AvenuesAI Q1 FY27 earnings call

AvenuesAI reported a robust Q1 FY27, with gross revenue soaring 109% year-over-year to INR 2,680 crores and profit after tax increasing 45% to INR 85 crores. The company's strategy is built on four interconnected pillars: payments, consumer, intelligence, and credit, which are designed to reinforce each other and drive long-term value. Transaction processing volume for the quarter grew 74% year-on-year to INR 1,479 billion, reflecting strong execution across utility, government, retail, B2B, and hospitality segments.

The company is transitioning to an AI-first fintech infrastructure, reflected in its name change from Infibeam Avenues to AvenuesAI. This quarter, Nueromind, a 100% owned AI-based subsidiary, is being merged into AvenuesAI to consolidate AI capabilities and create synergies. Additionally, a reverse stock split is planned, increasing the face value of shares from INR 1 to INR 10, aimed at improving shareholder perception and liquidity.

AvenuesAI is expanding its credit distribution layer through asset-light strategic minority investments. This includes proposed investments of up to 2.5% in RatnaFin Capital, an RBI-registered NBFC focused on SME lending, and up to 7% in online PSB loans, India's largest public sector-backed digital credit platform. Internationally, the company secured in-principle approval for a Cat III Retail Payment Services license from the Central Bank of UAE, strengthening its presence in a key market.

The consumer pillar, primarily driven by Rediff, is being built into a broader consumer and enterprise platform. RediffPay, the UPI-based consumer payments platform, is progressing well and is expected to move out of the CUG stage and into production this month. While RediffPay is not expected to contribute meaningfully to FY27 guidance, it represents a genuine second leg of the payment business, bringing consumer transactions onto the company's own payment rails.

For FY27, AvenuesAI projects consolidated revenue in the range of INR 11,000 crores to INR 13,000 crores, representing over 35% growth. The FY27 EPS is guided between INR 8.75 and INR 9.5 per share (post face value change). Management emphasized a conscious decision to reinvest incremental cash generation from the core business into AI and other high-conviction growth areas, prioritizing building a structurally stronger and more scalable margin profile for FY27 and FY28 over short-term profitability spikes.

The company's intelligence pillar, Phronetic AI, focuses on building AI on top of transactions, payments, and enterprise workflows. They are developing on-prem AI solutions using small language models (1-10 billion parameters) for enterprises with sensitive data, ensuring data sovereignty and security. Management expects meaningful results from AI investments to start showing up in the Q3-Q4 FY27 timeframe, with a 'good impact' on the business within 9 to 18 months.

The potential monetization of UPI transactions through MDR is a significant topic. While the act has passed the Lok Sabha, it awaits further approvals from Rajya Sabha and the President. Management anticipates that MDR, once finalized, will apply to big merchants and higher-value transactions, providing a meaningful positive impact for both CCAvenue and RediffPay, although the exact pricing and structure are yet to be ascertained.

Despite strong gross revenue growth, net revenue marginally declined by 3% year-over-year to INR 147 crores, primarily due to compressed take rates resulting from higher transaction volumes in a competitive payments landscape. However, the company's EBITDA, as a percentage of net revenue, improved significantly from 47% in Q1 FY26 to 68% in Q1 FY27, indicating effective expense management and a focus on absolute profitability.