One 97 Communications Ltd (NSE: PAYTM) Q4 2025 Earnings Call dated May. 06, 2025
Corporate Participants:
Unidentified Speaker
Vijay Shekhar Sharma — Founder and Chief Executive Officer
Madhur Deora — President and Group Chief Financial Officer
Analysts:
Unidentified Participant
Sachin Salgaonkar — Analyst
Rahul Jain — Analyst
Piran Engineer — Analyst
Vijit Jain — Analyst
Presentation:
operator
Thank you for joining and welcome to paytm’s Earnings call to discuss our financial results for the quarter and year ending on 31st of March 2025. We will start our call with Q and A After introduction to the management from PAYTM Management, we have with us Mr. Vijay Shekhar Sharma, Founder and CEO Mr. Madhur Devra, President and Group CFO Mr. Anuj Mittal, SVP Investor Relations a few standard announcements before we begin. The information to be presented and discussed here should not be recorded, reproduced or distributed in any manner. Some of the statements made today may be forward looking in nature and actual events may differ materially from those anticipated in such forward looking statements.
Finally, this earnings call is scheduled for 60 minutes. A replay of this earnings call and transcript will be made available on the company website. Subsequently
Questions and Answers:
Sachin Salgaonkar
we will start our Q and A now. If you seek to ask question, kindly utilize the Raise hand feature on your Zoom Dashboard. Please ensure that your name is visible as your name, last name followed by your company name for us to be able to identify you. We will unmute your line and take questions in the respective sequence of the raised hands. First question is from Mr. Sachin Salgaokar. Sachin, you may ask a question.Thanks Pranav. Good day Management and congrats on adjusted EBITDA break even. I have three sets of questions. First question is largely on lending. We did see the personal loan value decline on a QOQ basis and I do understand it’s basically on the back of tightening what we are seeing in the industry. Question out here is should we continue to see this kind of a trend at least in the near term before things start improving. And a related question is if you could help us understand how many lending partners you have right now and how should that number move Going ahead.
Vijay Shekhar Sharma
Hi, thank you Sajid, this is Vijay. Personal loan disbursements were not, did not grow quarter on quarter. Merchant credit definitely grew. And personal loan wise we are moving more and more towards pure distribution model where lenders pick up their own collection obligations. So to say we do make same margins on surprisingly and merchandise we’ve grown healthily and we continue to see that personal credit unless something bigger changes we will not see much larger growth. While we have also started to work towards secure credit secure based on various other items and maybe that if that grows we will see some numbers growing back.
And second part
Madhur Deora
on number of lending. Partners for each of personal loan and merchant loan we have between eight and 10 lending partners. Obviously there’s some overlap. So I think the total number of lending partners is about 14 if I’m not wrong, give or take one. So yeah. So that continues to progress well in terms of getting more lending partners onboarded.
Sachin Salgaonkar
Thanks Vijay and Madhur. Second question is on your expectation on MDR on UPI for larger merchants will be allowed in near near future. Just wanted to understand if you could help us understand how should one think about the monetization opportunities as and how this happens from a PAYTM perspective and at some level is it also linked to perhaps the UPI incentives decline what we saw this year and you know any thoughts on how the government is looking about the UPI incentive going ahead as well?
Madhur Deora
Obviously we do not know much and we will not like to predict how government is looking at it but we definitely see talks of MTR coming on UPI and we do believe that it should show up sooner than rather later and we do believe that based on what we are seeing in current financial year it could show up at any point of time and that would bring monetization of QR deployment acquiring and the consumer app both and I think the numbers etc and when and how is something that continues to remain to be discussed or to be seen and that will bring so called monetization to upi.
We do believe that.
Vijay Shekhar Sharma
And on your question about UPI incentive I think at least the way we are running the business is that we expect UPI incentive to remain low going forward. Especially as we just said once the MDR comes in then it would only be for very small merchants and it was never a very significant part of our business going forward we expect that to be the lower number as indicated in the last year.
Sachin Salgaonkar
Just a quick follow up out here. The finance minister did say that you know she wants 1 billion UPI transactions per day in next two to three years. So at some level perhaps we are seeing a monetization which might add a bit of a friction to growth and we have a higher target in terms of growth. And I do understand that consumers will not be charged on upi. But the perception sometimes in the market always is whenever an MDR comes the consumers will be paying and hence there’s a bit of a friction. So do we still see this coming in the near future despite this entire target of 1 billion UPI transactions?
Madhur Deora
I do believe that there is a tremendous upside left and is ahead of UPI in the country. There is Finance Minister is perfectly guided towards the size that we are expecting it and I do believe that it is the perfect target to chase. Consumers are not going to be charged like I said and I think in many cases consumers misunderstanding does exist but at the same time I don’t think consumers will be charged at the same point in time. How MDR shows up it is the work I do believe that NPCI and other bodies are doing.
Sachin Salgaonkar
And my last question, your thoughts in terms of how much AI could lead to cost reductions. I did see a statement in your press release saying that this quarter you did reduce some non sales employee cost on the back of AI. So just wanted to understand the potential for AI and what kind of savings we could see in future.
Madhur Deora
I don’t have a percentage but I do want to tell you that amount of more and more automation is coming in overall. Overall at large more productivity per employee is showing up. We are not replacing the positions that get, let’s say emptied. So we are clear about it that we will be not recruiting incrementally if somebody let’s say goes out. So practically it may not look like a drop but it will continue to as cost of people decline I do believe because more and more productivity is showing up and it is shocking to know what level of productivity can show up.
I’m right now in Bangalore. We had a board meeting. I was yesterday doing my team reviews. It was shocking that level of insights, level of skill from a senior product manager that we typically expect. And here we had a global expert product manager. So it would be a dramatic improvement in ability and capabilities of companies. So I do believe that cost will continuously reduce but there is no sharp one off etc. Kind of thing that we are expecting.
Vijay Shekhar Sharma
Yeah, I just want to add that what I’m really excited about is that we have really leaned into this and we are doing a pretty good job of using AI’s current capabilities. Of course we can always do more. And obviously the megatrend is that AI also continues to get better. So whatever opportunities exist today to become smarter, more efficient, leaner, those opportunities will be even more six months from now, a year from now. So we just fully lean into this. And that I think is that is what really matters.
Sachin Salgaonkar
Thank you both and all the best for future.
Vijay Shekhar Sharma
Thank you.
operator
Thank you so much. Next question is from Manish Adukia of Goldman Sachs. Manish, you make please ask your question.
Unidentified Participant
Thank you. Pranav. Hi good evening team. Thank you for taking my questions. So three questions from me as well. Firstly, when I look at let’s say the business, the merchant side of the business seems to be doing really well. Whether it’s merchant acquisition, device installs, merchant lending like you alluded to Vijay, but on the consumer side you touched upon the personal lending business maybe you know, somewhat subdued but even let’s the user base which has started recovering a little bit after the NPCI approval to onboard new users, but still significantly below the number where we were, let’s say a year, year and a half ago.
One, I mean is there a path to recovering the user base to where we were 12 to 18 months ago and what will it take to get to that number? And then second, is that important at all? I mean do you really need MTUs? I mean even if MTUs remain where they are or don’t grow, does that really impact your, let’s say revenue growth, your EBITDA, etc. I would love to, you know, get your thoughts on that. That would be my first question please.
Vijay Shekhar Sharma
Awesome way of looking at it Manish. Really admire the way you looked at it. The truth of matter is our future forward earning and bottom lines are protected by the people who stayed on the platform. Incremental users don’t matter but percent definitely do. And I do believe that we if we don’t do anything and simply keep keep focusing on the product, this improvement has come on dramatic lower cost that we would have spent year back. So it is purely product improvement that is bringing it back. And I’m very proud of the team that is working on our app, UPI and other backend and front end technologies that they are just solving the bugs, solving the features.
There is a very incredible feature that many of you may not know. Let’s say you made a payment and you want to in passbook history, right swipe you can hide it. That feature is like growing like a wildfire for us. Now these kind of insightful features give us capability to build more and more nuanced product that we will see over the period. And I’m very hopeful that even though as far as the future forward, next two years, I have to write let’s say revenue and profit forwarding, we will definitely do it based on merchant growth and the current consumer base.
But yes, the final question, it does matter to us. I do believe that in India there are about 200 million consumers that matter and we definitely will aim for 200 to 250 million customers on our platform. I’m not talking about let’s say GMV market share, transition market share, but I’m talking about highly Repeat usage of 250 million users because that is what material number of users matter on our platform. And we are not, as you’ve seen, we have not said that we are going to overspend on marketing. I would rather overspend on technology or attention to the product.
Unidentified Participant
Right. No, thank you Vijay for that response. Just trying to, you know, tie that response to like you mentioned disciplined marketing. I mean can both things happen? Can you be disciplined on marketing and just with product intervention grow the user base by substantial number?
Vijay Shekhar Sharma
Okay, absolutely. And in fact I want to tell you that the growth in user base did happen without in fact we cut the marketing in these quarters to show only and give the confidence to the team that your product matters. So as you are seeing the numbers that is because of the good product and better product attention. And I want to give you another surprise Manish. It is lesser number of people, more attention to the product that has got this. So lower cost in people operating, lower cost in marketing and get the growth. And I do believe without gangbuster marketing expenditure we would be able to get it back.
I do believe and I’m seeing it also.
Unidentified Participant
No, thank you Vijay, I appreciate it. My second question is on the comment in the shareholder letter on international markets and there again as an outside and it feels like there have been like a few change in strategies in the past. International maybe was a bit of a focus area at some point in time. Then you know, you decided to focus largely on the India business over the years. And now again let’s say that you believe that some parts of your technology stack can be exported to international markets. So just want to understand what would have changed versus let’s say the last time when you thought India was the bigger focus area.
For now you again explore international markets and opportunity stack. I would love to get your thoughts on that as well.
Vijay Shekhar Sharma
When we long back had come in public markets we had called ourselves as a platform where we were saying payment, commerce and financial services. And as you know, over the period we said payment and cross selling of financial services. And that meant that there is a ability and capability in the company of manpower, et cetera, technology, etcetera. That we created. And as far as the technology product market fit is considered, we are very clear that what we have built in India, we saw it in Pepe Japan, we are seeing further products that we are developing and deploying with Paper Japan and many other such similar partnership that we are in conversation that product technology can be monetized in other markets.
I’d rather call it product technology monetization in other market. And we are rather going to find out somebody who’s locally doing it and extend that. So internationalization is not about that we are launching consumer PAYTM app in other market. Internationalization is about we are helping somebody local market to build either consumer side or merchant side that we are talking about systems. And that way then we have further monetization of product and technology platform. And it also came about about number of people that we had. So because we had enough number of engineering and product people and I love the capability that we leveraged using efficiency, using AI and skill using AI that we are able to modularize much faster than earlier.
So one point in time we were like, oh, we would not rather spend anywhere else but attention to the domestic market which is perfectly continuing. But we right now, because of the assistant code generations and all sorts of things like cursor etc, we are able to modernize the code and extend it for another market. So incrementally very less technology product investment which rather is not even further investment, rather reutilization or utilizing internal resources and getting a market expansion because you are able to partner with someone who is doing a local market. So international for us is not launching PAYTM app in different markets.
International for us is expanding partnership of product and technology with some people in that local market. Mostly we are seeing merchant side relationships are far better for us because there is a nuance of what we have built in ability to see it in many markets being incoming instead of consumer side. So maybe we’ll see like that.
Unidentified Participant
Thank you. Just my last question may be directed towards Madhur I think again, please pardon my like if I get the numbers wrong but 2 or 3/4 ago I think Madhur you had called out medium term. The business can potentially grow at like you know, 30, 35% plus on top line and 15 to 20% was the EBITDA margin target from at least a near term Perspective. Would you like to share any updates in terms of, you know, from the next two, three year perspective? What is like the sustainable revenue growth that the business can look at and where can let’s say margins settle in the next two or three years? Any thoughts or color would be helpful.
Thank you.
Vijay Shekhar Sharma
I think the ranges that I mentioned earlier that you referred to Manish, is what we are targeting for the next year as well as in terms of growth as well as longer term. And yeah, the margin target for next two to three years remains in that range. We do think that the business has that much earnings potential. Especially like Vijay mentioned, our indirect expenses have come down because of all the AI that we have leveraged. So getting to higher EBITDA margins is a lot easier in some ways because of lower cost structure.
Unidentified Participant
Thank you so much. Very helpful. All the best.
Vijay Shekhar Sharma
Thank you Manish.
operator
Thank you Manish. Next question is from Sachin Dixit of GM Financials. Sachin, you may ask me a question.
Unidentified Participant
Congress team on a decent set of results across the board. My first couple of questions are with regards to MDR. Right? So let’s say MDR comes up anywhere, whatever 25, 30, whatever the number it comes up, how much do you expect PAYTM is likely to benefit from it, right. In terms of your GMB. Right. So if you think of let’s say 25 basis points for MDR, can you get 5, 7, 8 basis points out of it?
Vijay Shekhar Sharma
Logically yes, that’s. That’s rather conservative. But yes.
Unidentified Participant
And this is largely in line to how you pay incentives for being distributed.
Madhur Deora
If incentives also have lot of restriction on kind of payment they factor in for example like they don’t factor in utility merchant this much and that kind of merchant. So incentive distribution of transaction and bips per transaction will not be indication of MDR in my opinion because MDR is a wider payment fees. The one critical difference between incentive and MDR is that incentive was only on transactions less than 2,000 rupees.
Unidentified Participant
Right.
Madhur Deora
So just keeping that in mind and then obviously there will be detailing and I think slightly premature, short for us to talk about exactly what the number will be because they’ll be detailing as a part of this finalization what the MDR framework looks like and basis that we’ll be able to talk more. But yeah, Vijay has already given an indication so sure.
Unidentified Participant
Second question would largely be on let’s say right now on surface level it feels like because the cost of incurring this business are already there in the P and L, whatever India comes, it should directly fall all the way to ebitda. Right. But when I am also thinking of it, let’s say monetization is allowed on UPI mdr, it might result in heightened competitive intensity and a number of people might try to gain that market share. So is it safe to assume that the margins will be significantly lower than 100% or it will be closer to 100% is how.
Madhur Deora
So when we think about what the likely scenarios are and of course like I said, it’s a bit premature because we don’t know exactly which segments we are talking about and so on, we do factor that for the larger merchants there will be some competitive intensity and you may not be able to exactly charge the cap or whatever that is and then give an indication keeping that in mind. So yes, it does factor in that you’re not able to charge and it is similar to what we today do on credit cards and debit cards. So we are quite familiar with how that works, which is to say which merchant on which merchants are you able to make a slightly higher net payment margin and which merchants you make slightly lower net payment margin.
So yes, there’s an understanding of competitive intensity and how it relates to net payment margin within the construct of an overall cap.
Unidentified Participant
Got it. My second question is with regards to your business as it stands right? So when, when you look at your business and, and maybe the reason why Vijay also alluded to that product is how you want differentiate in terms of customer acquisition. But do you also target some sort of arpu per customers which is the driving metric behind how much you go about and try to invest behind acquiring a customer or you are generally going to take the tech led approach and let the consumer sort of affinity shape up wherever it shapes up.
Madhur Deora
No, we do bother about it. That’s why we are not randomly spending money and acquiring customers. When we got UPI customer acquisition permission, like you heard me say, 200 million customers. That’s a fairly small subset of the potential consumer base that UPI will have. But I rather have the material useful customer on the platform than to have a race of what you do with this customer.
Unidentified Participant
Got it. All right, thanks so much and all the best.
Madhur Deora
Thank you.
operator
Thank you. Thank you, Sachin. Next question is from Rahul Jain of Dorat Capital. Rahul, you may please ask your question.
Rahul Jain
Hi. Hope my line is okay. Yes.
Madhur Deora
Yeah.
Rahul Jain
So the question may sound little repetitive but just trying to understand from a growth point of view what are some of the opportunities that could be the bigger driver for us going into next fiscal? Are they Going to be the same set of two or three segment which needs to do a bigger lifting in their 26. Or do you think some of the current segment which are not performing so well, personal loan side or any other thing that could pick up to add growth traction?
Madhur Deora
Yeah, I think Raoul, I’d probably break that up into two logical parts. On the merchant side of the business, we see the same trends really. Right. That if you look at second half of last year, of course in the first half our deployments were lower. But if you look at the second half of last year, that’s a pretty good indication of where the business is headed in terms of gross deployments, GMV growth, highly engaged merchants and then merchant loans and all of those are very powerful drivers. And I think most people tell us that that part of the business they see structural advantages of PAYTM and very good momentum, more or less uninterrupted.
On the consumer side of the business, I would, I would say that last year was a cyclical low. So on the one hand for about six or seven months we were not adding new customers. On the other hand, the monetization levers was slightly lower, partly due to credit cycle and so on. So if you think about going forward forward, Vijay has talked about consumer growth and how that is going to come. Product led and then eventually, you know, maybe we make slightly higher investments, but initially product led. And then on the monetization side we see opportunities clearly on if there was, for example, an easing of the credit cycle, that would have a positive impact on persons on the credit card.
If we see a continued growth in trading volumes in India, of course last three or four months there were some regulatory developments which for the industry which lowered the trading volumes. But now the business is growing again. So PAYTM Money, which is our equity broking platform, we feel very interested in. And finally advertising, where we think there’s a lot of opportunities for us to make more advertising revenue. So the consumer side, we’re starting the year with a lot of optimism both on the base, which is the consumer, highly engaged consumers and number of transactions and so on, as well as the monetization opportunities through those three or four areas of upsell that I talked about.
Rahul Jain
Right. One more question just to understand how, you know, usage of this DLG has led to increase in the take rate. So what should be the. With changing evolving mix of dlg, what should be the ideal take rate for this segment? And secondly, how it is changing the perception of the lender in terms of approving the whitelisted potential you know, merchant or client. From our perspective, has that increased the threshold for the lenders?
Madhur Deora
Yeah, on the second question, I don’t think we necessarily ask our lenders to, to change their behavior just because they’re dlg and we also hope that they don’t do that because we do want eventually, you know, to target a range bound and predictable expected credit loss. We think that is fundamental to a fundamental indicator that you’re building a high quality franchise. So ultimately, as we have said enough and more times, it is the lender’s decision. Obviously we do some filtering on our side, but eventually it’s the lender’s decision to say yes or no to a loan.
But we don’t see a change in behavior, nor do we encourage or request or expect a change in behavior. The expected credit losses on merchant lending have been quite positive since, since April, May last year. So we don’t have any concerns that are making them less, less disciplined on credit losses. So I think that’s the good news. I think in terms of take rates, if you look at our historical take rates, it should be about three, three and a half percent higher on the merchant loan side which on a blended basis probably means about 2% higher for financial services because obviously there’s a percentage of it which is personal loans.
Rahul Jain
You’re saying 2,200bips more than the past or I, I could not solve that.
Madhur Deora
200 pips more than the past ie for compared to the period when we were not doing, when we were not doing D.
Rahul Jain
Ideally should go higher as the mix improves.
Madhur Deora
Well, higher load would depend a little bit on PL versus ML mix and fidgy versus non fidgy mix. Merchant loan does make us a slightly higher take rate anyway compared to personal loans. So there would be various factors but.
Vijay Shekhar Sharma
Yeah, but overall, overall it doesn’t make commercial difference in a different direction.
Madhur Deora
Yeah, just, just to be clear, it.
Vijay Shekhar Sharma
Is not a higher.
Madhur Deora
Sorry, just to be clear, merchant loan. When I say 2%, I mean the reason I say 2% is because not all loans have fidgies. Right. So for loans like, for like loans that don’t have FIDGY versus loans that have FIDG, if we are giving about let’s say 3 and a half percent FRDG then we expect to make 3 and a half percent more take rate, maybe more, but 3 and a half percent more take Rate through the life of, of the loan. Right. The 2% number I was giving you is because not all loans have F.
So when you’re talking about take rate and Literally taking revenue divided by loans, then you expect that to be call it 2% because call it 50, 60% of the loans might have FDG.
Rahul Jain
Right. And just a clarification, 3.5, that is the at least number. Right. And if the the performance is better, it could be much higher than that.
Madhur Deora
But just three and a half. I’m saying assuming same ECL, same partner loan without FLDG loan, with FLDG of 3.5%, the revenue would be 3.5% higher and of course we would have fldg cost of 3.5%. So that’s the point that I was making. Yes. Depending on the performance of the loan, we do make collection incentive anyway, which at the same ECL would be the same whether it’s a non DLG loan or a DLG loan.
Rahul Jain
Okay, so there’s no extra incentive for doing a DLG for the same performance or outcome.
Madhur Deora
We don’t do DLGs from the perspective that a DLG loan will make us more net take rate. We do it because our lenders, in some cases lending partners rather in some cases have a preference for it. And as a result of that they are, the volumes tend to be higher. So a partner who may have done X if there was no DLG, may do 30%, 50% more if there is DLG. Right.
Rahul Jain
It’s a volume advantage versus price. Thank you. That’s a.
Vijay Shekhar Sharma
Yep.
operator
Thank you. Next question is from Piran, engineer of clsa. Piran, you may ask your question.
Piran Engineer
Yeah. Hi team. Congrats on the quarter. Just firstly on payment processing charges, we’ve seen a good decline in the past two, three quarters. Is it just a function of mix or are we able to, you know, negotiate better rates with our partners?
Madhur Deora
It is a bit of both, I think compared to last quarter, obviously last quarter at festive season versus not so that Q3 to Q4 tends to work a certain way. And then there is element of just continuously doing a better job on processing costs with our partners. And I think you saw that trend in 20, 22 and 23 as well. So we just continue to work on that.
Piran Engineer
And is there scope that this goes down further? Assuming mix remains stable,
Madhur Deora
there’s always that effort. But I would point back to the payment net payment margin and payment processing margin discussion which sort of normalizes for this. So our effort is to continue to improve payment processing margin and across instruments and across merchant types and then payment processing costs sort of takes care of itself and it is actually something that you have to work on constantly to make sure. That you are able to be competitive and attractive to your partners while maintaining and improving our payment processing margins.
Piran Engineer
Okay, got it. And just secondly, you know, I don’t mean to harp on this MDR thing but if you could just give us some sense of right now what are the talks like with the government? Is there a particular pushback that they have which is why it hasn’t yet happened or is there sort of an in principle approval right now? But you know the concerned parties such as y’all and other fintechs are discussing the nitty gritty.
Vijay Shekhar Sharma
Yeah, we are the client of the network, not the network. We are the client of the network. Network is NPCI who decides, works with all these partners.
Madhur Deora
I’m going to discuss all those things. Clearly the powers that be are discussing this and we, I’ll go back to what we said a couple of months ago which is that the industry is expecting this to be a thing and we will hear back on this hopefully soon and then we’ll have a little more clarity to share in terms of how whatever that framework is has affected our business and we’ll share that quickly with our stakeholders.
Piran Engineer
Okay, fair enough. And just on PAYTM Money, if you could just broadly highlight what is the revenue right now, if it is meaningful and how do you think about this business over the next three years?
Vijay Shekhar Sharma
It’s not very large and we do believe it’s a great upside. It has a customer lock in also. So we have gone into mutual fund distribution. We are trying to find out MTF, kind of margin trading, etc. Kind of monetization and those have come out positive. So it doesn’t take investment anymore. But at the same point of time it is a great opportunity. I can see that it is in so called called less trading quarters if you will, last couple of quarters. Thanks to both FNO and normal trading being reduced, it has been able to turn around.
Piran Engineer
Well okay, but like Vijay, could it be like say at least to 300 crores annualized in terms of revenues?
Vijay Shekhar Sharma
Yeah, that’s about, that’s about the scale.
Madhur Deora
And it has a very good mutual fund business which helps us, like we just said, with customer lock in. It’s a fantastic trading platform where we make most of our revenue. And then we have also launched MTF in December of last year which is scaling up nicely and we’re very positive and the customer retention is good and arpus are good. So we’re very positive about scaling that business over the next two, three years.
Piran Engineer
Got it. Okay. This was it from my end thank you. Wish you all the best.
Vijay Shekhar Sharma
Thank you.
operator
Thank you. Next question is from Vijit Jain of City. Vijit, you may ask your question.
Vijit Jain
Yeah, thank you. And congratulations for the, you know, break even, even excluding the UPI incentives. So my first question is on the consumer business side. You know, can you comment on the prospects of return of wallet? I know some of your peers have introduced wallets recently and I’ also noticed the app has gone a lot of product changes. Seems a bit more simple, significantly more simple. So I just wanted to get your thoughts on what’s driving that. Is that an objective to kind of make the app light, increase user base through making it speedier, lighter and those kinds of things.
So if you can broadly talk about that.
Vijay Shekhar Sharma
Thank you. Your user. I’m glad. And it was long due. We’ve been very crowded, cluttered for long enough time and among various things as housekeeping exercise, my personal interest was to make app as simple as that we started this business with. So right now I’m glad that you’re calling it out light because surprisingly no traffic or no internal businesses have less traffic if you will. In other words, that the lightness is rather not costing us any growth line item to cross sell of other line items. So that’s, that’s the approach. My theory is if customers love you impeccably well and keeping payment led super app concept is a better than calling super app first, payment second, no? So payment first, super app role second versus super apparent and payment second.
That is the approach that we took and we are seeing good results and you saw the uptick in the number of consumers that come back also. And when you talk about wallet, I really wish we would have had it by now as in in terms of one way or other. But we may be near a breakthrough or some solution to way forward. So we are just trying to to keep it finger cross and see we have multiple options on the table and we could decide not many months ahead in future that what is the call that we’ll take.
We had a board meeting today, we did discuss about it. So we have something to discuss as management and come back on.
Vijit Jain
Got it. Thanks Vijay. My next question is on. You know, the shareholder letter also notes that you’ve applied again for the payment aggregator license to rbi. So do we have any additional inputs on that and do you expect that to also come about in the near term? I’ll just follow up with a quick question on MDR after that. Thank you.
Vijay Shekhar Sharma
Yes, we do. And there were some next steps that RBI suggested us to do we’ve been doing those.
Vijit Jain
Great, thanks. My last question is on the MDR incentives for the quarter. Right. So even you know, I know the government has obviously slashed the incentives that they gave. This is almost moot now given MDR is actually being expected. So the UPI incentive, sorry, is being slashed. And your share of UPI transactions obviously in F25 also went lower still. 70 crore seemed a bit low. So what I wanted to understand is did something change here or did your share of small merchant small ticket transactions was lower this year? Is that what drove the 70 crore number? And relatedly because I see that the payment processing charges are also significantly down quarter on quarter.
So I’m just wondering if I should just look at the net payment margins here and not look too much around that 70 crore number because that just seemed low to me.
Madhur Deora
Yeah. So most of this is the reduction on incentive overall. So what GMV is eligible. How much does the industry get paid? All of that has been reduced. Right, right. Quite meaningfully. Like for like we would have made a little bit more. But the two factors that have affected us is that while we’re doing really, really well on merchant payments side right now, if you just take the average market share through the year last year versus the previous year would have been slightly lower. Right. Because in the first half of the previous financial year we did have some market share dips and obviously we shared that very candidly and we talked about 808 lakh to 10 lakh devices.
Obviously it was apparent from our GMV data as well. So if you just take the average GMV it would have been lower. And obviously we are talking about the entire years of UPI incentive. And the second is that there were small changes to acquirer share versus the rest of ecosystem share in the new framework which is to say the acquirer share was slightly lower. So that affected us marginally as well.
Vijit Jain
Got it. Thanks.
Madhur Deora
But this number wouldn’t have been like. Yes, compared to 288 it looks like a low number but it wouldn’t have been like 150 crores or something. Right. It would have been marginally higher if those two things had not happened.
Vijit Jain
Got it. Understood. Thank you.
operator
Thank you. Vijit. Next question is from Anand Dama. Anand, you may please ask your question.
Unidentified Participant
Yeah, thank you for the opportunity. My first question is on the PL business that’s still declining for us. Is it that the decline is attributed to most partners reducing their business with us or is it that few partners were lumpy in nature and that’s where basically we are seeing a decline. And by when do you expect the disbursement number to largely bottom out? I think you’ve talked about in the presentation that possibly later part of the year we should see some pickup in that business. If you can just talk about that, number one. Number two, your financial services customer base has declined quarter on quarter to 5.5 million.
Is it more seasonal in nature or there is something more to read into.
Vijay Shekhar Sharma
That personal loan business. We are technically moving from distribution plus collection business to pure distribution business. And there are partners, growth integrations and in due course disbursements have been continuously growing. And I can say that we believe that there is demand and supply in the market market based on credit cycle. The part where we also do collection as an obligation is something that we will bring it back on the table once the market or credit cycle turns around. So in a way we right now are doing the business which is pure distribution like a marketplace distribution.
We have added few more line items like loan against mutual fund etc. And those will and have started to pick back. So that’s the reason of personal loan not same as Q at the same point in time. We are not much going to aggressively go any which ways in personal loan distribution business where we do believe that there is a large amount of stress in the overall market which is getting eased out. And instead of being aggressive, we let it be that whatever the lenders need and whatever the policy pricing lenders are doing, the market is behaving like that.
So there is not much different from our side that we are doing less or more.
Madhur Deora
On the number of users. It was partly because of personal loans that Vijay just talked about and the gm the volume dispersed number that you have seen. And it was partly in terms of active users in the equity broking industry which PAYTM Money is a part of, as you might be aware call it from December to February largely there were some regulatory adjustments because they wanted slightly less trading, if you will in so they increase, they reduce the number of settlement cycles and so on in the industry. So. So overall there’s been a lot of press coverage that industry volumes are down about 30, 40%.
So the number of PAYTM Money monthly active users would have declined along along with the industry. So those are the factors. We are very positive that this should start growing going forward.
Vijay Shekhar Sharma
I’m going to take a question from chat window where Ravi BR has asked this, but I think, I think Anand after your question rather I would wait for your second question.
Unidentified Participant
So second question is on the DLG cost. So is it possible for you to share how much the DLG cost in the current quarter? There is some trail income also that I’ve talked about on the DLG front. What is that? Any new partners where you’ve gone for DLG in the current quarter and sec. One more question is on the ESOP cost. So earlier you used to provide the ESOP cost schedule. I think you just provided for the first quarter how much it is going to be. Is it possible to provide it for.
Madhur Deora
Next two to three years on ESOP cost? Because we’re sort of still finalizing certain grants right now. We didn’t want to share quite a number. The 75 to 100 crores that we’ve talked about is for the next few quarters. So we expect expect that to be in the range when we do the next quarterly filing which will be to two odd months from now in July we will share the updated ESOP cost schedule. So that is a feature that we have this quarter. We didn’t have it and we put this range because it was sort of work in progress with respect to DLG costs.
We it’s a slightly commercially sensitive information so we don’t show share that but we have indicated on previous calls that blended it’s about 3 to 4% DLG that we give and that is not on all lending. It’s largely on merchant lending and it’s largely and it’s not all lending partners but it is, it is a very substantial majority of that. So basis that you could probably get some estimate of what that number is but we don’t want to share like exactly, exactly what that number is.
Unidentified Participant
Sure. And any new partners you have tied up with on a DLG front.
Madhur Deora
We currently have three partners on dlg. There’ll be a DLG disclosure that will go up on our website which looks so. Which is already on our website. Sorry I’ve been told it is already on our website which talks about. It’s a regulatory required disclosure which talks about how much AUM you have under DLG under different, different they call it portfolios. Each portfolio indicates for us a type of loan with a type of partner. So portfolio one would be partner A, call it merchant loans. Portfolio B might be partner B merchant loans and so on. So that is already on our website.
Unidentified Participant
Thanks. Thanks a lot.
operator
Thank you. Anand Vijay will take one question from the chat window.
Vijay Shekhar Sharma
Yeah I just saw this question from Ravi who is from Bangalore. I’m long term investor in paytm. As an investor I’m more interested in paytm showing profit as early as possible as you’re not able to show profit this quarter because of exceptional expense of 522 crore related to ESOPs. Did you consider splitting this expense to multiple quarters so that it could have resulted in profit this quarter quarter? Is there any compelling reason why you booked this full expense this quarter? Ravi, this is all audit matters. Auditor decides, we follow and the way auditor suggested we did it.
And as you can see this exceptional charge is something which everybody logically should see is a one off one time and exceptional in nature. We are at a verge of pat profitability. If we were to see every other expenditure and thing. I’m very sure that in next quarter onwards if everything goes as we are seeing, it could very well be a profitable quarter.
operator
Thank you. Next question will be the last question. This is from Pratik Podar of Bandhan Mutual Fund. Pratik, you may please ask your question.
Unidentified Participant
Yeah, just a couple of questions. One is when I look at your key financial services customers, the data, I mean on a sequential basis there’s a decline whereas the financial services revenue income has gone up. So I just wanted to check what has happened over there.
Madhur Deora
Yeah, so our financials, I think I just mentioned this a little while earlier. The financial services customers have decreased largely in two segments. One is personal loan where obviously there’s a dispersal data to also look at which we have shared and the second is in PAYTM money on a quarter on quarter basis. These numbers have reduced because from December to February there’s some regulatory adjustments from the. From the capital markets regulator which affected the FO industry overall. There’s enough and more news stories about you know, how much. Sure. Trading volumes have gone down and so on.
We do expect that to recover and we’re already seeing recovery in that. So it definitely looks like it’s bottomed out. Financial services revenue has grown because the highest margin and the highest ARPU product if you will, which is merchant Merchant loan.
Unidentified Participant
Yeah, I would have.
Madhur Deora
Continues to do very well. Yeah. So you already got it.
Unidentified Participant
And so last question. When I look at software, cloud and data center cost on a sequential basis that has declined by 10%. I just wanted to check if there’s any correlation with total number of transactions because that seems to have gone up. So has there been some efficiency gains over here or what has led to this 10%?
Vijay Shekhar Sharma
Yeah, yeah, yeah. Actually that is what I’ve been continuously putting up. This is classic AI. When you give AI an opportunity to review things it goes beyond human logic that you typically use. So you Very well pointed out and it is a very sharp eye.
I must congratulate and this is attributable simply to putting AI in every process and cost line item that what do you think we should be doing it kind of practices we are doing are following what else we could do then you know, I’ll just give you a clue about it. Things like let’s say you have a cloud where the machines are dedicated so that any spike you are able to take care of the minimum sort of permission and then AI was able to to say based on your pattern. I suggest that from this hour, typically in the night hour you could just reduce them to dramatically low volume and then it’s like you know, day and closing balance float revenue kind of thing in compute industry also where if you are not using compute for those hours you can do it.
Similarly internally we are picking up inferencing in a way that we start to use the downtime of our peak systems or the time when the peak traffic is not coming to do the inferencing. So there are tons of insights. I mean I’m glad that you pointed it out and I’m going to point back that yes it is efficiency by the team’s effort on finding cost efficiency.
Madhur Deora
I just want to make two other quick points. One is that when we did the migrations in first half of last year, obviously the most important thing was to do the migrations right? And since then using AI the team has been working hard on finding finding places where because it was a time bound activity finding places where we could have done things more efficiently if we had more time. So they’re solving those things. Second is while we’re very pleased with the improvement, I would just slightly discourage us looking at quarter on quarter trends too much because there is sometimes a little bit of volatility here and there.
But we are quite pleased that our tech teams and our DevOps team is very focused on very cost sensitive and that is that is a good place to be as an organization.
Unidentified Participant
Got it. Fantastic and best wishes for the future. Thanks.
Madhur Deora
Thank you.
Vijay Shekhar Sharma
Thank you. I’ll take few more questions from the chat window. Laksh Daftari has said that in past companies core business face significant challenges. Despite these disruptions, companies have demonstrated remarkable resilience. Currently there seems to be renewed focus on strengthening the core business. Given the unpredictable nature of the market, do you believe it’s strategically sound to double down on core or would a diversified approach exploring adjacents or alternate business segment offer a safety net for long term stability and growth Very, very good question Laksh and my answer would be that in India we have an obligation to focus on the core because that is what the business model has got scalable, profitable, identified, learned and so on so forth.
And the best part I can tell you is that we are able to see that result as you are seeing and as far as adjacency and alternate is concerned we have tried to find out software, services software that we can expand to the other fintechs, banks or other people which we also found out in neighboring geographies also. So that is our alternate additional market or incremental revenue that we found out. It’s very simple, no incremental much cost and you got more revenue on the bottom line side. So laksha that is where it is. And I can see Srinath asking share your three year vision on innovation on this platform of payment and financial services.
What new product can we expect? Srinath I’m going to say that when we look at three years the best thing is that the products that we are talking, I mean in other words it’s like saying you can continue to expect payment and cross selling of financial services continuously going much deeper in last three years the cost and the innovations of the quality of product will be very very different. As you are aware we started to build new products and services is app you saw consumer side you will see and devices you saw. So tons of machines in AI based capability will be in all workflows.
I’m especially I mean not going to say the particular feature right now in this call right now because this is a more earning call but you can expect us to build continued innovations in consumer and merchant sites as we have done in past and what we are building where we very proud of and very very excited about those things. Can you comment? Would you be probably 100 billion business by 2035. Thank you. I mean this is a running call when will ESOP reduce your order will get dividend or share appreciation. I think ESOP cost as you are aware we had one time charge and over overall ESOP costs have reduced quarter on quarter.
Next quarter onwards that will be much lesser all because of this one time charge that we have incurred in this.
Madhur Deora
Quarter and because Vijay gave up the GSOPS. So instead of 169 crores last quarter of ESOP charge going forward we have currently given an indication of 75, no more than 75 to 100 crores and we’ll update that guidance in the next couple of quarters. So it’s going to be a significantly lower esop charge going forward.
operator
Bye now. Thank you. With that, we come to an end of this call. A replay of this earnings call and the transcript will be made available on the company website subsequently. Thank you all for joining. You may now disconnect your lines. Thank you.
Vijay Shekhar Sharma
Good night, Sabah Khair. Bye bye.