideally, if the products were so great that Y-o-Y I see specifically for this quarter is just a 15% growth. Is this the same thing there, or?
No, the take rates are not too different. They are all in the same range, in the range of about 1.7%-1.75%. The idea is, again, I'm repeating myself, that the whole idea is not to just grow, but also to grow with better margins. We could have probably shown you much higher growth than that 15%. Maybe we could have grown at 30%-40% if we had given more incentives, right? We wanted to control the incentives and build that discipline in the market because we are not building for one quarter or one result. We are wanting to build that discipline and improve our incentive position over time for the coming quarters and coming years as well.
Sure. Okay. Could you talk a little about the quick commerce deal we had talked about? Again, that was for the Zoyer again. How is that shaping up, and what sort of pressure are we seeing there?
Again, in each of these cases, there are multiple of these quick commerce deals that we've done with BigBasket, Zepto, Blinkit, etc. Each one of them is shaping up well. Traction is good. We are now juxtaposing that with our ZUGS platform, Zaggle Unified Gig Worker Savings. That would then again further deepen our penetration with these companies and enhance the value proposition with these companies.
Does it typically take a lot of quarters or a few quarters to scale up the businesses while you onboard a client? Because again, just in absolute terms, program fees should have scaled up because these are usually larger clients having huge expenses. Per store, I guess, a few crore should come in. That obviously revenue will not flow, but take rate even if they are put in. A sensible amount of revenue should have started to flow from them. Does it take a few quarters to scale up?
Yes, it takes a few quarters to scale up because there is an adoption, there is education. You need to make sure that you are doing it in a manner which is giving the confidence to the CFO and her team that they have control on the spends. You are talking of large enterprises and hundreds of INR crores of spends. Each company has their own pace at which they want to roll it out.
Okay. Okay. So how far are we from that inflection point or broadly in those accounts or for these larger accounts?
In three of these larger accounts, we are live. There are about four or so which would go live in, let's say, anywhere between four to six months. Okay? Once you have gone live, then the adoption starts. You go live with, let's say, maybe 100 branches. You expand it to maybe 500 branches, see the system stability, etc., and figure out that, okay, what are the various kinds of issues that are there for that particular enterprise, solve them, and then scale them to however many stores. Post that initial setup of that 300-500 stores, you are able to expand it to maybe even to 3,000-odd stores. Okay? That is how this entire thing functions.
From signing of the contract, typically, you will take anywhere between four to six months to go live in a very, very large account. Does that answer your question?
Yeah. This is Devashish sir. So I work with Jalaj. Just a small follow-up to the question that Jalaj was asking. Is it fair to assume that then this quarter is a kind of transition quarter for us where because of the large-sized account visibility that we have, we are kind of sacrificing growth for those accounts where profitability is low? That's why this quarter, there is a lower growth in the program fees, and going forward, we will see much traction there.
Let's not oversimplify it, okay, because there is no, what do you call, clear-cut formula for this. I would say that the growth has been healthy, okay, over last year. On a Q4Q account, what happens is this is Q4. Q4, last year, was a bumper-bumper year, and it has grown by another 15% over the Q4 of last year. What we see is that as we sign up more and more clients, overall, the pace of, if you see Q4 of FY 2026, you would see much, much more larger revenue increase over this quarter than last Q4 of FY 2025. Can't say transition, but it is a constantly improving growth is how you would be able to see it.
Got it. And one last question, maybe quickly on the margins. If we close this call.
May we—hello? Mr. Jalaj, sorry to interrupt. May we request that you return to the question queue for follow-up questions as there are several participants waiting for their turn? Hello?
Oh, thank you.
Yeah. Thank you. The next question is from the line of Prateek Poddar from Bandhan AMC. Please go ahead.
Yeah. I just have two questions. One is on a sequence of cases, I see a very sharp increase in other expenses. Maybe you can help me understand what has happened over there. The other is when I look at your cash flow statements, there is something called other current assets where a substantial amount of cash has been blocked, close to INR 40 crore-odd. You can help me understand what is that. That is separate. Lastly, I see CapEx, which is quite high. Maybe you can just break that down between product development and other CapEx, whatever you would have done. Three sets of questions.
Yeah. Hi, Prateek. The other expenses, sharp increase was on account of the business promotion advertisement expenditure, which we have done in this quarter, like we did multiple conferences and all other stuff. That's one. Second is also increase on account of the network charges and the switch costs, what we have to bear when we have to integrate with any of these clients. This typically comes when a new client addition happens and all of these things. As a percentage of revenue, if you see, it will be the standard thing. Moving on to the CapEx item, in the current year, if you see, we have launched two to three new products like Zatic and Fleet Solution and VIP, etc., which was in the stage of underdevelopment stage that has been capitalized and moved to the intangible asset stage.
When it comes to the PPE, the new office building which we have shifted, that is the standard increase. The third one on the other assets, other assets typically, as I've explained earlier also, it includes two components. One is the purchase stock, which we maintain on every monthly basis in order to meet the demand of the customers and clients. The second is the pre-loaded cards. These two put together, we have close to around INR 152 crore. The rest of the balance of the total other current assets is around INR 170 crore, what you see in the balance sheet. These two put together is the INR 152 crore, and the balance INR 14 crore-INR 15 crore are the reconciliation statement, which we do with the pool accounts.
Out of this INR 152 crore, around INR 60 crore pertain to the gift purchase stock and around INR 90 crore pertain to the pre-loaded cards. Why this number is higher is because on account of two reasons. One, the business has increased significantly compared to last year and now. Second, if you've seen March, especially what happened is 29, 30, 31 are the holidays. Thirty-one is on account of Eid. It's a holiday. Where we have received the orders from the clients, but fulfillment was not done. What happens is in order to meet the demand, the timely demand, and meet the SLAs with the clients, we have to load the cards upfront and deliver to them at a later point of time as soon as we receive the orders.
Since three days are the holidays where we received the orders, and the fulfillment was not able to be done because of the holiday structure. These are the reasons.
No, this is very helpful. Lastly, just on the trajectory of other expenses, is this the new normal we should think about? Other expenses generally are rising faster than, let's say, our sales growth, obviously on a low base. Is that something which will happen next year also?
Can't comment as of now, Prateek, but this is one of the activities. Typically, as a percentage of revenue, see, it will be in the range of 1%-2% on specifically the items which we spoke other than the employee cost.
Got it. Lastly, just wanted to confirm, look, next year, I think you're guiding for 35%-40% growth with some margin expansion. Given that we have had some years of hyper growth, this 35%-40% should result in now a decent cash flow accretion, right? We would not get into a situation where there is negative OCF. Obviously, this year, you have generated some OCF, though very small as a percentage of what the EBITDA is. The EBITDA to OCF conversion next year should improve. That's a fair understanding, right?
Definitely, yes, Prateek. It will improve because last year, it was much, much negative. As we promised to the wider investors, etc., we are public and even in the current year. The idea is to focus on this much more and be capital efficient. OCF EBITDA also will increase gradually. In fact, one of the first steps we did, if you see, is our DS4 base, right? Which used to be 82%, that has come down to 16. We potentially go ahead and reduce that further. That's where the focus will be. As that gets reduced, automatically, the cash flows will turn positive.
Maybe some guidance, maybe not today, but in future calls on conversion from EBITDA to OCF helps a lot. That is one suggestion I would leave you guys with. Otherwise, thanks so much, sir. Thanks.
Definitely. Thanks, Prateek.
Thank you. The next question is from the line of Srinarayan Mishra from Baroda BNP Paribas. Please go ahead.
Hi. Thank you for the opportunity. My first question is on the EBITDA margin. We can see your Propel margins increasing to.
Sir, can you please be louder? Can't hear you.
Hello. Is it better?
Yeah. Yes.
Yeah. My first question was on EBITDA margins. We can see your Propel margins going up to 10% this quarter versus 3Q. We cannot see the overall EBITDA margins moving up in that direction. From 3.3%-something percent to 10% is the margin which we see in Propel, but EBITDA margins are flat. Can you throw some light on why this did not flow through?
We explained this last time as well, the Propel margins were supposed to expand in any case because of the overriding commissions that were due for the sales that we generated through the first nine months. That has flown through now. Overall, if you look at it, our margin guidance was 9%-10%, and we are at about 9.6% for the year. Next year, our guidance is 10%-11%, and we will look to meet that. If you look at Q4 of last year as well, Q4 is a high-growth quarter for us, but margins are generally a little compressed in Q4 because a lot of the corporates also meet their spend thresholds in Zoyer, etc. They tend to get some of their commissions, etc., from us, incentives from us.
This is the nature of our business that Q4 does tend to have much higher growth, but a slightly compressed margin profile.
Okay. Okay. And these expenses, we cannot even these out over the course of the year. The four-to-lumpiness, I mean, by way of accounting, it is required, or can we do some provision in earlier quarters for these expenses? Is that not possible?
It's hard because we don't know who will cross what thresholds. Just the same way as we are not allowed to take revenues in earlier quarters because we are also not able to prove to the auditors that we will cross those thresholds in Propel Points. That's the nature of this whole piece.
Okay. Okay. Okay. Understood. Secondly, sir, on BROME, if you can highlight in terms of DMV, what we have achieved, or in terms of revenue, gross or net revenue, that would be great.
Overall, on BROME, we have grown very significantly in terms of number of clients which have gone live and where we have signed up. It's a little too early for us to give you more data specifically in BROME , which is part of Zoyer, as to how much we have done in terms of revenues, etc.
Okay. So do you have any, I mean, timelines on, I mean, directionally by when you see that to be a significant chunk of the business and you start giving numbers on that?
It will always be part of Zoyer, but specific numbers probably we'll give sometime in this year, depending on how numbers pan out and how it is. You will see in our business more and more as we push for cross-sells, that a lot of these numbers are going to be intertwined. The whole idea is to capture all the strengths of the corporate while we explain the solution to you as a separate use case. When the team goes and sells to the corporate, the thesis is all about trying to give you a comprehensive spend management solution, right?
Got it. Okay. Okay. Got it. And last question, if I may.
Please interrupt, Mishra.
No worries. Okay.
Yeah. Thank you. The next question is from the line of Rohan Nagpal from Helios Capital . Please go ahead.
Hi. Thanks for the opportunity. Since you spoke to overriding commissions in Q4, the actual growth that we're seeing in the underlying volumes is a little hard to gauge. Could you give some sense of how much growth we're seeing in the underlying Propel volumes as of the overriding commissions that were booked this quarter? Thanks.
See, the volume growth is what it is. We've told you it has grown from INR 128 crore in Q4 FY2 024 to INR 245 crore. Of course, the margin gets added to that. Largely, the growth is pretty strong. It's just that the ORCs come in in the last quarter.
Okay. Understood. Thank you. That's it from my end.
Thank you. The next question is from the line of f Parikshit Kabra from Pkeda Advisors LLP . Please go ahead.
Hi. First of all, I'll clarify. The first question that was asked about program fees growth guidance for next year, I think Avinash said that it will go in line with the overall guidance. That implies that program fees will also be about 30-35% for this year. Is that a fair understanding?
Yeah. 35%-40% is what we have projected as our overall growth, and program fees should also grow in line with that. Yeah.
Okay. Perfect. Will this be front-loaded, back-loaded, anything along those lines? Same thing, by the way, for EBITDA guidance. Are we expecting it to gradually ramp up, or are we expecting it to come from Q1 itself?
See, all of this will gradually ramp up because the nature of our business is also such that Q1 and Q2 generally are lesser in terms of revenue. Q3, Q4 are higher contribution. Historically, it used to be a INR 65 crore-INR 35 crore. Now it has gone down to about INR 57 crore-INR 58 crore, INR 42 crore-INR 43 crore type of a number with Zoyer's increased contribution. There is always a skew towards Q2.
Got it. But from a year-on-year growth perspective, when I compare it, Q1 to Q1, Q2 to Q2, I'm talking from that perspective. Should I not be seeing 30%-35% growth from Q1? Because then it would imply then that for a year-on-year guidance to be met, then in Q3, Q4, you would be giving upwards of 40-50% growth.
Yeah. It's pretty much like that. You should see growth because Q1 of last year was also a lower number, I think INR 118 crore for program fees. You will see that number pan out at that 30-35% range.
Okay. Got it. Perfect. My second question is from a, sorry. The GTV perspective, from the gross transaction value, is it possible for you to start disclosing from our program fee what is the gross transaction value we are seeing? Over the last year, we have added so many clients, but the program fees have not grown as much. The pay trait has also not changed as per your previous response. That means the GTV has not managed to grow. Is that correct?
The GTV has grown. It's grown fairly well because if you look at it the whole year, the program fees, sir, have grown by 70%, right? It's not at a small base. The base last year also was INR 322 crore. On that, we have grown by 70%. I think somewhere, maybe we want to highlight this that overall, you should look at the year's numbers and how the number growth has been. Overall, the number has grown very heavily at 70%.
Okay. Understood. All right. Thanks. Thanks a lot, Avinash.
Thank you.
Thank you. Ladies and gentlemen, in order to ensure that the management is able to address questions from all participants in the conference, please limit your questions to two per participant. The next question is from the line of Ankush Agrawal from Surge Capital . Please go ahead.
Yeah. Hi. Thanks for taking my question. The first question is, compared to our changing commentary, the last quarter, the commentary was more around that we are more focused on growth because the opportunity is so huge. Even if that sort of keeps our margins subdued in the near term, we are fine with it. Whereas in this quarter, we have been talking a lot more about margins and better cash flows. That reflects in your guidance as well, wherein you expect margins to improve in the coming years. We wanted to understand what has led to this change wherein earlier the guidance and strategy was more growth-focused, and now it has changed to more balanced growth perspective. Has there been something changed?
Nothing has changed, sir. If you look at last year, when we came in March of 2024, we said we possibly will grow by 45%-50%, okay? We ended up growing by about 68%. The whole idea this year is that while we look at growth, we also look at improving our margins. Improvement in margin is a part of the long-term objective, which is that we have to take it to about 15%-16% over the next three to four years. While the margin expansion will come, it will also come at scale. The scale which we have to achieve will come only by having a little bit aggressive growth plan. What we are referring to, 35%-40%, is, please see, it is on a INR 1,300 crore base. Last year, the base was INR 775 crore.
Previous to that year was INR 553 crore. If you look at it, if we are saying this year that we are growing at about 40%, that is about INR 1,800 crore plus. You compare that two years back, we were at INR 553 crore. Today, next year, we would be at about INR 1,800 crore. That is like 3x jump in about the span of three years, okay? At every base we are growing, the idea is not to let the growth slow down, but the idea is to improve margins while we improve growth.
Got it. Got it. The second question, sir, is around the M&A. It has almost been a year or so wherein we have been talking about doing some major M&A. It's almost been about five, six months since we have raised a substantial amount of capital as well. Just trying to understand what is happening over here. Have we sort of pinpointed some M&A and the due diligence itself is taking a long time, or are we still figuring out which company to acquire because the timeline between capital raise and not being able to acquire itself has been like six, seven months now. If you can share some insights, like if the due diligence is taking time or you're not able to figure out the right M&A, what is happening over there, it would help.
Sure. Sure. Very good question. I will answer it in detail for you. See, when we raised the money, that was like end of December, okay? Since January, in fact, we have started looking at multiple companies. We are in a very advanced stage. Even when I say very advanced stage, between the closure and very advanced stage, it could be a quarter, okay? These are like little bit large acquisitions with multiple investors on the other side. There has to be, and also, the due diligence typically takes about three to four months because there is FGD, which is financial due diligence, then tax due diligence, and then legal due diligence, and then the final terms which we have to agree with the acquiring company. Okay.
What is happening is that we have set up about seven to nine players, and there is a lot of amount and time and effort which goes from the management side as well when we are looking at these companies, though we have a dedicated set of team which is looking at it, but the management time also goes in. What we have done is, in spite of coming very, very, very, very close, sometimes it just stretches at the last moment, okay? That stretch is what we have seen in one or two cases. We should be able to very soon tell you as to what is the status on all these acquisitions.
Okay. The takeaway would be that we have figured out what we want to acquire. It's just that the due diligence and the overall process is taking time. We have figured out what we want to acquire.
100%. We would not raise money, or we would not go ahead and dilute ourselves if we had not a clear-cut thought process on whom to acquire.
Got it. Got it. That was very helpful, sir. Thank you.
Thank you.
Thank you. The next question is from the line of Deepak Poddar from Sapphire Capital. Please go ahead.
Yeah. Am I audible, sir?
Yeah. You're audible, sir.
Yeah. So just a couple of clarifications first up. I mean, what was the tax plan of revenue for FY 2025?
FY 2025, it was about INR 3.35 crore.
INR 3.35 crore? Okay. Understood. In terms of, I think you mentioned something, the 6%-7% standalone. What was you were referring to? I mean, some outlook you shared on 6%-7% as a standalone.
No, no. 60%-70% growth.
It was not in context TaxSpanner, but on a standalone basis.
No, not in context.
On a standalone basis, you were saying something 6%-7%. Just wanted to clarify.
Six to seven percent is the Propel margins. Propel margins would be about 6%-7% range is what we are saying on a standalone basis.
Understood. Fair. Fair enough. Just my first question is, in terms of acquisition, whatever we are targeting, are we looking at them as a margin-accretive one? I mean, how should one look at?
Majority of them, I would say 95% of them would be margin-accretive, but one of it could be product-accretive as well.
Fair enough. That's very clear. When we see 30%-40% outlook in terms of growth, are we being conservative there?
Yeah, 35%-40% is what we have projected. Let's look at it how the year goes by, and let's also see how the market shapes up. Right now, this is what we have, a very clear-cut plan to achieve this. Maybe in coming quarters, we would be able to give you a better guidance.
Okay. Understood. And just last thing, in terms of margins you mentioned, we are looking at 15%-16% in next three to four years. So per annum, I mean, 100 basis points is what we are looking at? I mean, internally in terms of improvement?
Yeah. That's a smart assessment. That is what is our thought. This current year, we are looking at 10-11%, okay? As we go on, every year, we would look at improving the margin.
By 100 basis points.
Yeah. It could be. It depends. Next year, I'll be able to tell you about next year is how it goes.
Fair enough. Got it. Got it. That's very helpful, sir. I think that would be it from my side. All the very best. Thank you.
Thank you. Thank you.
Thank you. The next question is from the line of Rohan Mandora from Helios Capital. Please go ahead.
Hi. Just a follow-up. I mean, this is a question that I'm not—am I audible?
Yes, yes, Rohan. Go ahead, please.
Yeah. So I was saying, if there are overriding commissions that have been booked this quarter, then the revenue that you book under Propel will be the Propel revenue from your gift card that you have sold plus the overriding commission, right?
Yes. Yes.
Yeah. I'm just trying to understand. That doesn't really give us a picture of what the underlying growth rate is within the Propel business because the overriding commission has been sorting that growth rate. Could you give us a sense of what the underlying growth rate is within Propel?
Excluding worth is Rohan, it is 78% on quarter-on-quarter basis.
Oh, okay. Understood. That's helpful. Thank you.
Thank you. The next question is from the line of Rahul Rajani from MIPL Family Office. Hello. Sorry to interrupt. You have a disturbance from your end. Could you please reconnect?
Yeah. Can you hear me?
Yeah. Go ahead.
Yeah. Thanks a lot for the opportunity and congratulations to the management for the great result. Wanted to just have one update that is in the last conference call, you had mentioned that you had signed a contract with one of the largest retail chains in India, which is one of the largest conglomerates. How is that shaping up? How is that going about? When can we see the revenues kicking in for that? Yeah, as we explained, thank you for your question. As we explained, some of these large ones take a while to go live. In this case, the POC was successful, and we have gone live. You would understand that scale-up when you are talking about thousands and tens of thousands of branches has its own gestation period. That is what we are seeing.
Revenues have started to come through, but it would take us a little while for us to be able to really see very significant revenues. Also, please note that right now, the base of revenues that we are looking at is INR 1,300-INR 1,303 crore, right? It has to be significant with that base, and that's a little while away. Yeah.
Sure. Thank you. Yeah.
Thank you. The next question is from the line of Devesh Kasliwal from Antique Stock Broking. Please go ahead.
Thank you. Filling back on the guidance, you are saying that standalone guidance will be around 35%-40%, which I am presuming will be a conservative estimate right now. Apart from that, from the acquisitions and the acquisition that we are projecting to come forward in the next quarter, obviously, that will also add to the revenue. The overall consult guidance, can you give a number if possible?
See, if all of them come before September, then Devesh, we should be at about 80-odd % as growth. Okay. Standalone is what we have said, 35-40%. Consolidated, if we get all the acquisitions which we have planned, we are able to complete before September, then we will be able to take the whole year. It would be about roughly in the range of another 40%. It should easily add.
Okay. Okay. Thank you for that. Sir, one last question. Normally, given our platform is a SaaS platform, we have clients that are recurringly using our platform on a monthly basis. Is there a possibility that you could give a monthly recurring revenue number that we are at right now? Obviously, it is always going to grow going forward unless we have clients exiting. That would be a fairer assessment of how things are shaping up on a standalone basis for the overall company.
Sure. We will look at that and come back.
Okay. Thank you, sir.
Thank you.
Thank you. Due to time constraints, this was the last question. I would now like to hand the conference over to the management for closing comments.
Sure. So thank you all for participating in today's call. We hope we have addressed all your queries and provided valuable insights. We remain optimistic and focused on the future growth of the company, and we are excited about the opportunities ahead. For any further information, we request you to get in touch with SGA, our investor relations advisor. Thank you, and have a good night.
Thank you. On behalf of Equirus Securities, that concludes this conference. Thank you for joining us, and you may now disconnect your lines.