Infibeam Avenues Ltd (NSE: INFIBEAM) Q3 2025 Earnings Call dated Feb. 04, 2025
Corporate Participants:
Vishal Mehta — Chairman and Managing Director and KM
Vishwas Patel — Joint Managing Director and KMP and Executive Director
Sunil Bhagat — Chief Financial Officer
Analysts:
Rajat Gupta — Analyst
Divia Kothari — Analyst
Grishma Shah — Analyst
Ravita — Analyst
Ayan Shah — Analyst
Rahul Jain — Analyst
Satyam Badera — Analyst
Parik Gandhi — Analyst
Ayushi — Investor
Presentation:
Operator
Ladies and gentlemen, good day and welcome to InfiBeam Avenues Limited Q3 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. Should you need assistance during the conference call, please signal an operator by pressing the star then zero on your touchstone phone. Please note that this conference is being recorded. I now hand the conference over to Rajit Gupta from Advisors. Thank you, and over to you.
Rajat Gupta — Analyst
Yeah. Thank you, Steve. Good evening, everyone, and welcome to Avenues Limited Earnings call to discuss the Q3 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, Chief Financial Officer. Also joining us on the call today is Mr B. Ravi, who is advising 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 risks 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.
Vishal Mehta — Chairman and Managing Director and KM
Thank you. Thank you, Rajat. Good afternoon, everyone, and welcome to Avenues Limited Q3 FY ’25 earnings call. It is really a pleasure to connect with all of you and share our financial performance, key achievements and outlook for the future., I’m pleased to report that the 3rd-quarter of FY ’25 has been a very strong quarter, reflecting our ability to capitalize on industry trends, deepen our market presence and drive sustainable growth. Our strategic focus on digital payments, AI-driven solutions and expansion into new markets continues to yield significant results for us. We are in an operating environment where digital transactions, AI and fintech disruptions are redefining the way businesses and consumers interact. At leaders just don’t adapt to these changes. We anticipate them innovate ahead of the curve and drive towards the results. Thank you. Let’s begin with the key numbers for the quarter. I’m delighted to share that we have delivered an outstanding performance in 3rd-quarter of FY ’25, achieving an 18% year-over-year growth in gross revenue. This reflects a very strong transaction volume and an increased adoption of our payment solutions. We received — we achieved a 28% year-over-year increase in net revenues and a 15% year-over-year rise in EBITDA and a 22% growth in PAT. This kind of reinforces our commitment to profitability and sustainable expansion as we demonstrate operational efficiencies and improved margins. This quarter marked a significant milestone in our strategic evolution as we moved beyond the B2B payments and deepened our presence in the consumer payments and financial services space.
Our acquisition of a controlling stake in Rediff has provided us with a powerful platform to accelerate this transition. However, with over 65 million monthly visitors, has given us direct access to a vast consumer base, opening new opportunities to cross-sell and scale financial products. Leveraging this, we have applied to NPCI for a TPAP license under the brand. And upon approval, we will be able to offer UPI services to millions of users, bringing us into the heart of India’s booming digital payment ecosystem. Is a pivot for us to get into consumer payments. If we layer financial services on-top of Red Pay, users may naturally want to adapt. Our vision is to provide seamless access to credit, wealth management, insurance and invest in solutions all under a single digital ecosystem for consumers. Additionally, our Bill payment operating unit license allows us to integrate bill payments with pay, ensuring a steady revenue stream from every paid or mobile recharged made through the platform. With, the cost of acquiring customers can be significantly lowered as we can now monetize through multiple financial services from bill payments to insurance and cross-selling. Beyond payments, we are also building, an enterprise software suite designed for businesses and merchants. This all-in-one platform will be able to offer web-based ERP, CRM and HRMS solutions, integrating seamlessly with CC Avenue merchants to drive operational efficiencies and digital transformation. With over 10 million clients already using our digital payments and enterprise software platforms, our strategic expansion into consumer finance, UPI payments and enterprise solution is a natural progression. And are key pillars of this journey and setting the stage for a scalable high-growth future. Further, we anticipate contributing to 2% to 4% of our revenue with the potential to grow to 10% in coming years. Building on our success, I’m excited to outline the future roadmap of Fronetic AI or Neurominds, which is a legal entity that we have set-up where our focus will remain on pioneering innovation and developing cutting-edge technology. We see AI as a game-changer in transforming businesses and enhancing user experience. Our dedicated AI business under a new subsidiary will advance multiple AI-driven innovations that will contribute to 5% to 10% of our net revenue within the coming two to three years. Just to give you an update on some of our key AI developments, we have launched AI facility Manager solutions, which is designed for sectors like healthcare and retail gas distributions.
These AI models optimize real-time monitoring, predictive maintenance and operational efficiencies. We built agent AI capabilities where we are building AI-powered digital assistance capable of handling software tools, automating tasks and improving enterprise productivity. New human computer interfaces, which is upcoming trend in video integrated AI that will redefine digital interactions, enable more immersive real-time engagement across customer service and many of the applications in fintech. And the same AI application can also be used in sports, where we are leveraging AI for sports analytics, AI-driven coaching and empiring solutions, unlocking new possibilities in performance tracking and enhancement. To support this AI expansion and broader digital transformation, we are also making a significant commitment to investing in data center infrastructure. As India’s digital transformation accelerates, data storage and processing are becoming critical enablers of AI, cloud services and fintech innovations. Under our Infine Quantum Edge brand, we are establishing a network of localized small-scale data centers starting with our first operational 2 megawatt datacenter facility. And in the medium-term, we’ll plan to scale it to 10 megawatt with a long-term vision of reaching higher numbers. Unlike the large multi-gigawatt data centers pursued by global tech giants, our approach is to deploy multiple 1 to 2 megawatt data facilities, data center facilities across India, ensuring proximity to-end users and compliance with India’s data localization mandates. This decentralized model is essential for mobile edge compute and AI processing, driving improvements in real-time data analytics and user experiences. It is also an enabler in boost fintech and e-commerce applications by reducing latency in digital payments and online transactions. Furthermore, it supports regulatory compliance with Digital Personal Data Protection Act, which requires localized data storage. By establishing Smaller data centers, we can meet the growing demand in Tier-2, Tier-3 cities where digital adoption is rapidly increasing. This initiative also strengthens India’s transition towards a cashless economy while providing localized infrastructure to support the next phase of digital growth., with India projected to become Asia’s third-largest cloud market reaching $24.2 billion by 2028, this expansion positions us at the forefront of high-growth sector. Our investment strategy with a capex of INR20 crores to INR50 crores per megawatt ensures cost-efficiency, operational flexibility and scalable growth, enabling us to adapt to the evolving market demands. With the convergence of FinTech, AI and cloud, we are building a foundation for a secure high-performance digital ecosystem. This enables innovation while ensuring regulatory compliance and seamless scalability. Our approach is centered around fostering long-term value for capitalizing on the growth and emerging trends and technologies. With strategic investments in areas like and AI, we are going to enhance our operational efficiency and expand our footprint in digital payments and fintech. This proactive strategy allows us to stay ahead of the market dynamics, ensure we drive innovation and deliver meaningful returns to our shareholders. Thank you. And now I’ll hand over the call to Vishwas. Vishwas, all yours.
Vishwas Patel — Joint Managing Director and KMP and Executive Director
Thank you. Thanks, Vishal, and good afternoon to everyone on the call. In the 3rd-quarter, we have demonstrated unwavering resilience, innovation and market leaderships. Despite upheavals in the competitive landscape, Avenues through the strength of its business model continue to prefer — perform exceedingly well in its payment space. The Indian digital payment sector continues to experience robust growth with retail digital payments increasing approximately 100 fold over the last 12 years from 162 crore transactions in the financial year 2012 2013 to over 16,416 crore transactions in ’23-’24. In 2025, the industry is projected to reach an overall transaction volume of over $1.89 billion, trillion with an annual growth rate of over 16% from 2025 to 2029, resulting in a projected total amount of USB $3.46 trillion by 2029. This favorable macro-environment reinforces our strategic position as Avenues is poised to capitalize on these opportunities with agility. During this quarter, we reached significant milestones in our journey towards realized — payment solutions. We are pleased to inform that Avenues has received approval from key card networks for the state-of-the-art offline payment pause devices. This approval enables us to roll-out the CC Avenue Soundbox Max, a tap to pay pause device designed with simplicity, speed, security across retailers and brands and with the ability to accept all kinds of payment options, including credit cards, debit cards and of course, UPI with SoundBox. As the digital — as the adoption of digital payments continues to rise, both online and offline, our payment solution addresses the growing demand for faster, more efficient transactions in retail environments. The sound — CCIVE Soundbox Max pause device offers contactless payments for quick and secure transactions, even in areas with limited connectivity. It offers reliability for merchants with its intuitive interface speeds up the checkout processes, reduces wait times and improves overall customer experience. Our device is equipped with a robust security features that meet global standards to protect customer data and transaction details, as dynamic QR code generation for real-time payment processing. Additionally, it comes with the integrated soundbox and multilingual that provides instant audio confirmation for successful transactions, offering real-time updates and enhancing operational efficiency. This approval is a significant step forward for us as we continue to redefine payment ecosystem by providing innovative, secure solutions, we are empowering retailers and brands with the tools to elevate customer experience and boost operational efficiency. We have worked closely with thousands of merchants over the past few months-to ensure smooth integration and training, ensuring a seamless transition as we deploy our CC Avenue Soundbox Mex devices across a wide network of retail stores and partner brands. Another significant development this quarter is the successful integration of the CC Avenue Payment Gateway, the Basin Catholic Cooperative Bank. This partnership brings BCCB’s Internet banking facility into the CC Avenue payment network, offering millions of merchants on our platform, the opportunity to use this valuable payment option driving substantial business growth. The integration of BCCB is net banking mode allows the Avas customer-base to process every payment via debit card and net banking while shopping on hundreds — thousands of CC Avenue powered website.
This addition further strengthens our position in the market as the largest direct debit engine as CC Avenue currently processes transactions of more than 60 leading banks across the India. Thank you. We are excited about the opportunities this collaboration presents as it will provide lacks of CCMU merchants with direct access to BCCV’s rapidly-growing customer-base, offering them an even greater potential for growth and success. On the operational front, during Q3, we onboarded approximately 1.8 lakh new merchants, expanding our network across industries and geographies, that is 2,000 merchants a day, which is fully KYC. This growth reflects our commitment to providing accessible and efficient payment solutions. Our net payment take rate increased to 11.1 basis-points, enhancing our profitability this quarter.
Our Bill Avenue platform for the Bharat under the Bharat Bill payment systems processed a record INR7.7 crore transactions of a total valuing around INR21,400 crores during the nine-month period of FY ’25, highlighting its relevance in the overall digital payment sector. Through Resevenue, our hospitality-specific platform, we enabled our hotel clients to book over 5.78 lakh room nights in 90 days, driving a transaction volume suppressing INR528 crores. To further support the hospitality sector, we are offering advanced product solutions by developing AI-powered revenue management solutions. These tools are designed to help our hotels optimize their revenue stream and improve operational efficiency as well as the average room rate and occupancy. This initiative reflects our ongoing commitment to provide hotelliers with innovative technology-driven solutions to stay ahead in a competitive market., our focus externs — extends beyond immediate profitability. We are committed to ensuring long-term success of NPV Avenues.
By strengthening our core capabilities, we are strategically positioned to harness the vast opportunities with India’s rapid growing digital economy. The path ahead is one of sustainable growth and innovation and it’s truly motivating to see our team’s unwavering commitment to driving this vision forward. And also as part of our ongoing efforts to enhance customer experience and expand our global reach, we have introduced multiple new payment options in the UAE market. We have successfully enabled Tamara BNPL that is Buy Now Pay later and signed an agreement with BNPL set to go-live soon. These two are the biggest buy now pay later the GCC market. Additionally, we also launched Google Pay offering a faster and more secure checkout experience for our UAE merchants. These initiatives strengthened the payment ecosystem, driving higher conversion rates and improving accessibly — accessibility for a broader customer-base. This quarter, we also made significant strides in the GCC markets and merchant acquisitions, onboarding several renowned names across key sectors. The government and free zones of Sarja Media City Free Zone and Medan Free Zone, automotive and real-estate in Gargas Motors and Real Estate, education and lifestyle in Embrage Driving Institute Sarja Gulf and Club. Property developments, union properties in addition to our earlier property companies that we have like MR, the Mac, already on our platform. Furthermore, our KSA market expansion continues to grow momentum with payment processing now live in Saudi Arabia, Kingdom of Saudi Arabia for VFS Saudi mission, which has 14 new projects under it, the Nissan Automobiles Company, the Infinity Motor Company in Saudi Arabia. So these strategic initiatives reinforce our market leadership and position us for sustained growth in the coming quarters. With that, I’ll now hand it over to you to Mr Sunil, our CFO to provide insights into the quarter’s financial performance. Sunil by over to you. Thank you.
Sunil Bhagat — Chief Financial Officer
Thank you, Vishwat, sir. Good evening, everyone. In the 3rd-quarter of FY ’25, we achieved significant progress in our financial performance, driven by a disciplined approach to execution and a sharp focus on the profitability. For quarter three, our gross revenue saw an impressive growth, increasing from INR907 crores in-quarter three FY ’24 to INR1,070 crores in-quarter three FY ’25. This is reflecting a strong upward trajectory. Our net revenue also showed a notable year-over-year increase of 28%, rising from INR109 crores to INR140 crores. Our net take rate surpassed this expectations, rising from 8.4 basis-points in-quarter three FY ’24 to 11.1 basis-points in-quarter three FY ’25, marking a 32% improvement. This positive trend in-take rate has been a key driver behind the growth in our net revenue, EBITDA and PAT. Our EBITDA saw a robust — robust growth of 15%, reaching INR778 crore in-quarter three FY ’25, up from INR68 crores in the same-period last year, with an EBITDA margin of 56% as a percentage of net revenue.
Our PAT stood at INR54 crores, reflecting a year-over-year growth of 22%, further validating the effectiveness of our profitability-focused initiatives. Looking ahead, we remain committed to maintaining our focus on sustainable profitable growth and creating long-term value for our stakeholders. With this, I would like to hand it over the call to moderator to open the floor for question-and-answers. Thank you.
Questions and Answers:
Operator
Thank you very much. We will now begin the question-and-answer session. Anyone who wishes to ask a question may press star N1 on their touchstone telephone. If you wish to withdraw yourself from the question queue, you may press star N2. Participants are requested to use handset while asking a question. Ladies and gentlemen, we will wait for a moment while the question queue assembles. The first question is from the line of Divia Kothari from Ventura Securities. Please go-ahead.
Divia Kothari
So given the large audience, you have due to, but it is not necessarily the tech-savvy audience you’ll have. But how will you all convert that audience into your financial services customers?
Vishal Mehta
Yes. If I understand the question, the question is about the audience and the relevance of the audience to make financial transactions. Yeah, the good thing is that we have a lot of daily active unique users coming to in millions. And if you look at the app, there are millions of downloads as of today as well. So a lot of customers are using mail app. And I think there is a mechanism to build-out the Super app on the same app. And so the approach would potentially be that we would be migrating customers to a super app that also hand-out payments and other financial services. So that’s as far as being able to make it seamless for the customer who is coming to on a daily basis to transact. And while I think we are — we are awaiting certain licenses that are required for the same, given that it becomes a financial services transaction, the good thing is that even for enterprise emails and regular emails, it’s very important that safety security comes first. So this is highly secured application that enables people to actually communicate with each other and so I think while maintaining that level of standard and safety, we will be adding many more layers to be able to enable the same consumer to do financial transaction. Yeah. And so I think the good thing about the whole activity is that we’ll experiment a little bit. But the thing is that we have a user coming in every day. And we don’t need to actually burn the kind of capital that maybe you would have to get the consumer back onto the application because it’s a communication app, right? So whatever we have built-out will be around the pillars of mails and being able to allow the same consumer to transact on multiple payment, you know, financial services, payments and financial services. And that would be our goal.
Divia Kothari
So I had one more question. So the growing demand for buy now pay later solution in Saudi Arabia. So are you exploring to like deeper integrate — like integrate with large players or do you like plan on building something of your own?
Vishwas Patel
So here. So look, CCAvenue as a payment platform is neutral to any kind of payment options that are there in the market, right? So we integrate not only all the credit cards that are there or debit cards or the local payment options in GCC like MADA and other things, but any kind of buy now, pay later options which are very prevalent in those markets, we do integrate as a payment options. Our whole model is to give all possible payment options to our merchants so that they can collect the money and we make money on every transaction that we process, be it through credit, debit or buy now pay later, there is a percentage of that MDR that comes to us that we make our money on. So that’s the whole attitude is to be a very neutral and integrate all kind of payment options that are there in the market.
Divia Kothari
Okay. Thank you so much, sir. No more questions from my side. Thank you.
Operator
The next question is from the line of Grishma Shah from Envision Capital. Please go-ahead.
Grishma Shah
Good evening to the management team and thanks for taking my question. You know I have a couple of questions. Wanted to understand the implications of the government reducing the UPI incentives for the payment ecosystem. So if you could share your thoughts on the same.
Vishal Mehta
Are you alluding to the budget announcements of opening this financial centers that government is trying to promote or I didn’t get the context of.
Grishma Shah
The UK incentives which is budgeted in the last — this latest budget, which has come down from INR2,000 crores to INR437 crores for this financial year, FY ’23.
Vishal Mehta
So right now from our perspective as far as UPI, we are still offering at zero MDR and it’s a very — this thing. So we have not budgeted any income from UPI for the last two calendar years, right? And as far as the budgeting of the government is concerned, what the budget and the budget as a — and what they finally rolled-out is a totally different figure is from my experience from last year when the budgeted was something close to around, I think INR1,200 crores, but the final went well over INR2,500 crores. That was done in March of 2024 to the ecosystem players.
Grishma Shah
Okay. And what’s the timeline that you have in your mind while you are rolling out the in a way of apply for the license. So once you get it, how do you how quickly will you be able to roll this out
Vishwas Patel
See, I think you know from a implementation perspective we have to follow the regulatory standards to ensure that we get the approval. Sometimes the approval is quicker, sometimes it takes a few weeks. But we expect that we’d be able to roll-out this quarter.
Grishma Shah
Okay. And what are your thoughts on the take rate, given that the competition has, you know, in general increase in the digital payment industry. So your take rates have improved significantly. How do you see this going ahead? And I believe it is only because of the merchant transactions. So if you could throw some light on the GMV mix as well.
Vishal Mehta
So transactions are resulted. See, basically the way we see this is there are a lot of downward pressures because of competition as you just mentioned, because it’s a very competitive industry. And so there’ll be pressures on margins and no downward pressures in margins on the other hand, there are many initiatives that we have undertaken that actually help us in terms of expanding the margins as well and that’s how we’ve actually achieved from a single-digit take rate to a double-digit take rate So things like being able to work on express settlement which enables us to get better yields which is rather than doing a T +2 settlement, we try to settle the same day. Second is we’ve introduced which is offline point-of-sale device. So the MDRs and the rates that you get-in the offline point-of-sale is rates are much better because there is card which is present as opposed to online transactions where card is not closer present. So while it is a very new initiative from us, but we have integrated our entire capabilities of as well as the whole infrastructure and the firmware that enables us to actually drive such transactions. And this is a — this is area that we have not before in the past. So we are actually already deploying tens of thousands of devices in the market in terms of being able to drive adoption in the offline business, because as of now, most of the transactions that we do, almost all of the transactions are online transactions in India. So I think that is another one. And the third thing is that we are adding a lot of merchant base. You see small merchants, right? Because I think for the long — the opportunities in the long-tail. So if we actually pick-up, if you look at the top-10 market processing transactions in the country then you may you may see Amazon or Flip they don’t use CC Avenue. Even many of the the quick commerce players. So what we need to do is go after the long-tail, which has been our underlying thesis. So when we not ignore the large, medium and the large merchants, we think that going across and playing that field will potentially give us much better results?
Grishma Shah
I’m just shifting markets from India to UAE. Curious to know-how do the economics for this VMCL and introducing GP work there and I mean, I’m understanding that we have a payment network solution, but we don’t have a consumer and that’s why you are supporting. So if you could help me understand this a little better.
Vishwas Patel
Okay, I’ll take that, Mr So basically historically the UAE has always given us more than double the take rate that we enjoy here in India. We were first movers there and we have significant market-share in terms of all the big merchants to small merchants there, right? And the market is limited to around, I would say, a crore people at Max at NUAE, right. So providing solutions and platforms and building that stickiness is a model more so. Doing consumer wallets and other things in a small market does not make economic sense for us, right, and other things. So our focus has always been payments and platforms. So we are continuously introducing platforms in front of payments so that there is more stickiness from the markets when they give a — when they can go-live very easily by utilizing our platforms with built-in payments. It remains stickiness for us because any new competitor giving a payment cannot enter and it gives us enhanced margins over the period because you charge for both the platforms and the payments. So once the teams and everything are there. So that’s why if you see in the UAE market, like all the 27 Hiltons and UE are using it or maintenance collection of all properties of the Mac,,, Binghati, all those bigger are there with us and those are recurring and good margins. So that’s the whole model for a retail consumer play there, for us, it does not make sense.
Grishma Shah
Okay. Thank you for answering my question. Good luck.Yeah. Before we take the next question, we would like to remind participants that you may press star and one to ask a question. The next question is from the line of Ravita from Seven Island PMS. Please go-ahead.
Ravita
Hello, sir. Am I audible? Yes, sure. Sir, my question is, you have recently launched a payment processing for VFS Missan and CDT in Saudi Arabia, right? So I wanted to ask what is the revenue potential of this partnership and do you have a pipeline for expanding to other enterprise clients as well?
Vishal Mehta
So thanks for your question. Saudi Arabia is a very key market for growth over the next half a quarter — half a decade for the next six years or five years or so because the tremendous changes in changes happening there right now. So with a population of more than INR3.4 crores there, right, and one of the wealthiest market with good smartphone and internet penetration, additional payments is waiting to happen. So hence, we’ve taken steps, we have taken the license, the PSTP and license there from Sharma, which is a Saudi Arabian authority and we’ve launched VFS and these are some of the few merchants that are there, the entire Saudi mission for VFS that includes their NEOM project and other projects. So payment processing for all those projects will go through the CC Avenue.say, that is a Saudi Arabian instance that we have locally deployed there with data localization within that jurisdiction because we are changing rules there. So we are looking aggressively and investing in Saudi for the next listing to capture a significant sake of their digital payments market. So Saudi, yes, that’s the focus. UAE we have already done. We are also present in Oman with three of the top Omani banks like, Bank, Dofar, Bank Suhar are already utilizing our systems as a TSP. And I think with that, India and GCC markets are pretty much covered by us. And post that once we have successfully finished off all these then we will think of more expansions in Australia and US that you already announced.
Ravita
Sir, could you give the number of the revenue-share from this market?
Vishal Mehta
Right now, Saudi has just started. So it’s not accounted in this current quarter. But going-forward, it should significantly contribute.
Ravita
Any numbers — guidance?
Vishwas Patel
Guidance I can say,,
Vishal Mehta
I think we’ve already communicated, we think that international in the next two years should account for 20% to 25% of the overall revenues. We are focused on international growth and we see a lot of potential there.
Ravita
Okay. Got it. And sir, who are the other players in the pipeline or the other clients in the pipeline, if there are any
Vishal Mehta
We don’t specifically talk about clients. I think we do have a healthy pipeline. If you look at, you know, even in India, we’ve added more than 100,000 merchants in the last quarter. So I think if you look at that, it’s more than you know what perhaps the whole market in Middle-East would hold. Having said that, I think what we believe in is that as far as the clients are concerned, we think we should go after the longer-tail and not just — I mean, of course, we would love to have the very large clients who process a lot of volume, but we typically realize that these take rates are somewhat you know, highly competitive and it’s very hard to be able to negotiate that hard. So we think that we are going to go after the tail and find out the right opportunities. There are certain payment options that we would like to work with as far as large merchants are concerned and those opportunities are opening up for us. So we believe that we can — we don’t believe in replacing, but we may actually be more of a addition to the existing portfolio of a large merchant who is utilizing other payment options or payment gateways?
Ravita
Got it. One more question I have. So beyond UPI, what are the most promising monetization levels for Ready Spay and are you targeting lending embedded finance or wealth management as your primary revenue driver?
Vishal Mehta
So the last question is, yes, we are targeting other revenue drivers as well. You see, the main revenue driver for Redis right now is mails and ad. So in other words, the main revenue drivers for Redis today are emails and ads. So in other words, you have you know, 10s of millions of users coming in. It’s one of the top 1,000 sites in the world in terms of traffic and top 100 site in India in terms of traffic. So I think from a traffic perspective, you know, ads are obviously a monetization opportunity. And then emails Because Reddit provides enterprise emails to large companies. So much like you would use Google and Outlook and others, enterprise emails are also a large revenue driver for the company. So — and on the consumer side, you know offers free email and there are millions of daily active free email users coming to email app. So which is where we talked about upgrading the app to enable the user to also make payments. So we think that from a revenue driver perspective, payments is going to be important. We will be able to offer other bill payment solutions and others also to users of Reddit and then we would like to offer in cross-sell other financial services we have a lot of information about the profiling of the customer. So in other words based on you know so much more than a decade of data, we think that there’s a lot of interesting opportunities to be able to offer users what they really want. So I think we will have to go through a little bit of experimentation there, but pretty certain that we’ll be able to you know, offer the right kind of solutioning and offer the opportunities to cross the specific products. So yes, we are getting into, you know, offering insurance, lending and other things to consumers in.
Ravita
Okay. Thank you so much, sir. That’s all from my side.
Operator
Thank you. The next question is from the line of Ayan Shah from Asha; Co. Please go-ahead.
Ayan Shah
Yeah. Good evening and congratulations on the very decent set of numbers. The first question is, I have two questions. Like every fintech and enterprise SaaS player is integrating AI nowadays. Now what specific capabilities in prunetic AI that will give a sustainable competitive advantage? And can you quantify the AI-driven revenue opportunities over next three years?
Vishwas Patel
Sure. So basically, there’s a lot of, of course, information out there about what AI will do and the capabilities of disruption that are out there with even the recent launch of Deep and many others. But you see, what we are focused as a company on is to build a specific vertical and an opportunity within AI which is called video LLS which is a video large language model. And video large language models have a lot of opportunity because it’s visual and when you do visual AI and combine it with is specifically doing tasks that humans do, it may be as simple a task as being able to look at security footage and being able to do exactly what a security individual would be ending up doing and paying a second opinion to them or it may be to be able to create an agent that does customer service or create an agent that does even search optimization, all of that, you know, perhaps work-in this framework. So we already created a few agents and what that typically does is it automates the productivity. So generally when you want to run a campaign for a company, they have to plan for the inbound, so they have to hire people, they have to train them and then they have to perhaps look at running a campaign. Now with this VLM and AI, you can actually automate quite a bit. So what would take typically three months before you launch a campaign, you can do it in three days. So the number of people who can do experiments with these things and being able to reduce the lead-time that it takes to be prepared for an event that changes everything and so we’ve already started giving out our VLLMs with AI to specific large multinational companies internationally. You know currently it’s a very small portion of our revenues and we think the potential is very large there, right? And so we expect that as far as the net revenue is concerned, depending upon — and see this evolving field, a very disruptive field. So but I think that it’s a — it has a lot of future to be able to ensure that we can monetize on this. And second is that our position of creating smaller data centers actually gels very well with the low-resource models much like what has increased, the low-resource models that potentially will get established. So I think with whatever we are doing in terms of the revenue opportunity in the next three years, we think — we personally think data center and AI will go hand-in-hand. Whatever we are going to do in data center and whatever we will do in terms of advancements of AI, AI will be the biggest consumer of our data centers. And we expect that it should reach a high single-digit percentage of the revenue in the next three years. I’m talking about the net revenue of ours ourself.
Ayan Shah
Okay. That’s decent. And my another question is like — and I think you have given some answer to that, but like other media platforms as couple with the monetization, which you are now transferring relief into this fintech platform. Now what gives you confidence that this transaction transition will succeed where others have failed? And how do you plan to drive consumer engagement beyond just the UPI payments?
Vishwas Patel
I think it’s a very competitive world out here and a lot competitive in India as far as UPI is concerned, you know most of the stacks that you read, the top three players, I mean, if you think of Google and, they control huge portions of the market and then you will see Paytm as a third player in this. Now see two things that have happened. First is that UPI is the invention of the India stack. But you know, a lot of multinational companies, they have been able to take advantage of the stack. So rightfully the government has announced, you know, and NPC has also announced that we want to limit the percentage that one particular company would perhaps you know, take-in terms of market segment share and that number was 30%, it has been extended now by a year. But there is always going to be a regulatory requirement of going into lower and lower thresholds for one player to be able to dominate this industry. And so I feel that there will be a lot more opportunities for other players to participate. That’s one. And the second is that you know in terms of certain areas of data localization, I think with whatever is happening in macroeconomics, there is going to be more-and-more requirements for localization, which perhaps many other companies may also be able to achieve. And then the third thing is that I think we need to build-out an ecosystem. We already have an ecosystem of PC Avenue merchants with us and so given the large ecosystem, we believe that there’ll be many, many more opportunities that we will hold in terms of ecosystem that maybe others do not have. But as far as consumer payments are concerned, it is a very competitive space and UPI zero MDR anyway. So we believe that we just need to get more consumer engagement. And given that we already have so many merchants, if we integrate into all CC Avenue implementation across all the merchants online, in a single stroke will get more than a few million merchants. So we believe that there will be opportunities. Today UPI is a very small single-digit percentage of the transactions on CC Avenue. But for estate, it may be relevant. So I think we need to play in the ecosystem that we have established and build-out competitive advantages that enable us to do things that others define difficult to do
Ayan Shah
Okay. Thank you very much and good luck to you, sir. Thank you.
Operator
The next question is from the line of Rahul Jain from Dolat Capital. Please go-ahead
Rahul Jain
Is my line audible? Yes, you are. Yeah. So just two questions from my side. Firstly, on the TPAP timeline is there a way to look into it, how Long typically one should be taking to get into that zone or you think it is very difficult to draw a timeline on that? And secondly, on the data center business that you spoke about, it would be great if you could kind of understand that how the unit economics would work-in terms of what is the investment that would go, how many typical or typical number of clients such a centers will be able to post how the commercialization would work? How the two, three, four-year ROCE may look like for such a business? So I think that should be great. Thank you.
Vishwas Patel
Thank you., can you repeat the first part of the question?
Rahul Jain
Yeah. I think we were saying that we wanted to apply for CPAP license. Yeah. So any timeline that we could envisage on that.
Rajat Gupta
Vishal — Vishwat, do you want to take the first question? I’ll take the second one..
Vishwas Patel
Okay, sure. So the TPEP license is already applied for the processes with NPCI and RBI. From what we understand, one part is clear that the part of formality approval should come maybe in the next three or four weeks. Post that, anyway, we already Vishal already said that we will be launching Pay by the end of this quarter. So all works is going on. And that is it,., on the second part of the question.
Vishal Mehta
So Rahul, on the second question, you wanted to understand the unit economics and how data center business we expect it to work. See, we already have a 2 megawatt data center today. And generally speaking, you can assume that there will be about close to about 100 racks you know 100 to 200 rack capacity and you know the capex is this is commoditized data center business is somewhat commoditized. So in other words you know you can think of it in terms of a completely built-out data center that you can actually establish and launch in less than a few months. So I think that building out data center is not as much of a challenge this IT and non-IT part in it and many people and many companies have come up with data center in a boxes. And so I think that some ways, that is also somewhat an established principle. But in you know, rack can be anywhere from a 3 KV to a 33 KV. It doesn’t matter. The point is that what we establish is you know inference models you and rather than getting it into a structure, you think about it in terms of logistics. So if you’re able to solve last mile logistics, then you would need to use the mothership to actually transport packets from one location to another. But similarly, our thesis is that we will want to establish multiple small data centers and that small data centers will somewhat on the larger gigawatt data centers if someone should want to use larger capacities. So our perspective in this is that if we are able to establish multiple small data centers, then there is an opportunity. The good thing about this is that with LLMs, video LLMs and AI driven solutions that we are working on, that will be clients who would want to have that data processed and should they not want to invest in such hardware because fundamentally, you know many of these models, they’re getting low-resource. They would want to have reduced latency and you want to do it on real-time basis. So you would want to have an install capacity closest to you. And there’ll be certain applications that would definitely require it more than others. So historically, such opportunities were used for — by caching networks. In other words, things like companies like Akamai and others and in certain cases even telcos. So rather than just going and setting up data centers which are nothing else but co-location and selling their steel, we are interested in clients who will want to utilize our framework. And so and while we are not able to be able to build-out capacity, so I think the forward investment we make is not a huge one and the ROI on such opportunities is less than 24 months. So I think we can track our investments, we can drive adoption and we’ll be able to — we’ll be able to maintain the investment and be able to come out of it very quickly. So my expectation is that in terms of capacity, client can use and given the number of installs and number of opportunities that are coming up out there, you know, my expectation is that we may want to first test this network and thesis, make sure that it works and that’s why we are going after the 10 megawatt capacity and then be able to, but like I said, the ROA is actually less than 24 months as per our calculations because we are not just doing colo selling based deals, we are actually selling our framework, our AI framework and many other frameworks around the. And we’ll provide it to clients and we already have a few clients lined-up. Up, we want to utilize this capacity. So in somewhere we already have the demand before we actually establish a if that makes sense to you.
Rahul Jain
Right, right. So just to reinsure, when you said two and ROI, we basically you’re saying, key, the profits on a two-year basis on a fully blended services basis could pay-back for the capex that is involved. That is what you’re trying to do.
Vishwas Patel
That is true.
Rahul Jain
Right. And since you’re saying that there is — you know we would kind of a you know test and move forward. So is there a dedicated capex that we have in our mind for FY ’26, CY ’25 or it would evolve in coming period.
Vishal Mehta
We have — and I’ll be able to share more with you next quarter. We already have budgeted for next year. There is no additional capex for this year, but for next year, we will have budgeted capex for this and currently it’s evolving. So definitely will come back to you on this.
Rahul Jain
Sure. Thank you and best of luck for the time yeah hello.
Operator
The next question is from the line of Satyam from Profitmart Securities. Please go-ahead.
Satyam Badera
Hello, am I audible? Hello. Yes, you go-ahead. Yes, you are. Congratulations on a good set of numbers. I have couple of questions. The EBITDA margins have shown some compression. What specific cost factor are weighing on the margins? And how do you plan to mitigate these pressures?
Rajat Gupta
I think there’s a little bit of customer acquisition here that is in-place. We want to go after the larger breadth of customers and we are also forward investing in our AI initiatives. And so starting maybe this quarter onwards, we’ve established a separate subsidiary company for our AI efforts and we’d be able to — we’ll be able to share. Second is that we’ve also merged for the first time in our financials, while it doesn’t have a huge impact, the impact is that in terms of revenues, it’s less than 1%, but it does have, you know, certain expenses. And so you would see that we would have added bandwidth costs and certain other expenses. You’re talking about petabytes of data that come in on a daily basis and there’s so many pre-emale users. So I think in terms of overall, I think data is oil for us. I think it’s fairly large. So maybe some of that has contributed a little bit to our EBITDA margins
Satyam Badera
Okay, okay. And my other question is how is the adoption of CCI Avenue soundbox focusing? And how does it compare to the other competitors like Paytm and Payn Labs? Also with 8% market-share in India’s digital payment, what specific strategies are we placed to expand share, especially in Pay, pay you and?
Vishwas Patel
Okay, I’ll take that. So the instrument that we are offering right now is quite different from the normal just either a static QR that is published on a sticker and kept or a simple QR with a sound box that is there in the market. Our box is in the same price range, but it can also do credit cards, debit Cards, rupee debit cards, EMI and lot of other things along with the static QR, it also has dynamic QR that can be generated, specifically where there is a language issue. So say if someone has to pay INR176 rupees and 45 price up, right and instead of telling him in the local language to do it, here you can generate a dynamic QR by punching in through the buttons and a QR of that amount is generated. So that also helps a lot and it also works with a lot of ERP systems where a specific bill amount and that specific QR is generated. So that’s the big differentiator that we have that we are trying to upgrade the market with brand-new, newer devices. The additional thing also being that our thing is the omnichannel app. So the CC Avenue Mars app that the merchants will use will not only show transactions and reconciliation and reports of their offline shop transactions, but it will also include their online website transactions, their in-app transactions on Android, iOS, transactions coming in through there, transactions coming through SNIP, that is the social network in-stream payments. So any transactions done on Insta or Facebook or Twitter is also displayed there in a different format. So on-top of it, many other features. So it’s India’s truly and most unique omnichannel app with all the kinds of features, bells and whistles, where you have one single app to track transactions across multiple platforms where you are getting your transactions. It also has, which is like India’s one and only where within the app also if you don’t have the post terminal somewhere and you want to collect it, you can just tap the credit card, debit card on your phone and accept the payments. So it’s a unique tool. It’s like the world’s most advanced — advanced omnichannel app that we are launching. And the uptick has been brilliant, like we have seen like when we are onboarding 1 lakh 80,000 merchant plus fully in a span of 90 days, right? So the long-tail and everything is happening. So those will continue to grow both because a merchant is getting all-in-one solution through this. There’s almost IBR processing and other things also. So all those things merge into this, becomes a — becomes a very compelling solution for the merchants to take it. So that’s how we are deploying and it’s growing fast. We hope to expedite from 2,000 merchants a day-to even more. So with our aggressive marketing in the coming quarter.
Satyam Badera
Okay. That’s, question. Thank you. Thank you.
Operator
The next question is from the line of Parik Gandhi from Research Lab. Please go-ahead.
Parik Gandhi
Hello. Good evening, sir. Sir, just a couple of questions. First was that, where are we on the expansion front with respect to USA and Australia? And how do we see the growth there since in the initial phase, the margins will be very sticky. So where are we with respect to that
Vishwas Patel
So as I earlier said, right, right now, the focus since offline has opened up a huge opportunity here in India, we have yet to fully exploit it. So all focus efforts are here. Second thing, we have also opened up the Saudi Arabia market, right? So there we are just starting off with some of the key merchants already going-live, lots of airlines and lot of other merchants and the pipeline. And Saudi Arabia also from location perspective, it’s just not than we are done like we have to go to Alco, we have to go to Jetta and many other places interior to really capture the market. So it’s no use trying to unnecessarily expand the market till we have truly intense and monetize on the X-ray — on the current opportunities that we have already opened up. So as we said, the CC Avenue bit, offline bit in India, in UAE, in KSA, the TSP agreements in Oman, plus also our bill payment platform, our hospitality platform as well as well as well as our revenue platform plus our AI and lot of other things, I think we have a hands full and we typically like to focus and monetize on what we have in our space and then geographically grow when we have a little comfort that this is on an autopilot board.
Parik Gandhi
Okay. Thanks very much, sir. And sir, we have been mentioning in the past con-calls as well that for AI with respect to AI, there have been AI driven coaching and empiring solutions and different things with respect to that. So where do we stand-on that? How do we see that particular market growing? Are we capturing some major customers with respect to that or are we on mode? Where do we stand with respect to that?
Vishal Mehta
Sorry, you’re a little quick. Can you repeat this question?
Parik Gandhi
Yes, in the past con-calls, we have been mentioning AI-driven coaching and empiring solutions and different things with respect to that. So where do we stand-on that? How do we see this particular AI sector growing with respect to infer revenue?,
Vishal Mehta
Actually, I think a lot of that becomes agent so in other words I mean I am sure that you must-have read a lot about that because there’s a lot of information and news around it but a lot of this is in some ways in a pilot mode. So what we need to do is we really need to run pilots. There are certain areas like gas stations and others where we have created AI agents that actually end-up doing because it’s all about making sure that we get the right amount of accuracy and that has actually worked out very well. So on a particular skill, you need to train the — train the agent and once the agent is trained for the skill, then you can deploy that agent across. Similar to how we think about humans where if you want to train a human for customer service skill, you would want to train the person and then the person gets deployed. Similarly agents work similar in that way. And so we are building our agents and we are integrating a lot with gas stations and others and we work backwards from the client. So whatever the client requires, we actually enable that and we build-out more-and-more skills within the agent so that they’re able to solve problems for the client. So the firing and many others that you think in sports and many other verticals that we talked about, I think all of that is you can say in a pilot mode. And once we are able to get certain amount of efficiencies, we’ll be able to pick it up. Yeah.
Operator
MR. Gandhi, does that answer your question as there is no response, we’ll move on to the next question. It’s from the line of Ayushi, an Individual Investor. Please go-ahead.
Ayushi
Hi, sir. Congratulations on a set of numbers. My first question was that if we exclude the mark-to-market gains for the past 3/4, there has been no effective growth in PAT. Q1 was at INR50.40 crores, Q2 was at INR55 crores and Q3 was at INR54 crores. So how would you justify this and what measures are being taken to address this as, yeah, could this be a factor affecting the company’s recognition in the market?
Sunil Bhagat
We typically we don’t optimize for PAT as a company, we are actually somewhat focused on the — there is definitely a growth in the operating cost. So as we build-up and scale-up and we are — some of the initiatives that we take-up, they are forward loaded in terms of cost. So in some ways, we are comfortable in terms of — because front-loaded cost will only allow us to scale-up. And we are comfortable with that approach that we need to actually front-load the costs and we’ll forward in that. And so that we’ve never thought of optimizing for-profits. We are really focused on cash flows, we are focused on growth and we want to make sure that we are building out for the long-term.
Vishwas Patel
So I mean, to answer your question, I think, yeah, we have front-loaded a lot of our costs. And some of these initiatives, they are new initiatives and for instance, AI is a very new initiative. And I think we believe that if we continue investing in those areas, then we can perhaps build-out a much larger enterprise in the long-term. So I think as a company, we’ll just focus on growth and cash flows, if that makes sense. I think a lot of things that we do will translate into that and will forward invest into places that potentially makes sense. You also will realize that there are certain one-time costs for us in this year. So there are certain legal cost for demergers, there are certain advertising and bandwidth charges that we’ve started incurring because of the recent acquiring of. So you’ll see certain costs that come in and obviously for people because a lot of our businesses is people-driven. So I think those are the ones that will potentially you will see that they’ll create a impact to profit-after-tax. But yeah, we are not optimizing for PAT if that hopefully answers that question.
Ayushi
Right, but then I do understand what you’re trying to say, but then we also keep mentioning that we are increasing the number of merchants onboarded. But if you look at the CEC Avenue Payments TPV, it has actually decreased. So are we actually losing market-share to our competitors like Razer Pay because the numbers that they report for their TPV continuously keeps increasing and ours is pretty much in-line all 3/4 along and we probably will end-up at similar levels to Q FY ’24. So are we losing market-share currently?
Sunil Bhagat
No, I think we’ve seen, of course there’s going to be downward pressure because payments is a very competitive industry. And if you look at in terms of how we look at international growth and if you look at Slide 8 of our presentation, you would see that there is a slight decline, you know quarter-over-quarter in terms of the. So I think that it’s a function of you know the payment mix, the payment type because what tends to happen is that in some ways we, we actually compete, you know, with other payment options and we are comfortable talking to our merchants and allowing them to transact on certain payment options to us because in the festival season, people offer and competing companies would offer huge amounts of discounts to be able to garner TPV. So we are not going and saying we’ll optimize on TPV. We want to optimize on cash flows. And in certain cases, we make certain calls that potentially is in the interest of our merchants. It may or may not help us, of course, it helps us in the long-term, but in the interest of merchants, we make certain calls. So I don’t think that we would categorize as losing market segment share, but it is to actually make sure that we are doing well in a very competitive market and it enables us to in some ways make sure that we become more-and-more relevant. We know we are definitely sticky. And then we also need to retain certain customers. So losing market-share is all about losing customers. So we don’t have that as a problem as of today. But that doesn’t mean that we are not conscious of it. So we need to continuously figure out how to retain our customers and grow the base. And once the customers are added, they don’t typically give us revenues on day-one. There is a latency in terms of how the growth also shows up. So while we have a lot of data science around it in terms of what we expect, but like I said, I think that we need to continuously increase the pace and hopefully, you know, similar to how employees perform, employees, when they join you, they don’t perform on day-one, they perform maybe with some amount of latency. So we also have a similar thing. And then we are focused on somewhat working with MSMEs in India. So I think, yeah, it’s somewhat is a general answer, but hopefully that’s the best I can provide to you right now.
Ayushi
Okay. And sir, which segment is driving growth within the e-commerce platform business? Because we are recognizing GEM TPV, but we’re not recognizing revenues from GEM. So what exactly is driving the e-commerce platform business? S
Vishal Mehta
Ee this e-commerce software platform business that we give to many companies. And you know that we are — we have in the past around certain large clients. So we are continuously evolving. It’s a framework, platform framework that provides us the revenues.
Ayushi
And so there’s no update about the UPI views from banks, right?
Vishwas Patel
There is no update on sorry.
Ayushi
The UPI dues that we have to receive from the banks about.
Vishal Mehta
There is no update so-far. Vishwar, anything that you address,
Vishwas Patel
Yes, yes. So basically last — from April of 2024, there is no update from the government on the UPI dues that are there. We are in any way not claimed any UPI dues for the last two calendar years.
Ayushi
Okay, sir, thank you so much for your answer.
Operator
Thank you. Ladies and gentlemen, due to time constraint, this was the last question for today’s conference call. I now hand the conference over to the management for their closing comments. Thank you.
Vishal Mehta
Thank you all for joining our call and we look-forward to keeping you updated on the latest and the most recent developments in the company. Thanks all. Thank you.
Vishwas Patel
Thank you all.
Operator
On behalf of Go India Advisors, that concludes this conference. Thank you for joining us and you may now disconnect your lines.