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    One Mobikwik Systems Limited

    MOBIKWIK
    Financial Services·20 May 2025
    Management Summary

    MobiKwik reported strong growth in payments GMV for Q4 and FY25, with improving net payment margins and strategic investments in Pocket UPI and ZaakPay. While the lending business faced headwinds leading to negative EBITDA in recent quarters, management anticipates recovery in H2 FY25 and expects overall contribution margins to return to 30%+. The company is focused on leveraging its PAPG license for ZaakPay and optimizing costs for future profitability.

    Highlights

    5

    • Total GMV for FY25 reached ₹1,15,000 crores, demonstrating over 200% YoY growth from ₹38,000 crores in FY24.

    • Net payment margin increased from 13 bps to 15 bps QoQ, indicating improved profitability in the payments segment.

    • ZIP EMI GMV, a focus area in lending, grew 32% QoQ from Q3 to Q4 FY25, showing early signs of recovery.

    • ZaakPay secured its full PAPG license, enabling it to scale as an inherently profitable B2B payment gateway business.

    • Indirect costs were optimized, reducing from ₹119 crores to ₹110 crores QoQ in Q4 FY25.

    Concerns

    3

    • EBITDA has been negative for the last two quarters due to lower contribution margin from the lending business.

    • The lending business continues to face challenges, with the Q4 exit rate being weak compared to initial expectations.

    • Lending expenses appear elevated relative to revenue due to the DLG model's upfront cost booking and back-ended revenue recognition.

    What Changed2

    vs Q1 FY26

    Guidance items4 → 7 (+3)Risks discussed3 → 2 (-1)
    Key financials

    Metrics

    6

    Periods

    2

    Headline

    1
    • Total GMV
      ₹1.15L Cr
      YoY+2.0%

    Q4 FY25

    5
    • Payment GMV
      ₹33,100 Cr
    • Blended Take Rate
      64%
    • Net Payment Margin
      15 bps
    • Lending Revenue
      ₹56 Cr
    • Indirect Cost
      ₹110 Cr

    Segment breakdown

    Payments Business
    20% Contribution Margin₹1.1L Cr GMV (FY25)36% UPI Contribution to GMV (Q4 FY25)
    Lending Business
    40% Contribution Margin (Portfolio Level)32% ZIP EMI GMV Growth (QoQ)4% Net Take Rate (after DLG/credit costs)₹2.5 Cr EBITDA (Q4 FY25)
    List

    Capital allocation

    1
    high confidence
    CategoryHeadline
    Liquidity

    Liquidity disclosed

    IPO proceeds were received in December and started being utilized from January onwards, primarily for payments-related activities such as pre-funding, customer acquisition, and incentives. Borrowing and other liabilities scaled up from ₹450-620 crores in H1 due to the 3x scale-up of the payment business in FY25, leading to higher user and merchant outstanding.

    Guidance & targets

    7
    CategoryTargetPriority
    Profitability
    Overall Contribution Margin
    upwards of 30%
    		High
    Profitability
    Lending Portfolio Contribution Margin
    ~40%
    		High
    Profitability
    Lending Net Take Rate (after DLG/credit costs)
    4%-4.5% range
    		High
    Profitability
    Net Payment Margin (without PPI/UPI MDR)
    20%+ sustainable
    		High
    Growth
    Payments GMV
    accelerating
    		Medium
    User Base
    User Base Growth
    doubling or tripling
    		Medium
    Cost Management
    Indirect Cost
    remain at this level if not lower
    		High

    Lending Business Recovery & Contribution Margin

    H2 FY25 (next few quarters)
    CurrentQ4 exit rate weak, EBITDA negative for 2 quarters, CM impacted by DLG model.
    TargetImproved disbursement run rate, positive EBITDA, contribution margin moving towards 40%.

    Why it matters

    Critical for overall profitability and return to historical contribution margins, as lending is a key growth pillar.

    Lending as a market we believe has massive potential in India given it's under penetrated nature. Across these two businesses, we have been earning an overall 30% contribution margin. Payments as a business, as you know🎣, affords is about 20% margin, lending at a portfolio level was about 40% translating to 30% margins at the company level.

    How to verify

    key_financials.segment_breakdown[name='Lending'].metrics[label='Contribution Margin']

    Risks & concerns

    2
    RiskSeverity

    Lending Business Underperformance

    The lending business has seen challenges and contributed to negative EBITDA in the last two quarters, with a weak Q4 exit rate. — Management acknowledged

    medium

    Impact of DLG Model on Lending Profitability

    The DLG model's upfront cost booking and back-ended revenue recognition mathematically elevate lending expenses relative to revenue, impacting reported contribution margins in the short term. — Management acknowledged

    low

    Q&A highlights

    8

    “So this is accounted for payment line item only. Payments GMV and revenue from payment services.”

    Clarifies how revenue from a specific product feature is categorized within the financial statements.

    asked by Aman Jain

    2 min read5 chapters

    Detailed Narrative

    01

    Robust Growth in Payments GMV and Strategic Product Focus

    MobiKwik's total GMV for FY25 surged to ₹1,15,000 crores, marking over 200% year-on-year growth from ₹38,000 crores in FY24. The payments business remains a core driver, with Q4 FY25 Payment GMV at ₹33,100 crores. The company is strategically focusing on innovative products like Wallet on UPI and RuPay card, which are expected to accelerate GMV growth and user engagement. UPI's contribution to overall GMV increased from approximately 30% to 36% in Q4 FY25.

    02

    Lending Business Challenges and Anticipated H2 Recovery

    The lending vertical experienced headwinds, resulting in negative EBITDA for the last two quarters and a weak Q4 exit rate. Regulatory changes, particularly the shift to the DLG model in September, led to upfront cost booking and back-ended revenue recognition, mathematically impacting reported contribution margins. However, management noted a 32% quarter-on-quarter growth in ZIP EMI GMV from Q3 to Q4 FY25 and anticipates a recovery in the second half of the year, with a target of 40% contribution margin in a steady state.

    03

    ZaakPay's New Growth Trajectory with PAPG License

    MobiKwik's ZaakPay business received its full PAPG license from the RBI, marking a significant milestone. Management views ZaakPay as a crucial third pillar for growth, targeting online merchants. This B2B payment gateway business is inherently profitable due to its cost structure and is expected to contribute significantly to both GMV and overall profitability in the coming years, leveraging a large market opportunity.

    04

    Improving Margins and Cost Optimization Efforts

    Despite some pressures, the net payment margin improved from 13 basis points to 15 basis points quarter-on-quarter in Q4 FY25. The company aims for overall contribution margins to return upwards of 30%, driven by the recovery in lending and continued strength in payments. Furthermore, indirect costs were actively optimized, reducing from ₹119 crores in the previous quarter to ₹110 crores in Q4 FY25, with a commitment to maintain or further lower these costs through AI-driven efficiencies.

    05

    Strategic Capital Deployment and Balance Sheet Dynamics

    IPO proceeds, received in December, began deployment from January onwards, primarily funding growth initiatives within the payments business, including pre-funding, customer acquisition, and incentives. The company's borrowing and other liabilities scaled up from ₹450-620 crores in H1 FY25, reflecting the substantial 3x growth in the payment business during FY25, which naturally increases daily outstanding balances for users and merchants.

    This is an AI-generated summary of a publicly available earnings call transcript. It is for informational purposes only and does not constitute investment advice, a recommendation, or an endorsement. inve.money is not a SEBI-registered investment advisor. Please consult a qualified financial advisor before making any investment decisions.