PINELABS

Pine Labs is seeing a significant 'kick-in' of operating leverage as revenue scales faster than costs. Opex as a percentage of revenue fell from 37% to 31% YoY, driven by a controlled 6% increase in headcount despite 24% revenue growth. Management expects every incremental ₹100 of contribution to generate ₹50-60 of adjusted EBITDA, signaling a highly scalable business model.

Value Added Services (VAS) are becoming a core growth engine, with activation rates rising to 28% of digital touchpoints. VAS volumes grew 41% YoY to ₹76,000 crores, with the affordability (Buy Now Pay Later) business contributing roughly one-third of this volume. This high-margin segment is helping maintain overall contribution margins at a healthy 76%.

The company is successfully replicating its Indian playbook in global markets, now present in nearly 20 countries. In Malaysia, the business is growing at 40% with 11 bank issuers on board. Recent wins include Wio Bank in the Middle East and mandates with Miniso and Google Waymo in the US, showcasing the platform's global competitiveness against players like Stripe and Adyen.

Pine Labs is consciously moving toward an asset-light model by encouraging merchants and banks to purchase devices directly. This shift has caused depreciation as a percentage of revenue to drop from 11% two years ago to just 4% today. Management expects capex and depreciation to remain range-bound, further aiding the flow-through to Net Profit (PAT).

AI is now deeply embedded in Pine Labs' operations, with 21% of all code currently being written using AI tools. This has allowed the company to maintain a flat engineering headcount while increasing product output. While management isn't yet quantifying specific dollar savings, they noted that this efficiency allows them to reinvest in new product development without increasing team size.