Infibeam Avenues Ltd (NSE: INFIBEAM) Q2 2025 Earnings Call dated Nov. 12, 2024
Corporate Participants:
Vishwas Patel — Joint Managing Director
Sunil Bhagat — Chief Financial Officer
Vishal Mehta — Chairman & Managing Director
Unidentified Speaker
Analysts:
Rajat Gupta — N/A
Deepesh Sancheti — Analyst
Unidentified Participant
Pranav Mashruwala — Analyst
Nishant Gupta — Analyst
Presentation:
Operator
Ladies and gentlemen, good day, and welcome to Avenues Limited Q2 FY ’25 Earnings Conference Call hosted by Go India Advisors. As a reminder, all participant lines will be in the listen-only mode and there will be an opportunity for you to ask questions after the presentation concludes. [Operator Instructions]. Please note that this conference is being recorded.
I now hand the conference over to Mr. Rajat Gupta from Go India Advisors. Thank you and over to you, sir.
Rajat Gupta — N/A
Yes, thank you, Sagar. Good evening, everyone, and welcome to Infibeam Limited earnings call to discuss the Q2 FY ’25 results. We have on the call with us today Mr. Vishal Mehta, Chairman and Managing Director; Mr. Vishwas Patel, Joint Managing Director; and Mr. Sunil Bhagat, Chief Financial Officer. Also joining us on the call today is Mr. B. Ravi, who is advising Infibeam on Corporate and Financial Strategy as an independent consultant.
We must remind you that the discussion on today’s call may include certain forward-looking statements and must be therefore viewed in conjunction with the risk that the company faces.
I now request Mr. Vishal Mehta to take us through the company’s business outlook and financial highlights, subsequent to which we’ll open the floor for Q&A. Thank you, and over to you, sir.
Operator
Thank you, Rajat, and very good afternoon, everyone. Welcome to Infibeam Avenues Q2 FY ’25 earnings call. I appreciate you joining us to review our second-quarter and first-half performance for the fiscal year ’25. This quarter has been transformational for Infibeam Avenues in many ways as we continue to advance our strategic vision with very strong growth momentum and another robust performance building on the momentum that we achieved in the first quarter of FY ’25.
I’m excited to share some updates on our recent acquisition and integration of Rediff. With over 70 million registered email users, we are transforming their experience by upgrading them to a super app that will now house RediffPay also as its primary payment solution, which will be focused on UPI. The super app application that we’ll build out will also include a range of other financial products, bringing seamless financial management to millions of users on a trusted platform.
Looking ahead by the end of Q4 FY ’25, early Q1 ’26, we plan to launch RedF1, which is a complete suite of enterprise solutions. RedF1 will provide enterprise ERP solution, enterprise CRM, customer relationship management, as well as HRMS, Human Resource Management systems along with enterprise-grade e-mail services, which provides a comprehensive digital toolkit for businesses to go online and conduct their business. This initiative marks a significant step forward as we build a robust ecosystem of products that empower both individual users as well as enterprises, strengthening Infibeam’s position as a leader in digital transformation solutions.
With Rediff’s vast user base of 55 million monthly visitors and a registered email base of 70 million users, we are well-positioned to accelerate our financial services aggregation providing products like insurance as well as connecting users to lenders under a trusted consumer brand, RediffPay. Through the integration of digital infrastructure, which includes cloud-based enterprise email, storage, and content services, we are creating a unique digital ecosystem. This move not only expands our digital payment capabilities but also enhances user engagement and open up — opens up new revenue opportunities through cross-selling of financial products, leveraging advanced data insights as well as our artificial intelligence framework. This new revenue stream is expected to contribute anywhere between 2% to 4% of our total revenue this year and potentially reaching up to 10% in coming years.
As we build on our current achievements, I’m thrilled to share a few insights into the future direction of our artificial intelligence framework, Phronetic, which reinforces our commitment to innovation as well as solving real-world challenges with cutting-edge technology. We are working on a new human-computer interface at CI that will bring a revolutionary level of interactivity to video generation while chatting. Imagine a natural immersive human interaction that goes beyond text and voice using video as a primary mode of engagement. With this advancement, we are setting out to elevate customer support and experience making our platform a go-to solution for premier customer interactions. This HCI interface will mimic face-to-face communication, creating a richer, more engaging, and more personalized interaction for users.
Beyond this, we are also expanding our capabilities and understanding human activities, especially in areas like sports, entertainment, hospitals, and many more, where we are envisioning AI-powered agents. If it’s sports, it’s going to be coaches and umpires and many others. These applications could fundamentally change the way we receive feedback opening new doors for precision and performance enhancements. This approach leverages our model in ways that meet the unique demand of several stakeholders in every area. If it’s sports, it’s going to be athletes, coaches as well as other sports professionals.
And on the third front, we are enhancing what we call agent capabilities in our models, making them more proficient in handling software tools and even managing desk jobs. This evolution is aimed at making our AI versatile enough to serve in administrative, operational, and support roles where its decision-making and task execution capabilities will drive productivity and streamline workflow. Our approach in AI is always application first. This means that we are not solely reliant on proprietary models. We have developed a model orchestrator that can integrate with other LLMs also to deliver the best possible application outcomes. This adaptability positions us to continuously discover new use cases for our video AI models, providing full-stack deployments tailored to our end users.
To summarize, Phronetic AI is not just a technology company. We are building a platform that transforms interactions, powers better decision-making, and addresses challenges across industries. Our innovations in AI business manager, AI [Phonetic], and forthcoming HCI advancements are only the beginning. We will continue to lead in creating AI-driven solutions that make a tangible difference.
I’m also excited to share Infibeam’s strategic vision as we expand into our data center infrastructure, complementing our artificial intelligence business. This moves aligns with India’s digital transformation goals and supports the rapid advancement of AI and data localization. Instead of building very massive multi-gigawatt mega-data centers that many large tech companies are pursuing, Infibeam will pursue the strategic decision to focus on developing 1-megawatt to 2-megawatt data centers across multiple cities throughout India.
The question is why small data centers, you might ask because they are allowing us to bring our infrastructure closer to end users across the country. Small data centers play a critical role in mobile edge compute as well as visual artificial intelligence as they bring data processing and storage capabilities closer to the end-users and on IoT devices. This proximity is a game-changer, particularly for our core digital payments as well as our e-commerce services. By reducing latency, we enhance transaction speed, reliability, and essential factors in delivering a seamless real-time experience for our customer demand and it’s not just about major cities by setting up smaller data centers, Infibeam can cater to growing demand in Tier-2, Tier-3 cities where digital adoption is expanding rapidly. This approach supports India’s push towards a cashless economy and captures the broad diverse demand that’s emerging in these regions.
Our decision to invest forward in a network of smaller data centers rather than the large-scale gigawatt facility is a strategic choice that aligns with our priorities of cost-efficiency, operational flexibility, localized service delivery, regulatory adaptability as well as scalability. Small data centers are not only more manageable from an opex perspective but also allows incremental growth. As demand increases, we can scale up gradually adding capacity where it’s needed without the significant capital commitment and operational challenges that come along with operating a very large data center. This flexibility allows us to grow sustainability while maintaining control over cost and risks.
From a regulatory standpoint, this distributed model also helps us comply with India’s data localization laws, which require certain type of data to be stored and processed within the country. Our localized infrastructure supports these regulations, further strengthening our role as a trusted partner for our clients. It also aligns with the government’s goal of fostering regional data infrastructure, improving data governance, and promoting digital resilience. Moreover, Infibeam’s infrastructure strategy enhances our ability to concentrate on our core offerings, which is digital payments, e-commerce frameworks, and communication frameworks now with the Rediff acquisition. We are positioning ourselves to deliver optimized localized infrastructure that meets both our needs as well as those of our clients without the operational complexity and massive investments associated with large facilities.
Finally, the Indian government has also expressed strong support for decentralized data infrastructure as a means of strengthening digital resilience and supporting services across diverse regions. Infibeam’s focus on smaller data center aligns perfectly with this national vision, positioning us as a valuable partner in India’s journey towards a digitally empowered economy.
To summarize, Infibeam’s approach of building smaller distributed data centers, a thoughtful forward-looking decision that empowers us to deliver better services, adhere to their regulatory requirements, and scale efficiently. We are excited about this journey and are confident that this strategy will drive significant value for our business, our clients, and our shareholders.
Another key development this quarter is the establishment of Avenues Fintech IFSC Private Limited, a wholly-owned subsidiary in GIFT City within the India’s IFSC zone. With an initial capital of INR1 crore, this entity will operate as a payment system provider, expanding our fintech capabilities to target international and cross-border payments. This move is part of our strategy to provide global-scale regulated financial solution.
Additionally, we acquired remaining 26% stake in one of our subsidiaries, Infibeam Digital Entertainment, making it a wholly-owned subsidiary. This acquisition strengthens our commitment to digital media and live events, allowing us to leverage our fintech expertise in delivering engaging digital experiences.
Now turning our key financial highlights in Q2, I’m pleased to announce that we achieved a net revenue of INR134.3 crores this quarter and EBITDA of INR85.4 crores, and a PAT of INR55 crores. Our take rate also saw significant improvements reaching 11.3 basis points in Q2 FY ’25, a 21% increase from Q2 of last year. This reflects our disciplined execution, continuous optimization, and innovative approaches across our payment solutions, showing the strength and dedication of our teams. To reach the FY ’25 goals, we are accelerating our strategic initiatives and prioritizing international growth.
Over the next two years, we aim to have international segment contribute to 12% to 15% of net revenue, up from its current single-digit share. For FY ’25, we are anticipating revenue growth of 25% to 30%, EBITDA growth of 10% to 20% and a PAT growth of 20% to 35% year-over-year. Based on our performance so far, I’m confident we can meet these targets.
Our priorities remain focused on delivering profitable growth, leveraging strategic investments like rediff.com and our AI initiatives and optimizing operations to capture the emerging opportunities in digital payments and fintech sector. We believe our strategic roadmap aligns with the market needs and strengthens our ability to create sustained value for our shareholders.
Thank you. And now I’ll hand over the call to Vishwas. Vishwas, over to you.
Vishwas Patel — Joint Managing Director
Thanks, Vishal, and good afternoon to everyone on the call. We are actively shaping entry avenues for future growth and our second quarter exemplifies our commitment to resilience, innovation, and market leadership. The Indian digital payment sector continues to be a powerhouse, expanding at an impressive rate. In 2024, the industry is projected to grow to 45% to 50%, right, and more than 50% of the world’s real-time transactions will happen in India. It will accelerate India’s shift towards a cashless economy. This favorable macro-environment reinforces our strategic position as NP is poised to capitalize on these opportunities with digitality.
One of the quarter’s highlights was a report receiving approval for the RBI payment aggregator license. This license not only underscores a regulatory compliance, but also positions us rapidly to scale merchant onboarding. Simultaneously, our international acceleration through our GIFT City subsidiary enables us to offer cross-border payments, opening new revenue channels in the high-growth global markets.
In Q2, we onboarded two tech merchants, a testament to our commitment to simplify commerce. With an average of nearly zero new merchants running us daily, our network is expanding across diverse industries and geographies. Additionally, our net payments take rate is also increasing to 11.3 basis points, signifying enhancing our profitability this quarter. This quarter, we also announced several strategic collaborations, the CCAvenue SoundBox Match — Max with — we were delighted to launch the first-of-its-kind and all-in-one soundbox, which accepts not only UPI, but credit card, debit card and it enhances payment experiences with the support for dynamic and static UPI bar codes, NFC tap, EMB dip and PIN. This will be our first physical deployment in the offline space.
LazyPay. We partnered with LazyPay to bring — to bring Buy Now Pay Later solutions to the CC Avenue payment gateway. This progression will empower thousands of merchants to offer flexible payment options, enhancing the checkout experience and boosting growth for all Indian businesses. Loyalty Reward, our partnership with Loyalty Rewards will enable merchants to offer customer reward points as a payment option. Chalo, which we introduced a new feature in the Chalo app, which is the app, which is used on all the BEST buses in Mumbai and 13 other cities. It allows UPI and NCMC recharges directly from the NFC-enabled phones.
TTOD solution is one of the world’s first where we unveiled India’s first PCI-certified tech to our own device solution, now converting retail e-commerce app into secure terminals on unustainable phones. Our partnership with Citibank India will introduce payment options to a recurring payment shoot through Citibank India to enable merchants for seamless direct debit for subscription payments. Karnataka Bank. Our alliance with Karnataka Bank will provide their merchants with a white-label solution of CC Avenue Payment gateway with over 200 plus options and a host of features. These Karnataka Bank retail branches will be able to offer payment solutions to local retailers, schools, utilities within their region. ShopSe Digital Finance. We are excited to partner with ShopSe. They also offer a buy now pay later payment option merchant network, and thereby expanding affordability suit.
So apart from this, our Bill Avenue, the bill payment platform also saw a record INR1.55 crore transactions in 90 days valued at almost INR5,724 crores. This momentum reflects Bill Avenue’s relevance in the fast-evolving digital bill payment sector.
Through our ResAvenue, our hospitality-focused solution which is used by over 3,000 hoteliers, we facilitated over five lakh room nights for our hotel clients in this 90-day period and generating a transaction value exceeding INR315 crores this quarter for our hoteliers. We are advancing product innovation by developing AI-driven revenue management tools to help hotels maximize revenue and streamline operations. This initiative is part of a broader commitment to active hotels with cutting-edge technologies.
Now for international CCM International, I’m glad to announce that we have done a capital raise in our UAE payment subsidiary. We have successfully raised capital from family offices and investors in UAE. We have achieved a post-money valuation of $100 million for the — for our UAE payment subsidiary and raised $20 million for expediting growth in that market. We are currently now processing AED81.5 billion per month across for more than 7,000 plus merchants in the United Emirates.
We are now also establishing presence in the fast-growing Saudi Arabia market, the largest and the fastest-growing market in the Middle East. We have already invested in the presence there along with hosting an entire tech stack there as per local secured requirements in the kingdom. We have been certified by the Saudi Arabian Monetary Authority as eMSP PTSP provider and we have tied up with one of the kingdom’s biggest bank, SAB Bank to be an acquiring bank. We have started onboarding major merchants like BFS, Solutions, and Motors and we plan aggressively to scale our operations in the kingdom. Our efforts are not just focused on current profitability, they are geared towards future putting in premium avenues.
By building on the sound — solid foundations, we are well-positioned to capture the tremendous potential of India’s digital economy. Our path to sustainable profitable growth is clear and our focus on disciplined financial management that has led us to predictable and sustainable growth in revenue, diversification of revenue streams, and continuing improvements to our bottom line. Our platforms for years together has been offering a suite of cutting-edge financial tools and payment solutions for businesses across the — across our country and beyond but going forward, we are now going to expand up our platforms for consumers too across our country. We are in the work of one of the most significant milestones in our journey, a transformative move in the digital payment space that we believe will not only redefine how transactions are made but also set a benchmark for innovation in the industry.
As Vishal has already said earlier, Rediffpay, our latest venture into the world of digital premiums for consumers. It is not just another addition to the digital payment landscape. It represents a bold step into the future of financial transactions and is designed to meet the rapidly evolving consumer market. Rediffpay will not be only offered to the existing loyal customer base of 70 million users, but it will eventually be aimed to be the only financial tool for over a billion Indians. It will not only offer UPI and other tokenized card payment options for consumers to pay with it, but it would also offer a plethora of financial products and services like real-time fixed deposits booking, mutual funds, insurance, trading, and for consumers to invest, but it will also give them access to capital for their own personal and business requirements. Fundamentally, it will redefine the way people interact with money. We are setting the stage for a more inclusive connected future where no one else, regardless of their location or technology and infrastructure is left behind.
Now with that, I will now hand it over to Sunil Bhagat, our Chief Financial Officer, to provide insights into the quarter’s financial performance. Sunil Bhai, over to you.
Sunil Bhagat — Chief Financial Officer
Thank you, Vishwas, sir. Good evening, everyone. In the second quarter of FY ’25, we made substantial progress in financial performance, driven by disciplined execution and a focus on profitability. For quarter two, our gross revenue increased from INR787 crore in Q2 FY ’24 to INR1,017 crore in Q2 FY ’25, making — marking a strong growth trajectory.
Notably, our net revenue saw a year-over-year rise of 24%, climbing from INR108 crores to INR134 crores. Our net take rate expectations rising from 9.3 basis points in Q2 FY ’24 to 11.3 basis points in this quarter, reflecting a 21% increase. This improvement contributed to higher net revenue, EBITDA, and PAT. Our EBITDA also grew by 26%, reaching to INR85 crores in quarter two FY ’25 from INR68 crore in the quarter two FY ’24 with an EBITDA margin of 64% as a percentage of net revenue.
Our profit-after-tax also reached to INR55 crores, reflecting a year-over-year increase of 43%, underscoring the effectiveness of our profitability initiatives. As we move forward, we remain focused on achieving profitable growth and delivering value to our stakeholders.
With that, I now invite the moderator to open the floor for the question-and-answer session. Thank you.
Questions and Answers:
Operator
Thank you very much. We will now begin the question-and-answer session. [Operator Instructions] Our first question comes from Deepesh Sancheti from Manya Finance. Please go ahead.
Deepesh Sancheti
Hi. Very excited to hear about your — am I audible, first, sir?
Operator
Yes, sir. Please go ahead.
Deepesh Sancheti
Okay. Very excited to hear about your Rediffpay when should we expect the app and are we looking to become a fintech company?
Vishal Mehta
So we are a fintech company.
Deepesh Sancheti
Yeah, I mean similar to I mean you know the Jio Finance and ATMs.
Vishal Mehta
So if you look at you know currently the application has been downloaded by a few million users which is the Rediffmail app and what we plan to do is upgrade the app to make it a super app, which will also house Rediffpay. And so what we believe in is that communication, much like you do have communication players like WhatsApp and PhonePe and others, similarly, is a communication framework and payment sitting on top of a communication framework is how we envision the app to look like.
And to answer your other question, will it be a Protech app? Absolutely. We’ll introduce more financial products along with the Rediffpay framework, which will sit on top of a communication setup, which has already been downloaded by millions of users.
Deepesh Sancheti
And about your Phronetic AI, it secured a $1 million order in annual contracts with hospitals and a UAE gas station. Could you provide clarity on the timeline of revenue recognitions from these contracts?
Vishal Mehta
It will be this year itself. So we’ve already started monetizing. And so annually will be upwards of $1 million in terms of run-rate. We have actually expanded the relationship beyond gas stations to waybridges and many others. So Phronetic is being implemented in multiple areas. You see, we started out with visual AI, so it is object identification. We migrated the models to actually understand scenarios, which means that not just identifying the object, but in relation to that object, what are other objects looking like and what are they interacting with? And then activities within the scenario is the third layer of the model. So we’ve been able to go across the two or three different versions of our framework, which have been deployed. And when I talk to you about HCI and many other agentic behavior. It just means that the model should be able to imitate the agent then. And so I think that’s the path that we are going forward with.
Deepesh Sancheti
Okay. So what potential — I mean, what potential do you see in scaling similar AI solutions in sectors like healthcare and energy?
Vishal Mehta
Very large. You see, when we started out, we thought that the vision that we had was uberization of payments. You go into Uber, you walk out, there is no scanning of card, there’s no QR code, there’s nothing that you need to do, it just deducts the money from the wallet. And so I think in the world of AI, we think that uberization of payments across multiple areas will be the — will be the future. And for that video intelligence, understanding visual AI will become key.
And when we started out, we thought we will get into that payments-heavy setup, which is gas stations and others. But we find that the applications are diverse and as long as the models can be trained for each of these applications, it becomes a very valuable setup. So health care, for example, in some ways critical intensive care units where it’s very hard to monitor clinical patients because there is only one person across the entire facility visually and video intelligence can play a very large role.
It’s — to summarize, it’s not just face recognition, it’s more of actually understanding the whole activity within that because face recognition may be just an object identification in some ways. So we think that there’ll be many applications. We’ve focused on certain areas more than others at the moment.
Deepesh Sancheti
Okay. Now we mentioned that it is a projected revenue growth target for FY ’25 and about 25% to 30%. What proportion of the capital will be allocated towards AI and international expansions versus your core digital payments and platform development? And what is the return of in return on investment we are targeting for these strategic investments?
Vishal Mehta
For international, we have raised about INR165 crore — INR167 crores recently to expand our international business. We think international will become 10% to 15% of our revenues in coming quarters. We currently process about AED1.5 billions a month in UAE across 7,000 plus clients. We have also started expanding in Saudi. We have received the PSP license in Saudi and we are expanding into other geographies as well, Oman being one of them. So we think that international is a good opportunity and we’ll continue investing in that setup and we’ve raised capital there.
As far as our core business over here is concerned, you know, we think that AI is just not just going to be the software piece of it, but the edge compute, which is the data center piece that we talked about, where you can containerize data centers closer to the clients and go distributed in that data center, connecting into a gigawatt data center eventually will be the strategy and the approach that we’d like to follow in that you know, I mean if you — of course, depends upon a containerized one-megawatt data center, it typically in some ways will the capex of a particular one-megawatt container center will be anywhere between INR10 crore and INR20 crores. But this will essentially allow us to get into specifics for a particular client and provide edge compute to our clients and that’s the approach that we will go after. We typically follow the client. So, in general, you’ll start seeing ROI much quicker and not have that heavy capex going in one go and not being able to see monetization through. So I think our investment in India will be primarily in people. So we’ll invest in people and in data centers.
Deepesh Sancheti
Great. So coming to this quarter, we noticed that there was an amazing increase in your revenues. But we know there was also an increase in your other expenses compared to the last quarter. Could you give a breakdown of the key factors which is driving this rise? And are these expenses recurring or one-time?
Sunil Bhagat
Sunil, this side. So if you can see the other expenses, it is close to 1.5% to 2% of the total revenue. So the revenues increase. So corresponding with the other expenses also increase. Yes, we have some expenses in terms of one-time expenses, which we have booked in this quarter pertaining to the composite scheme and other things. Other than that, there is a regular expenses that will be incurred. So there is a one-time impact on this time.
Deepesh Sancheti
Can you quantify how much was the one-time expenses?
Sunil Bhagat
It is close to 1.5%, most probably.
Deepesh Sancheti
Okay, 1.5%. So then why? Why this, I mean did this revenue does not come with a great margin because I can see the net — I mean the profit before tax, and the net profit also not in line with the revenue increase.
Sunil Bhagat
Yeah, but if you see the last quarter, there was a one-time impact of other income, which was not this time. So that is the impact the — there is a decrease in the profit before tax.
Deepesh Sancheti
Okay. And given the excellent H1 numbers, do you plan to revisit your guidance for FY ’25? And what are the primary drivers that would influence this future revenue growth?
Vishal Mehta
We’ll continue with our guidance. This, of course, is an important quarter, which is the holiday quarter. We’ve been tracking well. We think that we are confident in achieving our guidances and if there’s any changes to that, we’ll of course communicate at the right time.
Deepesh Sancheti
Okay. And any other acquisitions you’re looking at?
Vishal Mehta
Nothing as of now. We will, we evaluate opportunities from time to time and as we evaluate we would, of course, communicate to the shareholders when it materializes and should it actually go forward. Historically, we’ve been slightly conservative. Our internal bias is always to build and not to buy, but when we feel that the right opportunity presents itself with the right kind of people and a great brand and possibility to build out synergies, yeah, that’s when we forward invest and we are able to take it forward.
Deepesh Sancheti
Okay. And also like given that we have already demerged one of our companies, should investors expect another demerger coming with the Phronetic AI or you want to build it and then maybe you know scale it up so — and after that demerger? Are we looking at that as it’s.
Vishal Mehta
Phronetic is — like I said, it’s a platform that we’re building out, which will actually help all our businesses and there’s a lot of synergies between what Phronetic is building out on video intelligence and payments and we think that it’s — we want to build it up, you know. As far as the model and the framework is concerned, we’ll continue building it out. As far as getting into edge compute and slightly more in some ways command centers, which are closer to the clients because many a times clients would prefer that they would want to have their own infra and their own edge and that business will also keep on building out, but we’ll evaluate as we go along.
Deepesh Sancheti
Okay. Great. All the very best, Vishal and Vishwas. Keep — I mean thank you so much.
Operator
Thank you. [Operator Instructions]. The next question comes from Krish Masha [Phonetic] from Envision Capital. Please go ahead.
Unidentified Participant
Hi, good evening, and thanks for taking my question. I’m keen to understand the business model around a tie-up with LazyPay.
Vishal Mehta
Vishwas, you want to take that LazyPay. Just to clarify, this is regarding the IFSC subsidiary company asked.
Unidentified Participant
Yes, sir.
Vishwas Patel
Okay. So IFSC within the GIFT City zone, since you already have significant presence there, on legal terms, it’s a separate country on its own, right? So a lot of Indian businesses and insurance companies and everything who are aiming for the international audience, namely NRIs have — put setup base there. But as a license — RBI license payment aggregator, we cannot acquire the merchants based out of the IFSC zone, right? So one part of the business was there was an immediate base that we already have with our presence. So we may be among the first to get a payment aggregator license in IFSC to support all those processing transactions for all the merchant base that are there for all the banks, financial institutions, and lots of other service providers that is there.
Second part is also there is a cross-border thing that we can do very easily from GIFT City. So there are certain models, which I cannot dwell in right now, but it gives us enables to tie-up with international gateways and get good local rates out there and offer it to merchants here. So the GIFT City — the IFSC subsidiary where it enables us to do a 1,001, this kind of businesses, that’s why that’s why we have incorporated this company and applied for the license at IFRSC.
Unidentified Participant
Okay. No, but I want to understand that BNPL tie-up, sir.
Vishwas Patel
BNPL tie-up with the different service providers. So as I said, in the CC Avenue payment gateway, our mindset is that of a — as to give the maximum number of payment options to — so that our merchants can offer it to their consumers to consume it transactions. So when you have credit cards, when we have debit cards and we have all these dozens plus wallets, and when we have more than 100 net banking options that we can create through their bank account, then we have standing instructions and other things.
So BNPL also, there are a couple of providers who are quite active in the market. So see MakeMyTrip is our merchant and he wants to offer say if there is a LazyPay merchant, a customer who has their listing and wants to pay for a MakeMyTrip ticket. To enable as a payment option for MakeMyTrip on CC Avenue, that means there is more conversion and more transactions. So it gives us those BNPL customers onto this. So, for us, as many options that we can offer so that our merchants can further offer to their customers to close their sales, hence the BNPL tie-ups with all providers.
Unidentified Participant
So we will earn a transaction revenue.
Vishwas Patel
Yes. So on every transaction that goes through the system, we earn revenue out of it. A percentage base revenue comes across to the company. So that’s the whole idea to increase the payment option base.
Unidentified Participant
Okay. And have we — is the government still using our agri platform or now they have transitioned to the new platform?
Vishwas Patel
There is no agri platform. As a payment gateway, we are enabled on lots of government websites. So there are its use, but we never built a dedicated agri platform for the government. We do as a GeM platform, but. Yes, sir, GeM platform. Vishal?
Vishal Mehta
Yeah, GeM platform is still being utilized by the government. But like we had mentioned earlier, we don’t report revenues from that because we are in discussions and in some ways arbitration with them.
Unidentified Participant
Okay. So there is no conclusion on that.
Vishal Mehta
Not so far.
Unidentified Participant
Okay. Fine. Thank you so much.
Operator
Thank you. The next question comes from Veer Vadera [Phonetic] from Niveshaay. Please go ahead.
Unidentified Participant
Hello. Am I audible?
Operator
Yes, sir, please go ahead.
Unidentified Participant
Could you elaborate on specific initiatives aimed at attracting larger high-value merchants and how has our pricing strategy evolved to cater to these clients, particularly in light of our increasing talk rate in markets like India and Dubai?
Vishal Mehta
See, look, I think Vishwas will add to what I have to say, but we have gone after a lot of merchant base, we add about 2,000-odd merchants every day on the platform. So the take rates usually come from a larger base of merchants and not from a selected few. If you look at the top three sives or five sites in India you may see CC Avenue on a few payment options, one or two, but not all. So we normally go after merchants where we have better take rates. So take rates is a function of going wider across merchants, one.
And second is that — so the base has to be larger. And then we also have a few merchants that provide us volume, which potentially allows us to get better rates. And so I think it’s a combination of that. And as far as our take rates are concerned, we have optimized the take rates quite a bit. We’ve — while majority of the other providers, they think of payment gateway take rates as actually just a means to get more volume and sell other services, we have said it’s not either or it’s and we have to make money in premium gateway framework as well as in other services that we provide on top of it.
As far as international clients are concerned, yeah, there will be certain clients specifically that we want to go after. And that’s where we find that you also, for example, like a very large geography like UAE, we have 7,000-odd merchants. Now in India, we add 2,000 merchants every day, but all of UAE we have 7,000 merchants. So the geography is not very large from that perspective, but we also feel that going into offline payments along with online payments, which is tap pay devices. There is a sandbox that Vishwas talked about, that should be a strategy, which will adapt both in India and international and that is something that is not accounting for our revenues. But the moment we get into pause devices, the cost of devices have come down significantly. And as the cost of devices comes down, if we had purchased and implemented the device a year ago, it would have been — it’s Moore’s law. It keeps on, you get more processing power, you have reduced cost of hardware.
So now I think we have reached a point where we believe the cost of hardware is not going to have a major impact because it’s come down significantly. If you recollect earlier it was in five-digit numbers, now it’s actually low four digits or in some cases even three digits. So I think that’s where we find that there is an opportunity that we’ll tap into, which also helps us in increasing our volumes and improving take rates.
Unidentified Participant
Okay. And given diverse services such as cloud-based email and content distribution, what operational or technical challenges have arisen during integration? And are there additional investment required to optimize Redev’s platform for business model?
Vishal Mehta
Yeah, second question is simple to answer. Yes, of course, there is additional investment and we have invested in the company and the company will invest in infrastructure, people, and certain specific areas that potentially allow the — allows the brand to get recognized. So that position because it’s a consumer-facing model, like Vishwas said, this is the first time we are getting into consumer payments framework and that makes it more interesting.
So I think while our business Rediff, which is the business suite will focus on B2B and Infi will focus on B2B, but the Rediffpay version of it, which is the financial products and other services in Rediffpay, they will be on the consumer side as well. So we’re getting into that space. And so that’s one.
Second is that integration challenge, we don’t typically talk about integration challenges. I mean, like any other acquisition, you would, of course, have challenges that you want to overcome as we build up. But like I said, I think that continue evaluating what areas of technology, what areas of business do we need to optimize and we’ll forward invest in and keep on building up on that.
Unidentified Participant
Okay. And as our international business, especially in regions like UA and Saudi Arabia continues to expand, could you share insights into the profitability of these market also? Are there particular regions or product lines that are delivering stronger performance and contributing more significantly to revenue growth?
Vishal Mehta
Look, the take rates in international are much better than take rates in India. If you recollect last year, we were in single-digit bps. Now we are in two-digit bps, whereas take rates internationally is as high as 18 basis points to 20 basis points. So I think there is — there is better take rates internationally compared to India. But international does not have UPI and real-time settlements as much as in some ways India does. And so what we need to do is we need to increase the number of merchants in the international business and that will come through like I said, offline acquisition, QR code-based acquisition, online build-out, and getting our brand across and then offering more products and services to the same merchant base. So I would not be surprised when we talk about Redifffund, which actually has you know things like ERP, HRMS, and CRM frameworks along with enterprise emails, we can also offer that to the merchant base who are using payments. We see a lot of cross-selling opportunities, but we can’t forward communicate what we plan to do because we still have to see the adoption of it and the rollout of it. And as and when it becomes possible and when we feel that the product maturity has reached that level, we’ll update you on the same.
Unidentified Participant
Okay, thank you.
Operator
Thank you. The next question comes from Pranav Mashruwala from Dolat Capital. Please go ahead.
Pranav Mashruwala
Hello. Yeah. Am I audible?
Operator
Yes, sir, please go ahead.
Pranav Mashruwala
Yeah. Hi. Thanks for taking my question. One on the net take rates. So your take rate has improved to 11.3 bps, but our credit card mix and contribution from other sources, debit card, and head banking has fallen. So what leads to improvement in take rates?
Vishwas Patel
So, you’re talking about the slide, which is slide 12.
Pranav Mashruwala
Yes.
Vishwas Patel
Where credit card is 44% in Q2 of FY ’25.
Pranav Mashruwala
Right, right, correct.
Vishwas Patel
And Q1 was 46%. And so the question is again, so the total — of course, volume has increased in terms of the total transaction processing volumes. And so across different payment options, we’ve got different take rates. And then we also are able to settle faster with the merchant in many cases, which helps us in terms of the overall margins. So if you look at quarter-over-quarter, it’s slightly improved. It’s 11.2 basis points 11.3 basis points.
Pranav Mashruwala
Right. Yeah. And sir, on our platform businesses, so was there any contribution from Rediff this quarter?
Vishwas Patel
There is no contribution from Rediff in Q2. Rediff will start consolidating from 1st of October of Q3.
Pranav Mashruwala
So maybe just a rough breakup of what constitutes our current platform revenue, I mean, as genetic AI contributions.
Vishwas Patel
Yeah. So it’s basically our frameworks, which we give to large companies. We’ve, of course, talked about Jio being one of our clients, Saudi Telecom being another one of our clients. We’ve got five or seven important clients that potentially give us that revenue. Phronetic AI is now adding up to that revenue, but again, it’s in the build-up phase. So, we’ve signed contracts and fortunately Phronetic will contribute to over $1 million this year. So we believe that we will start seeing a larger impact from Phronetic and other frameworks next year, not this year.
Pranav Mashruwala
Okay. And just last on the data center business. Any timeline as to when that revenue will start going in and that business starts meeting cash-flow costs?
Vishwas Patel
Yeah. I think data centers tied quite a bit of this what we are deploying for Phronetic. And so we think it should be as soon as next year in ’26. So we’ll start building it up. we already have a data center today which is active, which is in GIFT City, but we’ll start opening up in other cities so you can start seeing the revenues from data center in FY ’26.
Pranav Mashruwala
Okay. Yeah. That’s all from my side. Thank you.
Operator
Thank you. [Operator Instructions]. The next question comes from Nishant Gupta from Minerva Global Capital. Please go ahead.
Nishant Gupta
Hello. Sir, thank you for the opportunity. My question is just an extension of the data center point that you were talking about. So what would be the quantum of capex that you would require to set up the small data centers? And what is the expected, I mean, the sales, etc., which you can generate from that?
Vishwas Patel
Basically, these are containerized data centers which means that you know we are not talking about gigawatts we are talking about megawatt so rather than opening up there’s always economies of scale, and most companies and larger companies will invest in gigawatts, but we believe that in order to cover the length and breadth and be able to provide edge compute, we would need to set-up smaller data centers. So the capex will be, like I said, about INR10 crore or INR20 crores per location and this includes all physical container, power equipment, cooling solutions, fire systems, and all the basic networking. And we think that we already have use cases. So we ourselves will be client to that data center for our infra and then we’ll open it up to others as well to utilize it. So we believe that it should be — while there is capex involved, but it should be accretive. You’re looking at an ROI within 12 months to 18 months.
Nishant Gupta
Got it, sir. Fine, sir. Thank you.
Operator
Thank you. The next question comes from Anil Katyal, an Individual Investor. Please go ahead, sir.
Unidentified Participant
Good evening. Thanks for the guidance and posting good results. And I just wanted to know when this ODigMa is going to list.
Vishwas Patel
So as far as the process is concerned I think that we’ve given an update on Slide number 4. So, in other words, we believe that NCLT has approved the composite scheme of arrangement. Shares have been allocated to the respective shareholders and the company has filed an application with the exchanges for the approval of listing and trading and the same is under consideration. So we expect to hear any time from them.
Unidentified Participant
Okay. Thanks a lot.
Operator
Thank you. The next question comes from Pramod, an Individual Investor. Please go ahead.
Unidentified Participant
Hello, sir. So my question on the share performance of the company. Many developments like new business expansion is happening with the company and revenue is increasing every year, but share price performance is stagnant since many quarters with consistent selling coming from insiders. So, can you please explain why Infibeam is not attracting institutional investors like Detos as their contribution in the shareholding is very negligible? So how do you think investors’ confidence can be improved going forward?
Vishwas Patel
See, we’ve — I mean our internal thesis always to focus on the business and that’s what we’ve been doing for the past several quarters and years, if you come to think of it. We believe that we will deserve the investors through execution and not optics. And so as long as we keep on focusing on execution at the right times things should show up. That’s one.
Second is, as we expand and as we build out the company, we believe that you need to work with what you mentioned institutions to be able to allow them to understand the company better. I think fortunately, with more companies getting listed in the digital payment space with PayTM also getting listed recently, while people and shareholders are still understanding what payment ecosystem holds and what it means. We actually work in the same ecosystem. And what we need to do is we need to actually communicate the differentiation of what we are compared to what others are providing. So rather than getting into a cash burn cycle, we’ve always looked at profitable growth and we believe that should continue driving and guiding us as we build it out going forward.
But to answer your question, we believe that as we keep on executing and if we continue doing what we are doing and meeting and giving guidance and meeting expectations. Hopefully, that brings out trust, and that will attract the right investors into us.
Unidentified Speaker
I will just add to that, the communication line with the investors, with the analysts and all have been increasing, have been done well and therefore, I believe that it will be only a matter of time by which the communication and the company’s growth potential, everything is recognized by the market and it’s all up to the rest of the investors as well as the people who are there in this space, investing in this space for them to really recognize the potential of the company and I’m sure that should happen sooner than later.
Unidentified Participant
Okay. Thank you.
Operator
Thank you. The next question comes from Basant Bansal, an Individual Investor. Please go ahead.
Unidentified Participant
Yeah. Thank you for the opportunity. I just have one observation that operating expenses in this quarter has increased by 3% to 4% year-on-year and quarter-on-quarter. So can you elaborate on this?
Sunil Bhagat
Hello?
Unidentified Participant
Yeah.
Sunil Bhagat
Hello. Yeah. So operating expenses incurred as compared to the increase in the revenue from operations. So it is linked with the revenue from operations. If you can see the net revenues, net revenues increased.
Unidentified Participant
No, no. My point is that if I see operating expenses as a percentage to your revenue, in this quarter, it is around 90%, whereas in the previous quarter and last year’s same quarter, it was around 86% to 87%. So there is an increase of around 3% to 4%.
Sunil Bhagat
So the increases might be on account of the increase in the options that the payment.
Unidentified Participant
Which has to impacted the profitability?
Vishal Mehta
There is some impact of payment mix and then there is also some impact in terms of the people that required operating expenses have gone up. We have forward invested in certain areas. And so, for example, Phronetic being just one of them where we’ve invested in artificial intelligence and certain other options. So if you think of it in terms of the overall, it’s essentially the card mix as well as forward investing in certain areas.
Unidentified Participant
And I say that a new norm going forward or it was just a one-off kind of thing.
Vishal Mehta
We’ll keep on investing. It won’t be a one-off. Wherever we find that the opportunity is right, we’ll forward invest for growth. And, just so that, all these investments and expenses they are front-loaded, which means that you will have to make those investments upfront and then you start leaping the rewards and in places where we find that we can match the — and take reduce risk, we’ll do that. But in most cases, when we build out frameworks like and Visual AI and many others, you will have to front-load the cost. And those costs will actually be necessary for our future growth. So we’ll continue investing and making those choices. So to answer your question, it won’t be one-off. There’ll be continued investing every quarter in these futuristic tech frameworks.
Unidentified Participant
And if benefits of those experiences are going to accrue over the period of, say, four years to five years, then can we amortize it over that period instead of charging at one time?
Vishal Mehta
The normal charge to revenue, that’s been our internal philosophy. So we’ll charge to revenue and as and when you know, so like I said, we will expense them out.
Unidentified Participant
No, that is true. I know that it is something that you can also explore to amortize it over the period of certain period to which the benefit will accrue.
Vishal Mehta
Yeah, so we’ll follow the accounting standards and we’ll do the right thing as per the standards as per the standards.
Vishwas Patel
We can examine if that is possible, but we’ll go ahead on a conservative basis as of now.
Unidentified Participant
Okay. Thank you. Yeah. Thank you very much.
Operator
Thank you. Ladies and gentlemen, that was the last question of the day. I now hand the conference over to the management for closing comments.
Vishal Mehta
Thank you all for joining our second quarter half-year earnings call and we look forward to keeping you updated on the new and exciting developments in the company. Thanks all.
Sunil Bhagat
Thank you.
Vishwas Patel
Thank you, everybody.
Operator
[Operator Closing Remarks].