One 97

Management highlighted AI as a core strategic pillar, moving beyond mere cost optimization to become a significant revenue driver. The company aims to integrate AI into product and feature development, with a goal for AI-led infrastructure and products to form a 'commerce cloud line item' within a year. An example provided was an AI-powered soundbox capable of real-time translation, acting as an 'agent' for small businesses and generating subscription and inference fees. This strategy is expected to expand infrastructure and use cases dramatically.

One 97 reported an improvement in net payment margins, primarily attributed to enhanced payment processing margins and a favorable mix towards credit instruments like EMI. While the new Postpaid product's unit economics are estimated to be around 20 bps, a reduction from a historical 70-80 bps, management anticipates overall revenue and profit growth through new avenues and opportunities with UPI and bank partnerships. The company's EMI capability was noted as a key contributor to net payment margin.

The new Postpaid product, launched in September, is in its nascent stages with 'tens of thousands' of customers. It operates on a fee-based model, distinct from interest-based loans, targeting consumption credit up to ₹50,000-₹60,000. Management is adopting a 'sensible' and cautious approach to scaling, leveraging past learnings. They indicated that they do not foresee needing more than one bank partner within the next year, focusing on maximizing the potential with the current partner.

Paytm is making aggressive investments to expand its merchant base, evidenced by the hiring of 5,000 sales employees this quarter, with a clear objective to 'dominate the merchant ecosystem'. The company is now able to onboard online merchants, which offer 'high MDR plus high net margin', contributing positively to the bottom line. This expansion also includes cross-selling AI-led infrastructure and products to both small and large merchants.

Beyond its core payment business, One 97 is expanding its financial services stack to include money, stock brokerage, and eventually insurance. Wealth products such as gold, mutual funds, and stock trading are identified as key monetization avenues for existing high-quality customers. The outstanding book for non-DLG partners demonstrated robust growth, increasing by '80% plus' quarter-on-quarter, signaling strong performance in these segments despite headwinds in personal loans.

The company expects indirect costs to remain 'range bound' for the remainder of the year, with a more detailed outlook for the following year anticipated next quarter. Efforts to enhance efficiency include a device refurbishment program, which reduces the cost of a new device by '25 to 30%'. This initiative not only contributes to Capex savings but also ensures a higher proportion of active devices in the market, leading to improved revenue and Net Payment Margin.

Paytm plans to monetize its payment acceptance and technology stack internationally, primarily through a partner-operated model, similar to PayPay, in emerging markets like the Middle East and Southeast Asia. While the initial focus is on partner-led expansion, the company also envisions Paytm-operated models in regions with large profit pools or ideal product-market fit. Management expressed aspirations to enter developed markets eventually, aiming to prove that an Indian company can build globally competitive technology.