AvenuesAI Limited — Q3 FY25 earnings call

Call held 4 Feb 2025

Management summary

Infibeam Avenues Limited delivered a strong Q3 FY25, marked by robust growth in gross and net revenues, EBITDA, and PAT. The company's strategic focus on digital payments, AI-driven solutions, and market expansion, particularly through the Rediff acquisition and new data center initiatives, is yielding significant results. Management highlighted improved take rates and aggressive merchant onboarding as key drivers of profitability and market presence.

Highlights

  • Gross revenue grew 18% YoY to ₹1,070 crores.

  • Net revenues increased 28% YoY to ₹140 crores.

  • EBITDA rose 15% YoY to ₹78 crores, with a 56% margin on net revenue.

  • PAT grew 22% YoY to ₹54 crores.

  • Net take rate improved to 11.1 basis points from 8.4 basis points YoY, a 32% improvement.

  • Onboarded 1.8 lakh new merchants, averaging 2,000 per day.

  • Applied for TPAP license under RediffPay brand to offer UPI services.

  • Launched AI Facility Manager solution and committed to data center infrastructure (Quantum Edge).

Key financials

  1. Gross Revenue ₹1,070 Cr +18%YoY
  2. Net Revenue ₹140 Cr +28%YoY
  3. EBITDA ₹78 Cr +15%YoY
  4. PAT ₹54 Cr +22%YoY
  5. Net Take Rate 11.1 bps +32%YoY
  6. EBITDA Margin (on Net Revenue) 56%

What they filed

Q1 FY27: revenue up 109.4%, net profit up 46.6% against the same quarter last year.

₹ Cr · quarterly
Line itemQ2 FY25Q3 FY25Q4 FY25Q1 FY26Q2 FY26Q3 FY26Q4 FY26Q1 FY27
Revenue1,017 1,070 1,161 1,280 1,965 +93%2,381 +123%2,490 +114%2,680 +109%
EBITDA78 78 75 71 90 +15%96 +23%91 +21%100 +41%
Net profit47 64 55 58 68 +45%80 +25%89 +62%85 +47%
How to read this

₹ crore, as filed. The percentage beside a figure is the change against the same quarter a year earlier — never the quarter before, which would make every seasonal business look like it collapses and booms each year.

Capital allocation

high confidence
  • Capex ₹20 Cr
    • Data center infrastructure (Quantum Edge) ₹20 Cr
    Our investment strategy with a capex of INR20 crores to INR50 crores per megawatt, ensures cost efficiency, operational flexibility and scalable growth, enabling us to adapt to the evolving market demands.
  • M&A Rediff Acquisition · Integrated

    Provided a powerful platform to accelerate transition into consumer payments and financial services, with over 65 million monthly visitors.

    Anticipate Rediff contributing 2% to 4% of revenue, with potential to grow to 10% in coming years. Minimal impact on Q3 financials (less than 1% revenue, but added expenses).

    Our acquisition of a controlling stake in Rediff has provided us with a powerful platform to accelerate this transition. With over 65 million monthly visitors, Rediff has given us direct access to a vast consumer base, opening new opportunities to cross-sell and scale financial products. Further, we anticipate Rediff contributing to 2% to 4% of our revenue with the potential to grow to 10% in coming years. While it doesn't have a huge impact, the impact is in terms of revenues, it's less than 1%, but it does have certain expenses.

Guidance & targets

Revenue

  • Rediff Contribution to Revenue Revenue · coming years · Medium confidence 2% to 4%
    Further, we anticipate Rediff contributing to 2% to 4% of our revenue with the potential to grow to 10% in coming years.

    — Vishal Mehta

  • AI Business Contribution to Net Revenue Revenue · 2 to 3 years · Medium confidence 5% to 10%
    Our dedicated AI business under a new subsidiary will advance multiple AI-driven innovation that will contribute to 5% to 10% of our net revenue within the coming 2 to 3 years.

    — Vishal Mehta

  • International Revenue Contribution Revenue · next 2 years · Medium confidence 20% to 25%
    We think that international in the next 2 years should account for 20% to 25% of the overall revenue.

    — Vishal Mehta

  • Data Center Revenue Contribution to Net Revenue Revenue · next 3 years · Medium confidence high single-digit percentage
    And we expect that it should reach a high single-digit percentage of the revenue in the next 3 years, talking about the net revenue of ours.

    — Vishal Mehta

Capacity

  • Data Center Scale Capacity · medium term · Medium confidence 10 megawatts
    And in the medium term, we'll plan to scale it to 10 megawatts with a long-term vision of reaching higher numbers.

    — Vishal Mehta

ROI

  • Data Center ROI ROI · High confidence less than 24 months
    So I think the forward investment we make is not a huge one and the ROI on such opportunities is less than 24 months.

    — Vishal Mehta

Operational

  • TPAP License Rollout Operational · Q4 FY25 · High confidence roll out this quarter
    But we expect that we'll be able to roll out this quarter. ... Vishal already said that we will be launching RediffPay by the end of this quarter.

    — Vishwas Patel

What to watch in Q4 FY25

TPAP License Approval & RediffPay Rollout

next quarter (Q4 FY25)
Current Applied, awaiting final formality approval
Target License approved, RediffPay launched

Why it matters

Crucial for entering the UPI services market and leveraging the Rediff user base for financial services.

But we expect that we'll be able to roll out this quarter. ... Vishal already said that we will be launching RediffPay by the end of this quarter.

Risks & concerns

  • Intense competition in digital payments industry

    medium

    The digital payments industry is highly competitive, leading to downward pressure on margins and take rates.

    Management acknowledged

  • EBITDA margin compression due to strategic investments

    medium

    Current investments in customer acquisition, AI initiatives, and Rediff integration are leading to increased bandwidth costs and other expenses, impacting margins in the short term.

    Management acknowledged

  • Monetization challenges for Rediff

    low

    Concerns about Rediff's monetization given past struggles of other media platforms; management believes their ecosystem and cross-selling strategy will succeed.

    Analyst downplayed

Q&A highlights

7 direct
Converting Rediff audience to financial services customers Direct
The good thing is that you have a lot of daily active, unique users coming to Rediff in millions... there is a mechanism to build out the super app on the same app. And so the approach would potentially be that we would be migrating customers to a super app that also hand out payments and other financial services.

Addresses the core strategy behind the Rediff acquisition and how the company plans to monetize its large user base beyond traditional advertising.

Asked by Divya Kothari

Impact of reduced UPI incentives on payments ecosystem Partial
Right now, from our perspective, as far as UPI, we are still offering a zero MDR and it's a very -- this thing. So we have not budgeted any income from UPI for the last 2 calendar years, right? And as far as the budgeting of the government is concerned, what the budget and the budget as and what they finally rolled out is a totally different figure.

Clarifies that the company has not been relying on UPI incentives for income, suggesting limited direct impact from reductions, though the broader ecosystem effect is acknowledged.

Asked by Grishma Shah

EBITDA margin compression and mitigation strategies Direct
I think there's a little bit of customer acquisition here that is in play. We want to go after the larger breadth of customers. And we are also forward investing in our Al initiatives. So starting maybe this quarter onwards, we've established a separate subsidiary company for our Al efforts... Second is that we've also merged Rediff for the first time in our financials... And so you would see that we would have added bandwidth costs and certain other expenses...

Explains the reasons for margin compression (investment in growth, AI, Rediff integration costs, bandwidth) and management's strategic rationale for these investments.

Asked by Satyam Badera

CCAvenue SoundBox adoption and market share against competitors Direct
Our box is in the same price range, but it can also do credit cards, debit cards, RuPay debit cards, EMI and lot of other things along with the static QR, it also has dynamic QR that can be generated... So that's the big differentiator that we have that we are trying to upgrade the market with the brand-new, newer devices. The additional thing also being that our thing is the omnichannel app.

Highlights the unique features and competitive advantages of CCAvenue SoundBox Max, differentiating it from competitors and explaining the strategy for market penetration and retention.

Asked by Satyam Badera

RediffPay monetization beyond UPI (lending, embedded finance, wealth management) Direct
The answer to the last question is, yes, we are targeting other revenue drivers as well. You see the main revenue driver for Rediff right now is mails and ads... And then we would like to offer and cross-sell other financial services. We have a lot of information about the profiling of the customer... So I think we'll have to go through a little bit of experimentation there, but pretty certain that we'll be able to offer the right kind of solutioning and offer the opportunities to cross-sell specific products.

Confirms the company's intent to diversify Rediff's revenue streams beyond advertising into financial services, leveraging user data for targeted offerings.

Asked by Garvita

AI capabilities for competitive advantage and revenue opportunities Direct
what we are focused as a company on is a specific vertical and an opportunity within AI, which is called video LLM, video large language model. And video large language models have a lot of opportunity because it's visual... we already created a few agents. And what that typically does is it automates the productivity... we expect that as far as the net revenue is concerned... it has a lot of future to be able to ensure that we can monetize on this.

Provides insight into the specific AI focus (video LLM, Agentic AI) and its application for productivity automation, outlining the expected revenue contribution from this new segment.

Asked by Ayan Shah

Data center unit economics, investment, and ROI Direct
I think the forward investment we make is not a huge one and the ROI on such opportunities is less than 24 months. So I think we can track our investments, we can drive adoption, and we'll be able to maintain the investment and be able to come out of it very quickly. ... we're actually selling our framework. Our Al framework and many other frameworks and all of this. And we'll provide it to clients, and we already have a few clients lined up who want to utilize this capacity.

Details the investment strategy for data centers, emphasizing a quick ROI (under 24 months) by selling a framework and services rather than just co-location, with pre-identified clients.

Asked by Rahul Jain

Status of UPI dues from banks Direct
No, there's no update so far. Vishwas, anything that you have to say? ... Yes, yes, yes. So basically, last -- from April of 2024, there's no update from the government on the UPI dues that are there. We are in any way not claimed any UPI dues for the last 2 calendar years.

Confirms that there has been no update on UPI dues from banks since April 2024 and that the company has not claimed any dues for the past two years, providing clarity on a recurring industry topic.

Asked by Ayushi

3 min read 6 chapters

Detailed narrative

Strong Financial Performance in Q3 FY25

Infibeam Avenues reported robust financial results for Q3 FY25, with gross revenue growing 18% year-over-year to ₹1,070 crores. Net revenues saw an even stronger increase of 28% year-over-year, reaching ₹140 crores. This performance was driven by a significant improvement in the net take rate, which rose 32% year-over-year from 8.4 basis points to 11.1 basis points. The company also demonstrated strong profitability, with EBITDA increasing 15% to ₹78 crores and PAT growing 22% to ₹54 crores, maintaining an EBITDA margin of 56% on net revenue.

Strategic Expansion into Consumer Payments via Rediff Acquisition

A significant milestone in Q3 FY25 was the strategic evolution beyond B2B payments, deepening the company's presence in consumer payments and financial services through the acquisition of a controlling stake in Rediff. With over 65 million monthly visitors, Rediff provides direct access to a vast consumer base, enabling cross-selling of financial products. The company has applied for a TPAP license under the RediffPay brand to offer UPI services and anticipates Rediff contributing 2% to 4% of its revenue, with potential to grow to 10% in coming years.

Innovation in Digital Payments: CCAvenue SoundBox Max and Bank Partnerships

Infibeam Avenues launched the CCAvenue SoundBox Max, an offline POS device approved by key card networks, capable of accepting credit cards, debit cards, UPI, and offering dynamic QR code generation. This device is designed to enhance operational efficiency for merchants and is being rolled out across a wide network. Additionally, the company successfully integrated with Bassein Catholic Co-Operative Bank, expanding its payment network and offering BCCB's Internet banking facility to millions of merchants on its platform.

Advancements in AI and Data Center Infrastructure

The company is making significant strides in AI, establishing a new subsidiary for Phronetic AI (Nueromind) focused on pioneering innovation, including video LLM and Agentic AI. These AI-driven solutions are expected to contribute 5% to 10% of net revenue within 2 to 3 years. To support this, Infibeam is investing in data center infrastructure under the 'Quantum Edge' brand, starting with a 2-megawatt facility and planning to scale to 10 megawatts. This decentralized model aims to improve real-time data analytics and user experiences while ensuring data localization compliance.

International Market Penetration and Merchant Acquisition

Infibeam Avenues continues its aggressive international expansion, particularly in the UAE and Saudi Arabia. In the UAE, new payment options like Tamara BNPL and Google Pay have been introduced, and the company has onboarded several renowned names across key sectors. In Saudi Arabia, payment processing is now live for VFS, Nissan, and Infiniti, with the company aggressively investing to capture a significant share of the digital payments market, leveraging its SAMA license and local data deployment. The company aims for international operations to account for 20% to 25% of overall revenue in the next two years.

Focus on Profitability and Sustainable Growth

Management emphasized a commitment to sustainable, profitable growth, driven by operational efficiencies and margin improvement. While EBITDA margins saw some compression due to strategic investments in customer acquisition, AI, and Rediff integration, these are viewed as forward investments for long-term expansion. The company is focused on cash flows and building a robust ecosystem, rather than solely optimizing for short-term PAT, to ensure a larger enterprise in the future.

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