Ladies and gentlemen, good day, and welcome to Q3 FY 2026 earnings conference call of Zaggle Prepaid Ocean Services Limited. This conference call may contain forward-looking statements about the company that are based on the beliefs, opinions, and expectations of the company as on date of this call. These statements are not the guarantees of future performance and involve risks and uncertainties that are difficult to predict. As a reminder, all participant lines will be in a listen-only mode, and there will be an opportunity for you to ask questions after the presentation concludes. Should you need assistance during the conference call, please signal an operator by pressing star then 0 on a touch-tone phone. Please note that this conference is being recorded. I would now hand the conference over to Dr. Raj P. Narayanam, Executive Chairman, Zaggle Prepaid Ocean Services Limited. Thank you, and over to you, sir.
Thank you. Thank you so much. You know, a very good evening to everyone. Thank you for joining the earnings call for Zaggle Prepaid Ocean Services Limited for the Q3 and nine months of fiscal year 2026. 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, Managing Director and CEO; Mr. Aditya Kumar, our CFO; Mr. Rajesh Tummalaganti, our Deputy CFO; and SGA, our Investor Relations Advisor. The financial results, press release, and investor presentation are uploaded on the stock exchange and on the company website. I hope everybody had a chance to look at it. This quarter marks our best ever quarterly and nine months performance, with a very strong performance across all key metrics.
Talking about the quarterly performance, comparing Q3 FY 2026 to Q3 FY 2025, the company reported revenue of INR 498 crores, missing the INR 500 crore mark by INR 2 crores, growing at around 48% on a year-over-year basis. Our quarterly adjusted EBITDA crossed the mark of, you know, INR 50 crores for the first time in our history. We achieved INR 51 crores of adjusted EBITDA, growing at around 63% on a year-over-year basis. The PAT, profit after tax, surged to INR 36 crores, growing significantly at around 78% on a year-over-year basis. Our nine-month FY 2026 performance, I'm delighted to report that we have surpassed last full year's profitability levels, driven by margin expansion at both EBITDA and PAT levels. The company reported revenues at around INR 1,260 crores, growing at around 41% on a year-over-year basis.
Our adjusted EBITDA stood at around INR 128 crore, a 48% year-over-year increase. Our PAT surged to INR 95 crore, growing significantly at about 71%. The achievements, the achievement highlights are relentless bottom-line discipline and flawless execution that are powering robust growth across the board through cost efficiencies, revenue optimization, and operational agility. I also want to take this opportunity to talk about our AI journey so far as a SaaS fintech company. Over the past year, we have shared our vision for how AI will reshape the spend management ecosystem. Today, that vision is becoming an operational reality. You would know that, you know, as to how IT stocks are being beaten down. Moving from aspiration to integration, we have transitioned from discussing AI's potential to validating its power in real-world scenarios. We are currently in the process of launching our Agentic AI workflows.
Unlike basic automation, these agents are designed to independently execute complex tasks, such as automating vendor reconciliation, flagging tax compliance anomalies, and streamlining end-to-end spend approvals. The impact on our agility and efficiency is already very, very clear to us. For example, to develop and deploy a new product feature traditionally took us about 75+ days. Now, the same can be rolled out, and I'm talking conservatively here, in less than 30 days. By significantly reducing our production time and time to market, we are just not working faster, we are becoming more responsive to our customer needs and accelerating our path to a full-scale rollout. So by cutting our development cycles by more than half, we have turned speed to market from a goal into our greatest competitive mode.
One thing which is very clear to us is R&D will always help the company to stay ahead and remain competitive and ahead of competition. Now, I would like to give an update on our acquisitions and investments so far. Our existing acquisitions and investments continue to deliver exceptional performance. For Greenedge, we saw a very strong Q3 FY26 performance, achieving a revenue of INR 29 crores with healthy margins. Since our engagement began, Greenedge has been able to leverage the Zaggle's network extremely well in scaling up their revenues for nine months FY26 to INR 65 crores as compared to entire FY25 revenue of around INR 36 crores, already showcasing that how our synergies kick in. Greenedge has also strengthened its partnership with Amex by extending its domestic and international golf programs by another three years.
Concurrently, Greenedge has strengthened its partnership with NPCI to enhance their existing benefits platform, while also developing a new suite of innovative programs. Before we go to TaxSpanner, I am pleased to announce that as per the draft, and these are Draft Income Tax Rules 2026, employee tax benefits have been extended to the new tax regime, you know, which is a huge kicker to us in terms of not only adding more corporates to our kitty, but also to be able to enhance the entire consumer base. In addition, the proposed rules also indicate higher permissible values for meal gifts, you know, meal benefits, gifts, and certain other allowances, creating great opportunities for us. We see this to be a significantly positive development, not only for TaxSpanner, but also for our SAVE business in the years to come.
For TaxSpanner, this year has been focused on building a solid enterprise pipeline and building out products on salary structuring, TDS, GST, and JACS, which is for gig workers' wellness, which has worked very well in tandem with our existing SAVE, Propel, and Zoyer proposition. With a strong client base, including Accenture, Novo Nordisk, Bosch, HCL, among others, we expect TaxSpanner to deliver significant growth in FY 2027. Now I'll come to Mobileware. Now, Mobileware is rebranded as 86400. Since our engagement began in 2024, we have seen a massive growth journey being unleashed at Mobileware. Harnessing Zaggle's network and credibility, 86400 has secured 11 new partnerships with banks and fintechs to date. With Zaggle's support, 86400 has also onboarded several banks as customers throughout the entire period.
Fueled by these partners and clients, 86400 is seeing a massive surge in its revenue from INR 17 crore in FY 2024, to have already surpassed INR 50 crore in YTD FY 2026, and we are hoping that they would cross about INR 65 crore, you know, this year. We saw great traction last quarter with the launch of the Credit Line on UPI product with Suryoday Small Finance Bank , already seeing about 30 lakh+ transactions with more than more than INR 50 crore being lent through the product in the first quarter itself, and this will only increase in the future. Now, I would like to give you an update on the ongoing acquisition. We have made considerable progress on some of these as committed earlier. I'm pleased to announce the completion of our acquisition for Rio.Money, now rebranded as Zag.Money.
This is a pivotal milestone that completes our strategic architecture. One of the questions our investors have asked us constantly is: How are you going to monetize the existing base of customers and consumers? Historically, our growth has been fueled by three distinct pillars: enterprise clients, banking, and network partners, along with the merchant ecosystem. Today, Zag.Money establishes our fourth monetization pillar, a captive, high-intent base of 3.7 million salaried users. Over the past several quarters, we have meticulously stitched together a wider ecosystem of retail financial products to ensure we are ready to cross-sell into this base immediately.
To accelerate our revenue uptick, and as we had, you know, mentioned in our last, you know, con call, to reach our target of INR 500 crores for this segment within the next four to five years, we have earmarked a primary capital infusion of about INR 100+ crores. Now, I would like to give an update on our international expansion planning. During this quarter, I'm happy to inform you that the board has approved the incorporation of a wholly-owned subsidiary in GIFT City, Zaggle Payments IFSC Limited. This initiative aligns with our broader vision of expanding our global cross-border payments and financial services capabilities, leveraging the GIFT City ecosystem. As guided earlier, we are in the final stages of forming an entity in UAE with a view to expand in the MENA region.
We have narrowed down on Abu Dhabi as a base to set up operations, from where we will build out our global journey. Our confidence in this market is bolstered by the direct engagement with key business leaders of Abu Dhabi, as well as the select stakeholders across the UAE government, including the Minister of State for Artificial Intelligence. Last but not least, I would like to take a moment to congratulate our CEO and MD, Mr. Avinash Godkhindi, who has been recognized with India's Most Influential CEO Award, Award, and the impactful Unicorn CEO Award. His commitment, vision, and relentless focus on execution continues to inspire the entire Zaggle team. Also, our investment in Ayush Mhatre, taking him as a brand ambassador, has proven to be one of the best choices we have made.
You know, India brought home the under-19 World Cup under the fantastic and dynamic leadership of Ayush Mhatre. And what was very, very, you know, heart touching was, you know, when he raised his bat, the Zaggle sticker was right there, you know, for everybody to see. Now, I would hand it over to Avinash to carry on the...
Thank you, Dr. Raj, for your kind words and appreciation. It's truly an honor to be part of this journey. A very warm welcome to everyone joining us on the call today. I'd like to give an overview of a few key metrics. I'm very happy to share that today, around 3.7 million active users use the Zaggle card, cards, and software. A strong testament to the scalability and adoption of our platform. We now serve more than 3,700 customers across a wide spectrum of industries and sectors. During this quarter, our SaaS platform fees contributed to around INR 12 crore. Program fees contributed to around INR 2,211 crore, and Propel points contributed to around INR 275 crore. Now let me talk about a few business highlights.
On our fleet program, I'm happy to share that we have signed up with IRM Energy, a leading Indian city gas distribution company, with more than 120 gas stations across Gujarat, Punjab, and Tamil Nadu. With this, we have gained market leadership in the CGD space with our fleet program solutions. As we target our, as we set our targets, on the larger oil marketing companies, where we have been engaging for the past, few months, and we hope to see positive traction very soon. I'm also happy to announce that we are seeing extremely positive traction on our Smart Employee Purchase Program, Smart EPP. We have signed contracts with multiple customers already this quarter, including Dubashian Consulting, Hexalog, and Forever New, amongst others.
During this period, we also signed several other marquee clients like Senco Gold, Biba Fashion, Capital Small Finance Bank, Sesa Care, Mahindra Holidays, Rashtriya Chemicals and Fertilizers, amongst others. To provide a brief overview of one of our clients, a leading retail chain with more than 150 stores span India, was facing significant delays on vendor onboarding, as well as a complex manual process of raising procurement requests and invoices centrally at, and at a store level. The client also faced significant difficulty in managing audit trails and approval workflows. We addressed these issues by deploying our Zoyer platform to streamline and digitize the entire procurement workflow while strengthening policy enforcement across the organization. Building on our platform-based strategy, we have seen excellent cross-sell momentum across the organization.
In Q3 FY26, with enhanced cross-sell efforts and vigor, we were able to cross-sell to multiple customers, including House of Hiranandani, CK Birla Healthcare, and HD Media, among others. I'd like to take an opportunity to elaborate further on these. House of Hiranandani was an existing customer for our SAVE solution. We recognized the potential for further collaboration and successfully introduced our Zoyer offering. Within Zoyer, we offered the Brome module, to streamline their spends across their retail outlets. CK Birla is again an existing customer for our SAVE and Zoyer solution. We identified an opportunity to strengthen our partnership here by implementing our Zatix solution, which is an analytics platform to drive greater efficiency for their spends. I'm also happy to share that we have deepened our partnerships further with Visa and Mastercard.
We have signed a seven-year agreement with Visa for co-branded domestic prepaid cards, which offer spend-linked incentives. Similarly, we have also signed a five-year contract with Mastercard for credit cards, offering spend-linked incentives along with referral bonuses. In addition, we partnered with Euronet Services India for co-branded prepaid card solutions for the corporates. With continued momentum across our core offerings, expanding partnerships, and the strategic integration of our acquisitions, we believe we are well-positioned to sustain our profitable growth. With that, I'll now hand over the call to our CFO, Aditya, who will talk you through some financial updates in more detail. Thank you.
Thank you, Avinash, and a very warm welcome to everyone on this call. On quarterly performance, in Q3 FY 2026, we delivered a record revenue of INR 498 crore, reflecting a strong 47.9% year-over-year growth and 15.5% quarter-on-quarter growth. This was largely driven by an increase in program fees, followed by a strong contribution from the Propel platform revenues. The increase in incentives and cashback expenses is aligned with business expansion and higher transaction volumes. ESOP costs are being rationalized, as majority of the expense has already been accrued. We expect that ESOP charge for the next year to be in the range of INR 3-INR 4 crore. Adjusted EBITDA grew by 62.9% to INR 51 crore, compared to INR 31 crore in the corresponding quarter last year.
PAT increased by an impressive 77.7% year-over-year to INR 36 crore, our highest ever, with margins improving to 7.2%. Cash PAT, which includes net profit along with depreciation, amortization, and ESOP expenses, stood at INR 46 crore, marking a 76.1% year-over-year growth. Regarding the recent labor code changes, as notified under the law, we expect only minimal impact on our operations. Talking about our nine-month performance, for the nine-month period, revenues from operations grew 41.4% to INR 1,260 crore. Our adjusted EBITDA has increased by 47.5% year-over-year to INR 128 crore. Notably, our cash PAT has already surpassed full year FY 2025 cash PAT, with a strong 68.3% year-over-year growth, reaching to INR 121 crore.
On working capital, we are well on track, and as guided, we will see breakeven for FY 2026 and OCF turning positive in FY 2027. 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 question may press star and one on their touch-tone telephone. If you wish to remove yourself from question queue, you may press star and two. Participants are requested to use handsets while asking a question. Ladies and gentlemen, wait for a moment while the question queue assembles. The first question is from the line of Devesh Kasliwal from Antique Stock Broking. Please go ahead.
Thank you. Congratulations, sir, on a good set of numbers. I just wanted to check, in the consolidated segmental revenue, we have our platform fees, as around INR 79 crore, so that is a substantial jump from INR 12 crore. So I just wanted to understand why that jump is, and bifurcation between organic and inorganic in that.
Very small change in regrouping that has been re-updated. The new, updated financials have re-updated in stock exchanges.
Oh, okay. Okay, not a problem. Second thing was I wanted to understand the business as well as economics of the lease and the procure and lease mobile phone, that Smart EPP that you're talking about. Just how does it work, and how are you making money, the overall economics on that front?
Yeah, thank you for that. I think, there's substantial margins there, simply because there's a lot of benefits that you get in terms of savings, both on the income tax as well as the GST. And our commissions are also fairly thick, if I may say that, on that program. It's a highly profitable program for us.
So the working capital is used by us in this, or like we are procuring them on our books, will these be as assets, and then we'll be leasing it out to the employees of the company that we have signed the contract with? Am I right on that?
No, no, there's no working capital deployed from our end. The leasing partners are partners like Tata Capital. We just signed up, and we announced in the investor deck as well, Jio Finance. So this leasing would be done by leasing companies, and we have zero working capital that gets deployed in this solution whatsoever.
Okay. Okay, got it. And last question from my side. Just wanted to, and I know you don't disclose the cash flow from operations at the end of third quarter, but, given last quarter was festive and we were giving points for, like, to our customers, just wanted to understand how much of that has already converted into cash in the current quarter, if you could give some number in that.
Yeah, we are back on track, and we are on track with our guidance that Aditya also shared that, you know, we'll break even for sure by the end of this year, and next year we hope to be significantly OCF positive.
Okay. Okay, got it, sir. Thank you so much.
Thank you. Thank you. Ladies and gentlemen, in order to ensure that management is able to address questions from all the participants in the conference, please limit your questions to two questions per participant. If you have a follow-up question, we request you to rejoin the queue. The next question is from the line of Deepak Poddar from Sapphire Capital. Please go ahead.
Yeah, am I audible, sir?
Yes, yes, Deepak.
Yeah. Thank you very much, sir, for this opportunity. Sir, I just wanted to understand the employee cost in this quarter. Quarter-on-quarter, it was higher by about INR 3.2 crores. I mean, is there any one-off there, and what led to the increase?
There are some one-off payments which were given to certain employees in terms of the regrouping of the structure, but this is not linked to the new labor code impact, et cetera.
What is the amount?
Amount is around INR 2.1 crores.
So INR 2.1 crore. I mean, going into next quarter, we'll have-
Will not be there, yeah.
Yeah, INR 2.1 crore will not be there. Okay, okay. Understood. Understood. And in terms of free cash flow generation, I mean, you mentioned fourth quarter will cash break even, and from FY 2027 will have cash positive, right?
Absolutely. That's what we have communicated, yeah.
Understood. In terms of, I mean, margins, we have iterated in the past as well, a 1% kind of quarter, year-over-year increase, for next three to four years to have eventual target of 14%-15%. So, I mean, this year, I mean, if you exclude ESOP cost, our margins is, we're not looking at 100 basis point improvement, right? So, where do we see it?
See, the 100 basis points was never going to be, you know, a linear step-up function, and that we sort of clarified as well. So there'll be some years where the growth is much higher, like right now, we are seeing on a much higher base, we are seeing very... It may be lower, but overall, our guidance has been that we've been at, you know, Adjusted EBITDA of about 14%-15% in about five to seven years is what we've guided, along with $1 billion of revenue. That's been our guidance. So, let's see where we land at the end of the year. But, you know, the margin expansion is quite significant, as we are seeing, and the momentum is strong there.
Okay. So, so you're saying five to seven years, $1 billion revenue with 14%-15% margin, right?
Correct.
Okay, okay. And, and, I mean, in terms of revenue CAGR, this 40%-50% that we are expecting for this year, right? FY 2026. So that CAGR we can... I mean, that's the CAGR we should look at over the next three to four years?
...See, the guidance that you've given of 40%-45% growth for this year is all organic, all domestic. This doesn't include the growth that we are seeing in, our, acquisitions like Edge. But I wouldn't hazard a guess whether the next year growth would be, the same, higher, lower. Right now, our guidance stands for this year. But as I mentioned, it's only domestic and it's only organic. So there's a lot of, hopefully, upside that comes in from both the international, opportunities as well as the acquisitions in the coming years.
Got it. I got it. I got it. I think that's very helpful, sir. I wish you all the very best. That's it from my side. Thank you.
Thank you. The next question is from the line of Sachin Dixit from JM Financial. Please go ahead.
Hi, Avinash and team. Congratulations on a great set of results. My first question was on this, customer wins, right? So you guys do highlight significant number of customer wins happening during the quarter in multiple press releases. Is there a way for us to read this? Is there a way for us to think of it in numbers? I mean, if you can provide any color on that piece, would be really helpful.
Yeah, I think customer wins, the ones that we speak of are typically the ones where we see significant growth potential in those accounts in the coming years, right? So these are larger contracts, more important contracts for us strategically as well, where there could be more cross-sell and upsell. Beyond that, Sachin, it's very hard for us to give a rupee or a dollar number on our contracts, because the nature of the business being SaaS, it's very dynamic as to how much is the usage of the platform. And similarly, on the transaction side, we cannot necessarily predict how the spends of the company would be for the coming month or quarter or year.
And that's where a lot of the upside also comes, because many times the buoyancy is there in the business and customer's business, and that reflects in our numbers. So that's, there's an upside to that as well.
And so just a request, if it's possible, maybe if you can do some sort of quarterization data on customers and start sharing that in the call PPPs for people to see how the existing customers and new customers are ramping up on the platform, might be helpful. My second question is on the Rio.Money side and the acquisition side. Any update there on where we stand in terms of doing these to ramping up those businesses?
Yeah. So on Rio, the transaction is closed. The company has now been rebranded as Zag.Money from Rio.Money. So the cards are now in the market. Co-branded cards with Yes Bank are now branded with Zag. The whole, you know, idea is to be able to leverage the large employee base, about 3.7 million active users on the Zaggle platform, which keeps growing. And our access to a much larger employee base through our corporate customers. As we've clarified multiple times in the past, it's very rare that if a company has 100 employees, all 100 employees are on the Zaggle platform and using it, because all of them may not be filing their reimbursements, et cetera.
But we have access to that entire base of employees through our strong relationships with these corporates, and we'll leverage that to be able to reach out to a much larger audience in a much more cost-effective manner, right? And the draft IT guidelines and regulations again provide a great fillip to that, because now, you know, with the new tax regime also including the meal allowance, the gift allowance and fuel allowance and all the other allowances, obviously, a lot more employees from our marquee customers would sign up to be part of the Zaggle platform. And that we believe we can translate into a retail card customer as well, in addition to the TPAP capability that we bring.
So that's the thesis, and this has been a very fortuitous break with the NTR new tax regime also including these wallets now.
Then monetization-wise, this will again be an MDR-led monetization, or we also have some extra fees arrangement with our partners?
We have both fees as well as spend link, interchange link to income, here.
Got it. Thank you and all the best.
Thank you.
Thank you. The next question is from the line of Ankush Agarwal from Surge Capital. Please go ahead.
Yeah. Hi, thank you for taking my question. So just going back to the first question that was asked around consolidated software fee being around INR 79 crore, what did you clarify on that?
No, no. Like I said, it's an numerical error. The revised financials are being uploaded to stock exchanges.
Okay. Okay, got it. Secondly,
... if I look at our incentive cost as a proportion of program fee, that number has broadly been around 66%-67%. So, like, how are we looking at that number changing in the long run? Do you believe it will stabilize at this number, or over time, as the growth sort of moderate from the program fee, we can expect some kind of leverage on that number?
Yeah, absolutely. There is a lot of opportunity there for that number to come down in the coming years. And we estimate the steady state in about, you know, five years would be in the range of about 50%, there or thereabouts, as a percentage of program fees.
Okay. But if that is going to happen, like, if that is going to come down from 67%- 50%, shouldn't our margin outlook be much higher? Because that is the biggest part of this. If I look at net revenues, that's like 58%-59% of our overall cost now.
See, look, we always try to give you a conservative view on our projections. You're absolutely right that there is potential much higher upside, but there is also the possibility that some of our other costs would also over time increase, right? So we don't want to give you a view which is very overtly optimistic, but yeah.
Okay. No, that is all. Thank you.
Thank you. A reminder to all the participants, you may press star if you want to ask question. The next question is from the line of Shrenik Mehta from Indo Wealth. Please go ahead.
Hi, good afternoon. So I wanted to check on a little bit of a longer-term view. So we have fantastic growth in the last few years, but in spite of this growth, we are probably looking at a negative or a very low cash from operating activities, and we still have a fairly low number as far as the ROE of the company is concerned. So if you want to have a situation where we can get a compounder, which is, say, 30%-35%, kind of a compounder over the long run, which certainly looks to be the case here, you would need to raise this ROE closer to 25%-30%, and, and also have a very high ratio of the operating cash.
So I know it's a very rapid growth phase, but, do you see a situation where you're able to see these numbers over the next few years? What, what's the glide path that you look at?
Good point. Very well taken, sir. I think you're absolutely right. These are matrices that we internally focus on, whether it's, you know, operating cash flow or the ROE. Some of that obviously will improve with the deployment of capital that we raised. Some of the investments have been extremely successful, like Greenedge, where we're seeing a fabulous performance by the company and spectacular returns. And we hope to deploy that capital sooner than later to be able to generate outsized returns in the coming years. So we are acutely aware of the need to deploy that capital in a very effective manner, and we are at it.
Okay. You want to put some frame to it, like four years, five years, or more than five years, something in that range, or?
So I think, all these matrices go hand in hand. So whether it's the top line growth, whether it's margin expansion, whether it's improvement in, ROE, ROC and, cash flow, all of these over the course of that five-year horizon, would improve substantially. Because the business right now is in a hyper-growth, high-growth phase, and as the business captures more market share and we become much more, you know, established, not just domestically, but across markets, a lot of this operating leverage and, you know, those sort of things start to kick in, in a big way.
Yeah. Okay, and the second question was about the use of AI. So you've mentioned this in your presentation as well. Any specific one major use case that you could share, which could demonstrate a significant, you know, benefit to the company already, which is getting approved?
So a lot of work is happening in reconciliation to automate reconciliations.
Okay.
Reconciliations are most painful in this spend management universe. And in general, typically, if you talk to any CFO, she's likely to say recon is a major concern or headache. And especially when you are a large enterprise, which is the case with a lot of our customers, there are multiple systems and platforms that they have, and those generate a, you know, outsized amount of data. And to make sure that they are all in sync, and reconned, is a fairly elaborate process.
So the amount of manpower that gets deployed in doing it is also outsized. And, you know, there are a lot of reconciliations that you have with your payment systems, with the ERP data, some other data that you might be getting from your CRM, et cetera. So all of those recons in the coming years, we'll be able to get it done through the agentic AI platform and the AI capabilities.
Okay, wonderful. Congratulations again for the great set of results. Keep up the great work.
Thank you. Thank you so much, sir.
Thank you. The next question is from the line of Rohan Amp from Equirus Securities. Please go ahead.
Good evening, sir. Thanks, and congrats on good set of numbers. On this, just to reconfirm the disclosure that you're changing, that consolidated numbers for Propel revenues is also getting updated?
Yes. Yes, Propel-
Okay.
Yeah. So that Propel numbers are getting updated. As from this quarter onwards, there'll be consolidation from Greenedge numbers, too, that got integrated.
Sure. I just want to understand what is the take rate in Greenedge's gift card business, and what proportion of the revenue is coming from gift cards?
So basically, in Greenedge, the business is golf privileges and NPCI privileges, right? So that's a lot of redemptions that the Platinum and select credit cards and debit cards base of RuPay, which is growing rapidly. These are points given to cardholders linked to their spends, and they redeem it for vouchers and other privileges like golf, et cetera. So within this is not you know too much of the gift card part of it, Rohan, but of course, there is some, where some consumers still try to redeem it for a gift card.
Sure. So I was just trying to understand if you consider these golf privileges and others as a cost, what was the net take rate in that business? Just trying to understand on a co-consol basis, how should we look at the net revenue in the Propel business, adjusted for the cost of acquisition or servicing of these incentives or the benefits to the customers?
Yeah. So, as you're aware, as per India, we have to do the similar accounting, whatever we have to do it in Dragon, gross revenue basis. But what we have done is, we started to give, to investors and readers on net numbers basis in our investor presentation as well. So we will do the similar, thing to Greenedge numbers, too.
But in the presentation is on standalone, I believe.
Yes. Yes, yes. So, to answer the question, Rohan, the margins there are higher because golf is a very super premium category, higher than the Propel points margin that we make on vouchers. There the margins are much, much higher.
Got it. And, like last year in Q4, do we expect volume incentives also to come in? Because this year the take rates in gift card has been, around 4.8% in nine months, whereas it's 4.1 last year. So just wanted to check there.
Yes, yes, yes. Some of the ORCs have started to kick in this quarter. This quarter, as in Q3. Overriding commissions that we get for hitting thresholds with the merchant brands, and some of them will come in in the next quarter.
Got it. And just want to understand your thought process on branding, and what kind of annual budgets to be done, because, as I understand, probably we are also advertising in World Cup also, so this may have an impact on Q4 OpEx. So just want to, to get a thought. And next year, how should one think on this cost?
No, I think the branding is, as an investment, is something which we see us doing in a very calibrated manner, Rohan. And any of these opportunities that we tap into are, you know, done with extreme care to make sure that the return on investment is outsized. We are very particular that, you know, this, A, the overall size of investment is very reasonable, and B, the returns are outsized.
Sure. And lastly, the increase in depreciation, there's no one-off. This is the steady state incrementally?
Correct.
Okay. Sure. Thanks.
Thank you. The next question is from the line of Piyush from Narang Family Office. Please go ahead.
Hey, hi, team. Congrats on great set. The first one is on acquisitions. So anything nearing term sheet? And what's the update on the other ones, Dice and other ones?
So, as we mentioned, Dice, we are on the cusp of closure, so we should be closing that transaction very soon. And other term sheets, et cetera, we'll let you know as things play out. You'll hear from us. Yeah.
Anything in this year or it's gonna be next, next financial year?
I wouldn't want to make any commitments on the call here. But as soon as we sign, of course, you know.
Sure. The second one is on any qualitative commenting you want to give on current take rates, where are they moving? And, what kind of a growth do we see in the GTV spends, on our platform? So any color you want to give there, that how we are seeing the payments, on UPI from our platform?
Yeah, I think the good part about UPI payments is that overall there's a realization in the ecosystem that, you know, UPI cannot be subsidized by the government forever, right? So already there's interchange on credit cards, which is a full interchange for transactions above 2,000. In prepaid, there's an interchange for 1.1% for transactions above 2,000. And our belief is that in the coming years, as UPI becomes more and more ubiquitous, we are only gonna see that, you know, that take rates go up across board. Because this has to be ultimately, you know, self-sustaining and not based on, you know, subsidies from the government. So that's something which we are seeing the trend as well in the ecosystem.
What would be the current take rate? Are they par to TVs 1.85, is what I understand.
Yeah. So that's, that's where we are.
Okay. The next one would be on cash flows again. So, when we say we'll be operating cash positive next year, what would be our EBITDA to OCF conversion next year? Will it be north of 50 or would it be lower?
Too early to—for us to say, sir, right now. But our endeavor would be to be, in, in that space. Too early for us to commit and comment anything.
Gotcha. The last one would be on, again, the TAM. Do you see newer areas opening up, besides for your Brome or other something more on Zoyer, new markets, new sectors, opening up for that? Or you think the current itself is big enough for you to keep penetrating?
Yeah, I think, for Zoyer, there's always a massive market because the number of vendors keep growing, right? And the payouts that happen from corporates to vendors keeps growing, so that's obviously there. We've already spoken of our, you know, aspirations and work that we are doing to enter into the GCC and our establishment of our setup in UAE with Abu Dhabi as the base. So those would be newer markets opening for us. And GCC is the start. We'll obviously, once we're able to do a good job there, expand into other markets as well, right? So, TAM has never been a problem for the space, neither for us nor in other global markets.
It's just about capturing the market and doing it in a profitable manner in a rapid pace.
Yeah. Sorry, if I can squeeze in one more. Anything on competitive intensity you want to call out, or this is a new market being created by Wipro?
No, I think, see, competition has always been there. We are solving a set of problems which are deep and hard. And we are doing it in a you know, tech first, AI first manner. And I think scale is critical because that scale gives you efficiency, scale gives you institutional knowledge and learning of of the kind of problems that customers face. And you're able to solve that using AI. Even before those problems occur to the customer, you've already preempted those, those leakages from happening, right? And that's something where customer delight comes from.
So those are things which we stand out, and when we see a particular problem that comes up with a customer, because of the scale of the business and the number of customers that we have, when we solve it for one, we are able to take it back to the remaining 3,700 customers and say, "Hey," without naming that customer, we say, "One of our customers had this problem, this is how we solved it. Do you think you also potentially see this as something useful?" And many, many adopt it, because they don't want to have the same leakages and problems as others do.
Sure. That was it. Thank you.
Thank you. The next question is from the line of Daksh Malhotra from Edelweiss Global. Please go ahead.
Yeah, good evening, and, congratulations on a good set of numbers. Definitely, met the expectations on various fronts. So I just wanted to ask, as you know, Mr. Raj, in his opening comments, mentioned, the way IT industry has gotten beaten down, especially in the last few days, given the Anthropic AI model and, you know, Jefferies terming it as a SaaSocalypse. And, you know, they are saying that, even the software, you know, the SaaS model can entirely be done by AI and, different plugins. Just your view on the overall scenario, on how, while we are using AI, and, you mentioned about how it can be used in reconciliation activities in bigger companies, but how are we sort of placing ourselves against, these things? That would be the first question.
Thank you so much for the question . So, you know, my opening comment was basically, you know, in relation to the services. You know, India has always been, you know, a services mindset and not a product mindset. Okay, if you look at, you know, this versus Agentic. Let's say, you know, that's an intellectual discussion we are doing right now. What does SaaS do? You know, SaaS builds workflows, you know, makes, you know, rules, workflows, and then a decision tree. This is what SaaS does, you know, in any of the applications. Now, all of those possibly can be done by the Agentic AI, okay? Where you train the agent to do these activities basis certain parameters. Now, then what will happen? The application will remain as it is, except all the coding which has been done has moved to an agent.
Okay, so if you are able to build an agent, you have been able to solve the problem. So they will be able to do the workflows, they will be able to do the hierarchy, they will be able to do the decision tree making, and also build the solid logic. Okay, logic is what today, you know, differentiates an application from a SaaS application, because SaaS application has a lot of logic in it, okay? Now, today, from tomorrow, you are transforming that logic into an agent. Okay, agent is doing the workflow, hierarchy, decision tree, et cetera, and plus the logic part of it. So that's the change which we are seeing. For Zaggle, the product would remain as it is, okay? And in the product, the work will be done by the agent.
So for us, because we are a SaaS and Fintech company, this is hugely beneficial. I'll give you a very small and a quick example, that today, you know, any feature which we have to do, which is, let's say, for example, you know, doing 18 workflows, okay? I have one single feature. You know, that typically would take about 75-80 days, you know, to, to, develop, then, deploy and test, and then deploy. Today, we are able to do it in less than 30 days. To be very candid with you, you know, as we improve, we should be able to do it in less than 10 days. Okay, so that's a efficiency which is from 80 days, if it comes down to 10 days, you imagine the, you are able to reach to the customer faster.
B, you are able to also see that the cost of production of that particular feature is much lower. So there are benefits both ways. And if you see, we have considerably downsized, you know, our IT team, okay? Keeping in mind that, you know, more and more AI we are using, the better results we are seeing. And today with, you know, Claude code, which has just been released, or, you know, or Anthropic Opus, it's-
Yes.
It's on the platter for you now. It will only improve, it will not go back. You know, this is what we have been saying for the last one year or so, that R&D, we'll have to spend a little bit money, but you know, this would help us in becoming better in the future. What I see in next six to nine months, this will only accelerate.
Okay. So basically, for us, this will be more of a tailwind, given our nature of a fintech business also, we can reduce our headcount and... Yeah. Okay.
200%.
So not a threat in any way for our organization, for Zaggle?
No, no. In fact, you know, the... If I have to very candidly tell you that entry-level jobs, you know, we used to do, let's say, a form we had to build, we will tell, you know, a programmer, "Okay, build this, you know, developer, build this form." You know, to build 1 form or, you know, he'll take about four days. Today, we do it under 10 minutes.
Right. Right. Very helpful, sir. There's one more question. You know, given and I understand people have asked the cash flow question and working capital question, but given the rapid growth we are seeing and we have, you know, relatively raised cash by diluting little bit of equity in the past, are we planning to dilute any more in the time to come?
You know, not really, not looking at, you know, diluting any equity right now. We have enough cash in the bank, and, you know, the deals which we are looking, we just want to do a good deal, as we have done in the case of Mobileware or, you know, Greenedge or TaxSpanner. Just want, you know, accretive deals for us. You know, looking at their growth rates, you know, we are amazed that, you know, that they had the propensity to grow at that pace, and they were not growing, and with that help and support they are doing. So right now, I'm not looking at diluting any equity. We have raised enough money, in fact, more than what we wanted to raise at that point of time, and self-sufficient right now.
Right. So because I saw that we had some INR 400 crore or INR 445 crore odd cash in our hands from the previous raise. And, so yes, that's, that's sort of, I think, a big concern at the street, that, we are diluting. We, we are not getting enough, positive operating cash flow and diluting, or raising equity, to get our cash flow needs met,
Okay.
-which probably is acting negative against our-
We've raised money, you know, which was in the, you know, December, a year back, roughly 14 months. You know, we have not, you know, post that, we are only looking at great opportunities. That money was also raised purely for acquisition purposes, and that's what we have been constantly looking. And it's a process. See, now operating leverage will kick in. We'll again reach one stage where we may, you know, use some of this for whatever crores, you know, there. And then again, you know, we will reach one more level. Imagine, you know, we were INR 371 crore when we went to, you know, in 2023. Today, you know, we roughly will close at about INR 1,700-INR 1,800 crore.
You know, that's like, 5x jump, you know, which has happened in less than, you know, three years.
No, commendable, sir. On growth, it is commendable. Just that, you know, we put some, we don't press the brake, but people press the clutch on the growth and just, press the pedal on the cash flow so that, the whole economics looks better. Just that. Thank you very much.
Got it. The idea and thought is that, and, you know, we'll work each process. You know, it's not like one shot will solve everything. We just need to play it, you know, a little bit, neatly and deeply, and then we'll reach. We are very, very much aware of, you know, the concerns on positive cash flow, and, every day, but trust me, we are working on it, you know, to make it happen.
Thank you so much, sir. Wish you guys all the very best. Thank you.
Thank you. The next question is from the line of Rudraksh Kala from MB Investment. Please go ahead.
Hi. Good evening. Firstly, I'd like to congratulate the management for posting a good set of numbers. I did a comparison, and the top line is up 15% quarter-on-quarter, but the PAT is only up in the ballpark of 9%-10%. We've also seen a sharp uptick in cashback and incentive spends. Can you explain this, what drove this, and whether it's a one-off or a continued trend? And if it's a one-off trend, would you, when do we expect it to normalize?
So, we look at our business from a year-over-year basis because there is seasonality, so the quarter-on-quarter numbers don't necessarily educate that much, to be very honest. Having said that, you know, there is seasonality. Q3 being a critical quarter for us, does include some, you know, significant incentivization as well. I would urge you to look at the incentives, in line with, you know, what the historic numbers have been.
So going forward, is it a continued trend or is it gonna, you know, even on a Q1, year-over-year, year-over-year basis?
Gradually, of course, as I answered in the previous question, we see in the medium term this coming and, you know, stabilizing at about 50% as a percentage of the program fees, right? That's where we are headed towards, but right now this is a space where we are growing rapidly. So that's why we are seeing this to be at these levels, about 67%. Right?
All right. Also, could you share an update on collections and cash inflows from already realized business deals, particularly contracts where work is completed, and then, what is the cash conversion, or are we expecting it in the next quarter or not?
See, work done, we, we are not a services company, so that work done, approach, work is never done for us because we are constantly enhancing our products. So, there are, of course, you know, customers who are going live every day, and that's a cycle that completely depends on the nature of the complexity of the product and what product they choose from our platform.
Fair enough. Thank you so much. I wish you guys the very best for your future endeavors. Thank you so much.
Thank you.
Thank you. As that was the last question for the day, I would now hand the conference over to the management for closing comments. Over to you, sir.
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 and the profitability 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 nice evening.
Thank you. On behalf of Zaggle Prepaid Ocean Services Limited, that concludes this conference. Thank you for joining us, and you may now disconnect your lines. Thank you.