Zaggle Prepaid Ocean Services Limited — Q3 FY26 earnings call

Call held 12 Feb 2026

Management summary

Zaggle Prepaid delivered its best-ever quarterly and nine-month performance in Q3 FY26, driven by robust revenue growth, significant EBITDA and PAT expansion, and strategic acquisitions. The company is actively integrating AI to enhance efficiency and reduce development cycles, while also expanding its market presence domestically and internationally. Despite strong growth, management acknowledged the need to improve operating cash flow and optimize incentive costs.

Highlights

  • Q3 FY26 Revenue grew 48% YoY to INR 498 crores.

  • Q3 FY26 Adjusted EBITDA surged 63% YoY to INR 51 crores.

  • Q3 FY26 PAT increased 78% YoY to INR 36 crores, with margins improving to 7.2%.

  • 9-month FY26 Revenue reached INR 1,260 crores, a 41% YoY increase.

  • Acquisition of Rio.money completed, rebranded as ZAGG.money, establishing a 4th monetization pillar with 3.7 million salaried users.

  • Greenedge 9-month FY26 revenue grew to INR 65 crores, significantly up from FY25's INR 36 crores.

  • Mobileware (86400) YTD FY26 revenue surpassed INR 50 crores, projected to reach INR 65 crores for the full year.

  • Launch of credit line on UPI products with Suryoday Small Finance Bank saw 30 lakh+ transactions and INR 50 crores lent.

  • Board approved incorporation of a wholly-owned subsidiary in GIFT City for international expansion.

Concerns

  • Q3 FY26 Revenue missed the INR 500 crores mark by INR 2 crores.

  • Employee cost in Q3 FY26 increased by INR 3.2 crores QoQ, with INR 2.1 crores attributed to one-off payments.

  • Operating cash flow remains low/negative, though management guided for breakeven by FY26 and positive in FY27.

  • Incentive costs are currently high at 66-67% of program fees, with a target to stabilize at 50% over 5 years.

Key financials

  1. Revenue ₹498 Cr +48%YoY
  2. Adjusted EBITDA ₹51 Cr +63%YoY
  3. PAT ₹36 Cr +78%YoY
  4. PAT Margin 7.2%
  5. Cash PAT ₹46 Cr +76%YoY
  6. 9-month Revenue ₹1,260 Cr +41.4%YoY
  7. 9-month Adjusted EBITDA ₹128 Cr +47.5%YoY
  8. 9-month Cash PAT ₹121 Cr +68.3%YoY

What they filed

Q1 FY27: revenue up 27.4%, net profit down 30.8% against the same quarter last year.

₹ Cr · quarterly
Line itemQ2 FY25Q3 FY25Q4 FY25Q1 FY26Q2 FY26Q3 FY26Q4 FY26Q1 FY27
Revenue303 337 412 332 432 +43%526 +56%618 +50%423 +27%
EBITDA27 29 36 30 44 +63%52 +79%58 +61%31 +3%
Net profit20 20 31 26 35 +75%37 +85%41 +32%18 −31%
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
  • M&A Rio.money Acquisition · Closed

    Pivotal milestone that completes our strategic architecture and establishes a 4th monetization pillar with a captive high-intent base of 3.7 million salaried users.

    I am pleased to announce the completion of our acquisition for Rio.money, now rebranded as ZAGG.money. This is a pivotal milestone that completes our strategic architecture.
  • M&A Dice Acquisition · Pending regulatory
    So as we mentioned, Dice, we are on the cusp of closure. So we should be closing that transaction very soon.
  • Liquidity Cash ₹445 Cr Cash raised previously was purely for acquisition purposes. Company has enough cash for current needs and is not looking at further equity dilution.
    We have enough cash in the bank and the deals which we are looking. We just want to do a good deal as we have done in the case of Mobileware or Greenedge or TaxSpanner, just want accretive deals for us.

Guidance & targets

Revenue

  • FY26 Revenue Growth (Organic & Domestic) Revenue · FY26 · High confidence 40% to 45%
    See, the guidance that we have given of 40% to 45% growth for this year is all organic, all domestic.

    — Avinash Godkhindi

  • Total Revenue Revenue · 5 to 7 years · Medium confidence $1 billion
    But overall, our guidance has been that we would be in the adjusted EBITDA of about 14% to 15% in about 5 to 7 years is what we have guided, along with $1 billion of revenue.

    — Avinash Godkhindi

  • ZAG.money Segment Revenue Revenue · next 4 to 5 years · Medium confidence INR 500 crores
    To accelerate our revenue uptick and as we had mentioned in our last con call to reach our target of INR 500 crores for this segment within the next 4 to 5 years, we have earmarked a primary capital infusion of about INR 100-plus crores.

    — Raj Narayanam

Profitability

  • Adjusted EBITDA Margin Profitability · 5 to 7 years · Medium confidence 14% to 15%
    But overall, our guidance has been that we would be in the adjusted EBITDA of about 14% to 15% in about 5 to 7 years is what we have guided, along with $1 billion of revenue.

    — Avinash Godkhindi

Cash Flow

  • Operating Cash Flow Cash Flow · FY26 · High confidence breakeven
    On working capital, we are well on track and as guided, we will see breakeven for FY '26 and OCF turning positive in FY '27.

    — Aditya Kumar

Costs

  • ESOP Charge Costs · next year · High confidence INR 3 crores to INR 4 crores
    We expect that ESOP charge for the next year to be in the range of INR 3 crores to INR 4 crores.

    — Aditya Kumar

  • Incentive Cost as % of Program Fees Costs · about 5 years · Medium confidence 50%

    Previously 66-67% → 50%

    And we estimate the steady state in about 5 years would be in the range of about 50% there or thereabouts as a percentage of program fees.

    — Avinash Godkhindi

Market context

  • Operating Cash Flow Cash Flow · FY27 · High confidence positive
    On working capital, we are well on track and as guided, we will see breakeven for FY '26 and OCF turning positive in FY '27.

    — Aditya Kumar

What to watch in Q4 FY26

Operating Cash Flow (OCF) Breakeven

FY26
Current Low/negative
Target Breakeven

Why it matters

Achievement of OCF breakeven is a key milestone for financial sustainability and validates management's capital allocation strategy.

On working capital, we are well on track and as guided, we will see breakeven for FY '26 and OCF turning positive in FY '27.

Risks & concerns

  • Operating Cash Flow (OCF) generation

    medium

    Despite strong growth, OCF is currently low/negative, though management has a clear path to breakeven in FY26 and positive in FY27.

    Analyst acknowledged

  • High Incentive Costs

    medium

    Incentive costs are currently 66-67% of program fees, which is high, but management expects it to stabilize at 50% over 5 years.

    Analyst acknowledged

  • IT Industry/SaaS Disruption by AI

    low

    Analyst raised concerns about AI impacting SaaS models, but management articulated how AI is being leveraged for efficiency and cost reduction, viewing it as beneficial for Zaggle.

    Analyst downplayed

Q&A highlights

6 direct
Employee Cost Increase Direct
So there are some one-off payments which were given to certain employees in terms of the regrouping of the structure, but this is not linked to the new labor code impact, et cetera. So what is the amount? The amount is around INR 2.1 crores.

Clarified that a significant portion of the QoQ employee cost increase was a one-off event, not a recurring operational expense.

Asked by Deepak Poddar

Smart EPP Working Capital Deployment Direct
No, no, there's no working capital deployed from our end. The leasing partners are partners like Tata Capital. We just signed up and we announced in the investor deck as well, Jio Finance. So this leasing would be done by leasing companies, and we have 0 working capital that gets deployed in this solution whatsoever.

Addressed concerns about capital intensity for the Smart EPP program, confirming an asset-light model with third-party leasing.

Asked by Devesh Kasliwal

Revenue CAGR Sustainability Partial
See, the guidance that we have given of 40% to 45% growth for this year is all organic, all domestic. This doesn't include the growth that we are seeing in our acquisitions like Greenedge, but I wouldn't hazard a guess whether the next year growth would be the same, higher, lower. Right now, our guidance stands for this year. But as I mentioned, it's only domestic and it's only organic. So there's a lot of, hopefully, upside that comes in from both the international opportunities as well as the acquisitions in the coming years.

Clarified that the 40-45% growth guidance is for the current year, organic and domestic, suggesting potential for higher growth from M&A and international expansion in future years, but not committing to a multi-year CAGR.

Asked by Deepak Poddar

ROE and Operating Cash Flow Direct
Point very well taken, sir. I think you are absolutely right. These are metrices that we internally focus on, whether it's operating cash flow or the ROE. Some of that obviously will improve with the deployment of capital that we raised. Some of the investments have been extremely successful like Greenedge, where we are seeing a fabulous performance by the company and spectacular returns. And we hope to deploy that capital sooner than later, to be able to generate outsized returns in the coming years. So we are acutely aware of the need to deploy that capital in a very effective manner, and we are at it.

Addressed investor concerns about low ROE and operating cash flow, acknowledging these as internal focus areas and linking future improvement to effective capital deployment and business maturity.

Asked by Shrenik Mehta

AI Impact on SaaS Business Model Direct
For Zaggle, the product would remain as it is, okay? And in the product, the work will be done by the agent. So for us, because we are a SaaS and Fintech company, this is hugely beneficial. I will give you a very small and a quick example that today, any feature which we have to do, which is, let's say, for example, doing 18 workflows, okay, one single feature. That typically would take about 75 to 80 days to develop, then deploy and test and then deploy. Today, we are able to do it in less than 30 days.

Provided a clear explanation of how AI (Agentic AI workflows) is being integrated to enhance efficiency and reduce development time, positioning it as a benefit rather than a threat to their SaaS model.

Asked by Daksh Malhotra

Further Equity Dilution Plans Direct
Not really, not looking at diluting any equity right now. We have enough cash in the bank and the deals which we are looking. We just want to do a good deal as we have done in the case of Mobileware or Greenedge or TaxSpanner, just want accretive deals for us.

Reassured investors that the company is not planning further equity dilution, citing sufficient cash reserves and a focus on accretive M&A.

Asked by Daksh Malhotra

UPI Take Rate Trends Direct
And our belief is that in the coming years, as UPI becomes more and more ubiquitous, we are only going to see that take rates go up across board, because this has to be ultimately self-sustaining and not based on subsidies from the government. So that's something which we are seeing the trend as well in the ecosystem.

Provided a strategic outlook on UPI monetization, indicating an expectation for increasing take rates as the ecosystem matures beyond government subsidies.

Asked by Piyush

3 min read 6 chapters

Detailed narrative

Strong Financial Performance in Q3 and 9-Months FY26

Zaggle Prepaid reported its best-ever quarterly and nine-month performance. For Q3 FY26, revenue reached INR 498 crores, marking a 48% YoY growth. Adjusted EBITDA surged by 63% YoY to INR 51 crores, and PAT grew significantly by 78% YoY to INR 36 crores, with PAT margins improving to 7.2%. For the nine-month period of FY26, revenues from operations grew 41.4% YoY to INR 1,260 crores, with adjusted EBITDA increasing 47.5% YoY to INR 128 crores and Cash PAT reaching INR 121 crores, up 68.3% YoY.

Strategic Acquisitions and Ecosystem Expansion

The acquisition of Rio.money has been completed and rebranded as ZAGG.money, establishing it as the company's fourth monetization pillar, leveraging a base of 3.7 million salaried users. Management has earmarked a primary capital infusion of over INR 100 crores for ZAGG.money, targeting INR 500 crores in revenue from this segment within 4-5 years. Existing acquisitions like Greenedge and Mobileware (86400) continue to perform strongly, with Greenedge's 9-month FY26 revenue at INR 65 crores and Mobileware's YTD FY26 revenue surpassing INR 50 crores, projected to reach INR 65 crores for the full year.

AI Integration and Operational Efficiency

Zaggle is transitioning from discussing AI's potential to validating its power in real-world scenarios through Agentic AI workflows. This integration has significantly reduced the development and deployment time for new product features from typically 75+ days to less than 30 days. The company anticipates further acceleration in this efficiency, leading to faster market responsiveness and lower production costs, particularly in complex tasks like vendor reconciliation and tax compliance.

Market Expansion and Partnerships

The company is expanding its global footprint with the approval for a wholly-owned subsidiary in GIFT City, named Zaggle Payments IFSC Limited, to leverage the GIFT City ecosystem for cross-border payments and financial services. Plans are also underway to establish an entity in UAE to expand into the MENA region. Domestically, Zaggle has deepened partnerships with Visa and Mastercard, signing a 7-year agreement with Visa for co-branded prepaid cards and a 5-year contract with Mastercard for credit cards, enhancing spend-linked incentives.

Product Traction and Regulatory Tailwinds

Zaggle has seen strong traction in its Fleet Program, signing with IRM Energy, and in its Smart Employee Purchase Program (Smart EPP), securing multiple new contracts. The launch of a credit line on UPI products with Suryoday Small Finance Bank has already facilitated over 30 lakh transactions and INR 50 crores in lending. Furthermore, proposed draft income tax rules for 2026, extending employee tax benefits to the new tax regime and increasing permissible values for meal benefits and gifts, are expected to significantly boost the Save business and TaxSpanner.

Outlook on Margins and Cash Flow

Management guided for adjusted EBITDA margins to reach 14-15% within 5-7 years, alongside a target of $1 billion in revenue. While incentive costs currently stand at 66-67% of program fees, they are expected to stabilize at around 50% in approximately 5 years. The company is on track to achieve operating cash flow breakeven by FY26 and expects OCF to turn positive in FY27, with ESOP charges for the next year projected to be in the range of INR 3-4 crores.

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