Zaggle Prepaid Ocean Services Limited — Q4 FY25 earnings call

Call held 12 May 2025

Management summary

Zaggle Prepaid reported a strong Q4 and full year FY25, with revenues growing 51% and 68% respectively, and PAT surging 67% and 99%. The company provided an optimistic outlook for FY26, guiding for 35-40% standalone revenue growth and an improved EBITDA margin of 10-11%. Strategic investments in TaxSpanner and Mobileware, along with new partnerships and AI-driven product enhancements, are expected to fuel future growth and margin expansion.

Highlights

  • Q4 FY25 Revenue: ₹411 crores, up 51% YoY.

  • Q4 FY25 Adjusted EBITDA: ₹38 crores, up 40% YoY.

  • Q4 FY25 PAT: ₹32 crores, up 67% YoY.

  • FY25 Revenue: ₹1,303 crores, up 68% YoY.

  • FY25 Adjusted EBITDA: ₹125 crores, up 46% YoY.

  • FY25 PAT: ₹88 crores, up 99% YoY.

  • FY26 Standalone Revenue Growth Guidance: 35% to 40%.

  • FY26 Standalone EBITDA Margin Guidance: 10% to 11% (upped from 9-10%).

Key financials

2 periods

Q4 FY25

  • Revenue
    ₹411 Cr
    YoY +51%
  • Adjusted EBITDA
    ₹38 Cr
    YoY +40%
  • PAT
    ₹32 Cr
    YoY +67%

FY25

  • Revenue
    ₹1,303 Cr
    YoY +68%
  • Adjusted EBITDA
    ₹125 Cr
    YoY +46%
  • PAT
    ₹88 Cr
    YoY +99%
  • Cash PAT
    ₹111 Cr
    YoY +66%
  • Cash Flow from Operations
    ₹19.8 Cr
  • DSO
    60 days

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.

Segment breakdown

  • Q4 FY25 Segment Contributions
    ₹9.3 Cr SaaS platform fee₹157 Cr Program fees₹245 Cr Propel Points
  • Segment Growth Rates
    91% Propel platform revenue growth (Q4 FY25)15% Program fees revenue growth (Q4 FY25)71% Propel platforms growth (FY25)12% SaaS fee growth (FY25)70% Interchange fee growth (FY25)78% Propel volume growth (Q4 FY25, ex-overseas)
  • Investment Performance
    ₹3.35 Cr TaxSpanner Revenue (FY25)₹33.89 Cr Mobileware Revenue (FY25)

Guidance & targets

Revenue

  • Standalone Revenue Growth Revenue · FY26 · High confidence 35% to 40%
    we currently project our standalone, and I repeat the word standalone, FY '26 revenue growth to range between 35% to 40%.

    — Raj P Narayanam

  • TaxSpanner Growth Revenue · FY26 · Medium confidence 60% to 70%
    this year, we look at a growth of about 60% to 70%, which we expect that we will be able to do it with relative ease.

    — Raj P Narayanam

  • Program Fees Growth Revenue · FY26 · High confidence 35% to 40%
    overall, we have given a guidance of 35% to 40%, and we see program fees also growing in line with the same assessment for the year.

    — Avinash Godkhindi

  • Consolidated Growth (with acquisitions) Revenue · FY26 · Medium confidence 80% odd
    if all of them come before September, then Devesh, we should be at about 80% odd as a growth.

    — Avinash Godkhindi

Profitability

  • Standalone EBITDA Margin Profitability · FY26 · High confidence 10% to 11%

    Previously 9% to 10% → 10% to 11%

    our guidance on standalone EBITDA margin was between 9% to 10%, and we are happy to announce that we are upping our guidance to 10% to 11% in the coming year, in FY '26.

    — Raj P Narayanam

  • Long-term EBITDA Margin Profitability · next 3-4 years · Medium confidence 12% to 15%
    Hopefully our entire goal of achieving 12% to 15% EBITDA margin over the next three, four years, this year would be a deciding year for that goal to be achieved.

    — Raj P Narayanam

Expenses

  • ESOP Expenses Expenses · FY26 · High confidence ₹9 crores to ₹10 crores
    During FY '26, we anticipate recording ESOP expenses in the range of Rs. 9 crores to Rs. 10 crores.

    — Aditya Kumar

Margin

  • Propel Margins Margin · coming year · High confidence 6% to 7%
    Margins as this line of business has grown, will stay in this range of 6% to 7% for the coming year as well

    — Avinash Godkhindi

Risks & concerns

  • Global geopolitical uncertainties and macroeconomic volatility

    medium

    Mentioned as context for FY26 guidance, but not elaborated as a direct threat to achieving targets.

    Management acknowledged

  • Timelines for large client onboarding and significant revenue realization

    medium

    Large clients typically take 4-6 months to go live and then scale up gradually, impacting immediate significant revenue contribution.

    Management acknowledged

  • Lumpiness of expenses and revenue recognition (e.g., overriding commissions, holiday impact on fulfillment)

    low

    Q4 tends to have compressed margins due to corporate spend thresholds and incentives; holiday periods can impact cash flow due to upfront card loading.

    Analyst acknowledged

Areas of evasion (2)

  • Monthly Recurring Revenue (MRR)
  • Specific revenue/DMV numbers for BROME

Q&A highlights

1 direct, 1 evasive
Monthly Recurring Revenue (MRR) for SaaS platform Evasive
Sure. We will look at that and come back.

MRR is a critical metric for SaaS companies, and management's non-committal response suggests a lack of transparency or readiness on a key business aspect.

Asked by Devesh Kasliwal

Underlying Propel volume growth vs. reported revenue (distorted by overriding commissions) Partial
volume growth is what it is. We have told you, it has grown from Rs. 128 crores in Q4 FY '24 to Rs. 245 crores. Of course, the margin gets added to that. So, largely the growth is pretty strong. It's just that the ORCs come in, in the last quarter. ... Excluding overseas, Rohan, it is 78% on Y-o-Y quarterly basis.

Analysts sought to understand the organic, non-one-time growth drivers, and the response, while providing some figures, did not fully isolate the 'underlying' growth from the commission impact as requested.

Asked by Rohan Nagpal

Delay in M&A execution post capital raise Direct
When we raised the money that was like end of December, okay? And since January in fact we had started looking at multiple companies, we are in very advanced stage. But even when I say very advanced stage, between the closure and very advanced stage, it could be a quarter, okay? And these are like little bit large acquisitions with multiple investors on the other side. And also the due diligence typically takes about three to four months...

This question addressed investor concerns about the utilization of raised capital and received a detailed explanation of the M&A process and timelines, indicating a clear strategy despite the delays.

Asked by Ankush Agrawal

2 min read 7 chapters

Detailed narrative

Strong Q4 and FY25 Financial Performance

Zaggle Prepaid reported robust financial results for Q4 FY25, with revenues reaching ₹411 crores, a 51% YoY increase, and PAT surging 67% to ₹32 crores. For the full year FY25, revenues grew 68% to ₹1,303 crores, while PAT saw a remarkable 99% increase to ₹88 crores, exceeding earlier guidance. Adjusted EBITDA for FY25 stood at ₹125 crores, up 46% YoY, demonstrating strong operational leverage.

FY26 Guidance and Long-Term Margin Ambition

The company provided a standalone revenue growth guidance of 35% to 40% for FY26, building on a ₹1,300 crores base. Significantly, the standalone EBITDA margin guidance for FY26 was upped to 10% to 11% from the previous 9-10% for FY25. Management reiterated its long-term goal of achieving 12% to 15% EBITDA margin over the next three to four years, signaling a clear focus on profitable growth.

Strategic Investments and Partnerships Driving Growth

Zaggle continues its inorganic growth strategy with the acquisition of TaxSpanner and strategic investments in Mobileware Technologies, with Board approval for EffiaSoft Private Limited. TaxSpanner, which generated ₹3.35 crores in FY25, is projected to grow 60-70% in FY26, particularly through the new ZUGS solution for gig workers. Mobileware's revenues grew 98% YoY to ₹33.89 crores in FY25, strengthening Zaggle's UPI and payment ecosystem capabilities.

Product Innovation and AI Integration

The company is transitioning to an AI-powered SaaS model, aiming to become a default spend management infrastructure. Initiatives include the 'Zaggle Co-Pilot' in pilot phase, designed to streamline finance workflows and enhance decision-making. This AI-led approach, leveraging advanced conversational AI technologies, is expected to drive customer engagement and deliver personalized, real-time interactions at scale across EMS, Zoyer, and Propel offerings.

Program Fees and Propel Platform Performance

In Q4 FY25, program fees contributed ₹157 crores, growing 15% YoY, while Propel Points contributed ₹245 crores, with the Propel platform revenue growing 91% YoY. For the full year, program fees grew 70% and Propel platforms grew 71% YoY. Management indicated that Propel margins are expected to remain in the 6-7% range for the coming year, with a focus on optimizing profitability and cash flow by controlling incentives rather than solely pursuing top-line growth.

M&A Pipeline and Capital Deployment

Management addressed analyst concerns regarding the delay in M&A execution post capital raise, explaining that due diligence for large acquisitions typically takes three to four months. They confirmed a clear thought process for acquisitions, with seven to nine players currently in advanced stages. The QIP funds are primarily earmarked for these investment activities, with a consolidated growth of around 80% projected for FY26 if acquisitions close before September.

Cash Flow Improvement and DSO Reduction

Cash flow from operations significantly improved to ₹19.8 crores in FY25, compared to a negative number in FY24. The company also successfully reduced its Days Sales Outstanding (DSO) from 82 days in FY24 to 60 days at the end of FY25. This improvement in working capital management is a key focus area, contributing to better cash flow accretion alongside margin expansion.

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