One97 communication Ltd (NSE: PAYTM) Q1 2026 Earnings Call dated Jul. 22, 2025
Corporate Participants:
Unidentified Speaker
Vijay Shekhar Sharma — Chairman, Managing Director and Chief Executive Officer
Madhur Deora — Executive Director, President and Group Chief Financial Officer
Analysts:
Unidentified Participant
Sachin Salgaonkar — Analyst
Piran Engineer — Analyst
Sachin Dixit — Analyst
Pranav Gundlapalle — Analyst
Jayant Kharote — Analyst
Sameer Bhise — Analyst
Rahul Jain — Analyst
Grishma Shah — Analyst
Vijit Jain — Analyst
Sumeet Kariwala — Analyst
Prateek Poddar — Analyst
Presentation:
operator
Thank you for joining and welcome to paytm’s Earning call to discuss our financial results for the quarter ending June 30, 2025. We will start our call with Q and A after introduction to the management from Paytm’s management, we have with us Mr. Vijay Shekhar Sharma from founder and CEO Mr. Madhur Deoda, President and Group CFO and 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 statements made today may be forward looking in nature.
Actual events may differ materially from those anticipated in such forward looking statements. Finally, the earnings call is scheduled for 45 minutes. A replay of this earnings call and transcript will be made available on the company’s website. Subsequently we will start our Q and A now. If you seek to ask a 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. We will unmute your line and take questions in the respective sequence of the raised hands.
Questions and Answers:
operator
First question is from Mr. Sachin Sal Gankar. You may please and you may please ask your question.
Sachin Salgaonkar
Thank you for the opportunity. Congratulations on a good set of numbers. I have three questions. First question Clearly Vijay Madhur we did see a good amount of a cost control be it marketing, other expenses and capex for sustainably number of quarters. So question out here is is there further room to cut without impacting let’s say revenue growth. Because obviously if you cut marketing there is a bit of an impact on growth.
Vijay Shekhar Sharma
Hi, thank you Sajan. I do think there is always a corner where we are able to find some cost but they will area so it is not the agenda. It is rather investing in a few more line items that we believe are long term growth. So we are not actively pursuing cost cuts. While I’m definitely pursuing whatever is not necessarily drop it out of the window.
Sachin Salgaonkar
Okay, got it. Second question is, you know wanted a bit more clarity in terms of your lending book. I know in the past you guys used to give a good amount of disclosures but any color in terms of you know how is the mix between let’s say personal and merchant loan. I do think this quarter the value of loan dispersed is also not given. So do want to understand you know where the numbers are. And a related question is the mix between DLG and non dlg is it because of the lenders where the mix is now getting screw, you know, skewed more towards non dlg or could that change basically you know how the lenders get changed from a medium term perspective.
Vijay Shekhar Sharma
So first thing first, it is the same lenders who have decided to forego DLG based math because they see the book performing great for their references. It is not about adding new lenders who are not taking dlg. So it is strictly about current lenders that have existed previous quarter or previous to previous quarter number one which inherently inherits that the book has performed incredibly good for lenders to have their risk and comfort to be deciding because you know there were various clearances and clarifications that got issued. And as far as the mix is concerned I can say that we’ve linearly extended the previous quarters.
The problem of not giving the numbers separately as you are aware we’ve been discussing it many more quarters before it gets misconstitute that we are the lender or we are lending. When we say we distributed so much of loans we kept trying different different wor but we do not want any ways whatsoever anybody to misunderstand that we are not owning responsibility or book of these loans. So we being the fee base income we started to say let’s just talk about the fee. I’m very happy to hear and learn and we will be very gladly all of us are available that what KPI should be help you understand these things that you are asking for.
As of numbers they’ve been very linear, traditional, sequentially and the previous lenders who have been continuing with us ever since are the lenders who have decided that they don’t need dlg. So Madhur more
Madhur Deora
Indicatively both personal loan and merchant loan grew last quarter both in terms of revenue and dispersals. And also the mix is roughly the same as it was last quarter. So there has been no sort of qualitative thing to report. And of course going forward if we do see qualitatively different trends then we’ll call that out. I think one of the things just to echo what we just said is that the distribute I think a lot of people on this call do understand that we are purely a distributor, but we did find that there were other stakeholders who were getting confused by this.
We are happy to receive feedback on what might be helpful from a modeling standpoint without obviously causing confusion.
Sachin Salgaonkar
Thanks Madhuranjay and I’ll get back offline in terms from a modeling perspective. But just given the fact that the mix is not changed as compared to last Quarter between personal and merchant loan. The question out here is we were expecting a recovery in the personal loan. Are we seeing no recovery and hence the mix has not changed at all or you know, we still are seeing recovery or you know, perhaps recovery some point away in the personal loan?
Madhur Deora
No, no, not, not significant recovery. It is linear.
Sachin Salgaonkar
Got it. And last question is, you know, again, now that you have turned positive on EBITDA margin, any guidance or any medium term steady state adjusted EBITDA margin, we should look at it and of course related question is contribution margin is significantly improved now at 60%. Is this a sustainable level? Ideally we could look at going ahead and you know, perhaps a bit more room to improve from this super high level.
Madhur Deora
Maybe I’ll take one by one on contribution margin. We are at 60% as you noted last year, same quarter we were at 50%. So significant improvement there. We have said high 50s. So we want to just leave some room for quarter on quarter aberrations. But we do think this is the right ballpark for us going forward with respect to ebitda. So we are not doing adjusted EBITDA anymore. We’re not doing EBITDA before you soft cost. So this is straight up EBITDA replacement reported gap ebitda. We do think that what we had said earlier, about 15 to 20% over the next two, three years is still the number to drive towards and that seems more achievable today than even a few quarters ago because the contribution margin is very good.
And we are seeing, and we’re seeing that, you know, keeping a tight leash on indirect, sorry, indirect expenses overall does still allow us to grow very well. But as I just said, we may do a little bit more in investments but more than offset by growth in contribution margin.
Vijay Shekhar Sharma
Sachin, EBITDA before ESOP happened last quarter. This is the last, this is the first quarter where we are obviously if you read the earning release, we have pruned out every word which included EBITDA before esop, bet before ESOP or anything before esop. Next quarter onward we will stop giving the E line and it’ll be only the employee cost so that we are maturing towards absolute complete employee cost, including EBITDA or pat, where the E cost is a cost to the management. So there we go. No more adjusted anything.
Sachin Salgaonkar
Got it? Thank you. And all the best for future.
operator
Thank you so much. Sachin. The next question is from Piran, engineer from clsa. You may please ask your question.
Piran Engineer
Yeah, hi, thanks for taking my question. Congrats on the quarter just before the you know, technical questions. There was this press BSC release right now. So Madhur, you’re not getting reappointed on the board or you’re seeking not to get reappointed. Anything to read into that or like have you been at the board just for a short time or since inception?
Madhur Deora
I’ve been on the board for about two and a half, three years and there was never the intention that this should be a permanent thing. We wanted one executive director on the board so I did a term and now our general counsel is being nominated for this. On a personal level, I’ve been very much looking forward over the last two or three years to drive some business priorities for the company but quite frankly simply didn’t have the bandwidth with everything else that was going on. So I’m really, really looking forward to going back and driving certain big business initiatives.
So that’s going to be the roadmap and we just need to free up bandwidth for that. I would rather do that than sort of board level governance.
Vijay Shekhar Sharma
The important thing is if you notice that we’ve gone focus, focus, focus. So mother’s bandwidth rather than being a board representative in an operating representative or operating action is very more, very much more valuable. As you notice our future forward growth line items they are all about revenue and profitability by the same businesses and little bit of expansion into international market. So overall there is a tremendous amount of work operatingly on the table and I think there is the responsibility of the board wise we got a GC so that more compliance, compliance etc etc kind of updates can be taken care.
Piran Engineer
Okay, okay, that clarifies it. Just moving on to the quarter. In this quarter ballpark what percent of our disbursements would have been under fldg?
Madhur Deora
I. I think we’d rather not give the exact percentage but I mean you can see from our direct expenses decrease quarter on quarter and that will give you a sense. We also report partnered portfolio AUM on a monthly basis as per RBI guideline. But I can tell you that that number is down. Even that AUM number is down over 40%. So you can imagine that the new dispersals are significantly lower in the DLG than before dlg.
Piran Engineer
Correct. So then Manu, the QOQ decline, which it’s almost halved, that’s pretty much attributable only to the change in DLG stance. There are no other products or services that have caused this decline. Hello.
Madhur Deora
Oh sorry. Just because. I apologize. So the other costs have actually gone up a little bit as they do so quarter on Quarter as you’re growing the business so the DLG impact is even sharper. But you shouldn’t assume that because that line has half that the DLG has half. Yeah, the DLG has gone down very, very significant.
Vijay Shekhar Sharma
Yeah, important thing. We actually had an incredible quarter for merchant disbursements and portfolio quality. DNG is not the needle mover single reason. Rather there is a tremendous amount of growth in credit disbursement itself that we saw. If you see the revenue that would help you understand because DLG was coming in the cost line item. We still are showcasing the revenue side of the financial services and that is needle moving behavior there is from the merchant loan.
Piran Engineer
Got it. And, but. And if I compare it on a yoy basis, last year first quarter you all had not started dlg. This year first quarter you all might have done a little bit here and there. It’s still down. So I have to think of it as it being down because of that business that was sold to Zomato. Right.
Madhur Deora
Well, we actually have a little bit of commentary on that later on. So you’re absolutely right though. So first quarter last year we had no dlg. This quarter we have a small amount but less than previous quarter. And the reason for reduction in expenses is some cost rationalization. Also our of all the business that we have done historically, our collection costs are down quite a lot on a sequential basis because. And also on a year on year basis because especially in personal loan, our partner AUM which is under collection model is down quite a lot.
Right. Because A the overall volumes are lower and B we have moved a large volume amount of volume to distribution only model. So our collection costs are down quite a bit as well. So when you look at year on year you have to adjust for that as well. And we have of course the back in indirect expenses given some. Sorry, under direct expenses given some sort of qualitative factors for it. Just so that you have a sense of the trend lines and direction.
Vijay Shekhar Sharma
So the important revenue you should know if you read financial services revenue561 it is overall. If you see quarter on quarter and the number is because of DLG not being there, this is lesser number. It could have been higher if we had the same amount of DLG that we could have issued in March 25 because the loan closure we are able to recover the DNG and the revenue.
Piran Engineer
Correct? No, no. Yeah, I get that. Just trying to work out some math. Okay, this answers my question. Just lastly in terms of the POS business, I see you’ve given some you know, qualitative commentary at the start. Are we rethinking how we do our POS business just as a distributor while the bank owns the POS machine? You mentioned this for the enterprise level merchants and just broadly out of your 1.3 crore devices, how much would be PoS?
Vijay Shekhar Sharma
The important thing is that we do not do that business where the bank owns the customer and we are just putting hardware on behalf of bank and other way around.
Piran Engineer
Vijay, the bank owns the machine, you own the customer.
Vijay Shekhar Sharma
We don’t do that. We don’t do this business. We own the machine. We own the customer. We are in that business. And that is what we have tried to qualitatively talk about. Because it is important to know that there are two business models where one like you said bank owns the customer or bank owns the boss versus our model where we effectively own the customer at the machine and we route the payment processing to a bank. And that is the business that we are in. It’s. That’s why we call it full stack. We are not saying that bank owns the device or owns the customer and we are being called post provider.
No, that’s the business we don’t have.
Piran Engineer
Okay. And just the number of machines would be useful.
Vijay Shekhar Sharma
It’s the number of subscription that you’re seeing is our customers are owned by us.
Piran Engineer
Out of 1.3 crore, most will be soundboxes. Right. How much would be POS machines?
Madhur Deora
Oh, I get it. I think roughly roughly a million million plus. You should also know Piran, that as we see the entire gamut of the market historically we have thought about soundbox and edcs as two different things. Now it’s a spectrum.
Vijay Shekhar Sharma
Yeah.
Madhur Deora
Because now we also have a card soundbox. Now we have a card soundbox with a screen. So the only thing that it really doesn’t have which an EDC has is a printer. Right. And we actually have card soundbox with a screen with a chip and pin. Right.
Vijay Shekhar Sharma
And these are being installed in enterprises. So.
Madhur Deora
So now this is an entire spectrum. And you’re, you’re right to say that, that you know four years ago we were saying soundbox and EDC machines. But now soundbox that can accept cards, tap and chip and pin and has a screen that is effectively an EDC for a merchant who doesn’t believe in.
Vijay Shekhar Sharma
Being a hardware, software and services full stack owner. We were able to build hardware where what is needed is added and what is not needed is removed. And that is where the edge over anything else is. Other companies source hardware from China Do a capex deal on a rental and that’s a payment business. We don’t call it payment business. We design our own hardware, we own our own software, we deliver our own services and like you just learned the idea of creating many more layers between the paper QR to let’s say an enterprise online or you can call it peak P billing post machine are that there are so many devices it’s like a phone business literally that there will be so many layers and types of phones in the between either size wise.
Piran Engineer
Got it, Got it. Okay, that’s it from mine. Thank you and all the best.
operator
Thank you P. The next question is from Mr. Sachin Dixit from JM Financial. Sachin, you may please ask your question.
Sachin Dixit
Hi Vijayan team. Congrats on a great set of results. My first question is with regards to the shareholder letter mentioned that the payment services business operated at break even One housekeeping question what all revenue line items are you including there? Largely from a longer term perspective how do you see profitability in this particular payment services business growing ahead.
Vijay Shekhar Sharma
So payment business includes subscriptions and any interstate in MDR all those kind of incentives etc that we call out it does not include any financial services revenue whatsoever and obviously the marketing services are so it is payment related billing that we would have done through the merchant.
Sachin Dixit
Right. And how on profitability piece
Vijay Shekhar Sharma
I do believe payment is profitable business like you’re seeing without UPA MDR we are talking profits and I do believe payment standard is profitable and has a operating leverage. We continue to push operating leverage of creating more solutions and value adds on top of as basic as processing if you will and that’s where the differentiation in the payment business comes.
I. I continue to believe that payment standalone will be bottom line driver and a large bottom driven driver Once these MDRs also show up in effect today we are calling calling break even and tomorrow we are going to call large profit from payment. That’s why I keep saying for us to the core we have a great business.
Sachin Dixit
Perfect. Perfect. My second question is on the contribution margin side right? Obviously this quarter we reported a 60% contribution margin which looks quite good from a sequential or YY basis But there will obviously be some impact of FLDG based trail revenue coming in from the last few quarters that we have issued. While there is no DLG expense on the like to like so I’m guessing there might be some one time impact being there in that contribution profit.
Madhur Deora
Sorry, please, please finish.
Sachin Dixit
So I. I was just saying like so can you break down maybe how Many percentage points would be because of let’s say the trail revenue coming in this quarter versus there being no FLDG expense.
Madhur Deora
So to be clear, this is not, I wouldn’t quite call it a one time impact. I think you’re right in observing that this quarter we rather suddenly don’t have a significant amount of DLG cost. But the fact that we are doing large amount of non DLG business will mean that the trail revenue will be a bit lower compared to if we had done DLG business. So yes, there will be some impact of not doing DLG on just future financial services revenue. We don’t think that’s very significant. And like I mentioned when I think Sachin had asked. Sachin had asked the question that that’s part of the reason why we think our guidance should be high 50s rather than guiding to specifically 60% which is what we have already achieved. Although there are drivers in the rest of our business that can move this number upwards.
Vijay Shekhar Sharma
Sachin, your question of if we had large trail revenue answer is last year and this quarter because these are 1214 month loans was not very large.
Sachin Dixit
Understood. All right, thank you. And those are my questions.
Vijay Shekhar Sharma
Thank you.
operator
Thank you. Sachin. The next question is from Mr. Pranav Gundlavalli from Bernstein.
Pranav Gundlapalle
Hey, good evening. Just had three questions. First is on your BNPL product. Is a resumption of BNPL contingent on you getting your wallet product back or are there other dependencies before you can get the NPL started? Just for making this. Answer that and then come back to second question.
Vijay Shekhar Sharma
No, it is not. Both are independent. It was rather the small credit issue that exists in the market. Less than 50000 credit due to that. And that is the only single KPI that materially matters to the lenders. There is no other KPI wallet. We don’t peg it on wallet either anyways and we never.
Pranav Gundlapalle
Okay, so if there is a recovery in personal credit, both your PL and BNPL products could come back
Vijay Shekhar Sharma
100. I mean I personally love the product and I’m personally a champion of it. And like you said it, when the personal credit comes back, BNPL will come back. We totally believe that it’ll come back.
Pranav Gundlapalle
Okay, great. Second question is on your lending business. What percent of share dispersal would your largest partner account for? Rough number two, what’s the concentration?
Madhur Deora
It would be somewhere between 30 and 40% and there’s a reason for it. While we have a huge amount of lending capacity available with other lenders, especially the lenders who have joined in the last six or nine months who have done successful sort of scale up to a certain level but have a lot more appetite especially in merchant lending. Majority of the business is repeat business and in the case of repeat business the partner who gave the first loan always have the rover and vast majority of Repeat business nearly 100% gets done by the same partner.
So as a result even though we have a huge amount of capacity available from other vendors, the same partner actually effectively ends up getting all the repeat business and then a new business is distributed based on various logics such as which is a better fit, who has better conversions, better commercials, etc. So it does take time for the business to shift away and the largest partner, I think you get some indication of that also from our disclosure that there is one partner who is very substantial in terms of their AUM on our platform.
Vijay Shekhar Sharma
And I want to tell you that we personally have been pursuing other lenders who are do not necessarily have appetite to do the let’s say top up to release this rofer so that we can allow another top up loan to be given and a couple of them even agreed. I’m personally very committed to continuously even further deconcentration or hedging among multiple people but rather this is more like that some champions have understood the product and they want to do even more versus many who have their own restrictions based on many many their own self reasons may issue lesser amount.
So it’s less about capital availability. I can also tell you I personally look at capital availability right now we are dispersing 30, 40% of capital availability.
Pranav Gundlapalle
Super clear.
Madhur Deora
Just to give you another sense, another way to answer that because I don’t want to give the exact number is that this partner is largely in merchant lending. Our book with other partners in merchant lending over the last nine months has grown significantly faster obviously from a smaller base in each case than with this partner. So that shift that it is shifting but it happens gradually because of the repeat and top up business nature of this.
Pranav Gundlapalle
Understood, understood. Very clear. The last question is I think circling back on the credit card acceptance. So you know, irrespective of whether you call it POS EDC or Smarter Soundbox would our number of devices accepting credit cards have increased in the last one year especially after the restrictions on ppbl. And also have the economics changed versus what it was with the PPBL arrangement?
Vijay Shekhar Sharma
Yes, actually you pointed out towards the correct thing the net payment margin is going to grow because of credit card EMI and let’s say loyalty point or any other high margin processing Payment instrument. We came from the behind on EMI and we nearly took the top spot of processing EMI volumes in India then credit card wise number of devices.
Yes, exactly. That is the reason that we continue to drive these acquiring. Surprisingly all of our card acquiring machines are card acquiring. Along with that our QRS are card acquiring because of rupee credit card going on qr. So it started to earn sizable revenue because rupee credit card on UPI actually is MDR bearing even today.
Madhur Deora
I should also just clarify, I think you mentioned something about margin. The margin is nearly identical because between whether PPBL was acquiring or the partner banks who we are acquiring with right now. So the margins are not different at all.
Pranav Gundlapalle
Understood. Just to clarify, we had, I think you know if you look at the RBI disclosures, ppbl had almost a 7,8% market share in what at least RBI calls as post machines. Is it safe to assume that the market share has not declined since the last 12 to 18 months?
Vijay Shekhar Sharma
We increase that. So yes, safe to assume that it did not decline.
Pranav Gundlapalle
Cool. Thank you.
Vijay Shekhar Sharma
Have an eye my friend. I’m sick.
Pranav Gundlapalle
Thank you. Those are my questions.
operator
Thank you so much. Pranav Karoti from Access Capital, you may please ask your question.
Jayant Kharote
Thanks for the opportunity and congrats on the delivering positive earnings to the whole team. First one is on this quarter’s payments revenue. So if I look at the device addition positive has been pretty strong. And if the net payment margins are north of 3bps Is there a decline in the yields for the devices? QoQ.
Vijay Shekhar Sharma
UPI volume is not accounted for any revenue till the time period final bonus is given or the grant is accepted. So the yield looking less is not because of rental or any other thing or subscription fee that we charge for the merchant or any other thing. It is because growth of UPI effectively shows incrementally less BIPS payment processing because we only account for it in the quarter where we get the amount. So and UPI is growing.
Madhur Deora
I just add a couple couple of things to that and this we also get PIDF revenue which is an incentive from the government. We also have certain incentives with our partner banks. So there are a couple of smaller but if you’re looking literally quarter on quarter and you know getting to smaller margins of error then there are some few others much smaller variables that also play as a part of our overall subscription revenue per device. Because we have become extremely efficient on capex and refurbishment we are not looking to drive up subscription revenue per merchant necessarily.
So we have very much moved towards what is the lifetime Value of this portfolio which is which includes the subscription revenue, includes for example things obviously these incentives but also rupee on UPI and then also includes some attribution of the fact that some of these merchants can be upsold to merchant vending. So we look at it in the holistic context rather than trying to drive up a single number.
Jayant Kharote
Actually that is feeds into my second question I was going to ask now that do you see the boss market market shares having stabilized between the few players and does this now open up headroom for looking at price hikes on these products?
Vijay Shekhar Sharma
I like it. I personally want to tell you internally we did increase the price and it worked out and sort of. It’s a funny thing. I mean funny because internally when my team pitched it because they said that we can try it I was like are you sure you would not see churn in the merchant? Then we found out that there is a reversal RC by paying large because our products are far superior than competition in the market. Everybody else is a Chinese copy our hardware, software, stack etc work out incredibly better and that gives our product a premium level in the market.
So sometime if you were charging 100 bucks we’re charging 129 now and we are able to do it because the customer loves it and the stability and robustness gives a premium to it. And in other words I would not want to call that we are going to increase the price. I would rather going to say that we are continuing to expand and invest in the business and I’ve told the team earn the business revenue and profit and expand and expand to newer places and. And they were able to do it. So no, not yet. And especially when there are seven more players coming in this market.
But at the same point in time we did the elasticity check my friend and it was so positive and surprising.
Jayant Kharote
Yeah, I mean that experience that you’ve gone through couple of events over the last two years if the vintage has stuck around that ability to price it up should be there that. But I get your point. You want to wait for a couple more.
Vijay Shekhar Sharma
Yeah, I mean obviously one more year our time will come. Okay.
Jayant Kharote
The second question is slightly longer term and you know most of the businesses have stabilized now Vijay, whether it’s lending or payments, there is decent healthy linear growth here. But if I were to again push you towards any non linear variables there that can lift the revenues. So credit card on UPI we discussed 4/4 back you had guided 5% of GMV but it doesn’t seem that the pace is going at that rate maybe the issuance side. So anything else that you can call out that can introduce non linearity to the revenues.
Vijay Shekhar Sharma
Some of the consumer products, if you remember we just talked about bnpl, we just talked about wallet, we just talked about many of those products. Those were nonlinear. I mean those were getting incredible top line, bottom line, both. Once they start showing up, I’m going to tell you that that linearity just changes the orbit to the next level and then continues next linear. And after that we could think about newer product and technologies for our merchants. We have some of those being pilot as we speak. I rather speak once we see a sizable number. So yeah, obviously I mean we are in it for long.
Jayant Kharote
Is BNPL around the corner by any chance?
Vijay Shekhar Sharma
Now it’s not a question of BNPL on the corner but my point was that there are line items that we have showcased in the past that have this dramatic peak and like we just answered in a few minutes back, it is rather the 50,000 ticket loan kind of thing that is overhang on it.
Madhur Deora
And I should just also mention that it’s anybody’s guess about the next 612 months but we do feel that on for example consumer credit side there’s a little bit of a drag on the business. Right. That business has seen much better days and I’m not saying exactly we’ll do exactly those volumes six or 12 months from now, but it does feel like and including in our conversations with partners that we are towards the bottom of what our potential is on that platform. And maybe six or 12 months from now we’ll be getting a lot more monetization out of that.
The other thing that we have done is we have made this very much product driven transacting user growth. So if you look at paytm’s product now versus a year ago, the app homepage for example is very, very much payments heavy and a lot of the things which might have been distracting users or it might have been cross sell upsell have been sort of deprioritized. So I think those things sort of and that is because of sort of where we were coming from a year, year and a half ago. And that is paying a lot of results and I think we’ll continue in that posture for a bit.
But we are very disciplined about if anything it’s okay to under monetize the consumer side a little bit right now but just make sure that the users are getting fantastic payment experience.
Jayant Kharote
Understood. Thanks and congrats once again guys.
operator
Thank you Jayant. The next question is from Mr. Sameer BSE from Diamond Asia. Sameer, you may please go ahead and ask your question. Sameer, if you could please unmute your line and ask your question.
Sameer Bhise
Yeah, hi, thanks for the opportunity. Congrats on a strong set of numbers. So just wanted to ask, in terms of this efficiency improvement journey, would you. Say that some of the low hanging. Fruits have been taken and it is. It is probably more difficult in terms. Of say expansion of EBITDA margin. Would that be a fair statement or. You think some of the easy wins are still there on the table to take?
Madhur Deora
So I would, I would say I just break up the question into two parts. So one is on the cost efficiency side. I would say, like if you will, as you described the low hanging fruit, a lot of that we have done. So if you look at our indirect expenses, it’s down very meaningfully from its peaks, about 30, 35% lower. Having said that, every time we pay more attention to it, there are things that we find where we can be more efficient. So it’s not about doing less, it is just about just getting more efficient so that we can do more.
So there might be a few more areas and there most likely are a few more areas. But I think the EBITDA margin expansion is going to come from the fact that this quarter, for example, we grew 31% on a like for like basis, 28% at headline number. We do think in future quarters that number should be at least that much, if not higher. And we are a 60% contribution margin business and there’s no reason why indirect expenses should grow anywhere close to the revenue growth type of levels, not even perhaps half of that level. So now that we have 60% contribution margin, we are positive.
I think the jaws really open up as long as we stay disciplined on indirect expenses and continue to drive high, high margin revenue.
Sameer Bhise
So just kind of putting some of. This math together, would it be fair. To call that you could probably hit say early double digit before, before the. End of the financial year.
Madhur Deora
I want to give specific guidance for end of this financial year because that is obviously one does with, you know, quite a lot of sort of proactiveness when, when one is ready. But we do see significant improvements in EBITDA margin between now and the end of the year. We’re currently at about 4% but that is like 4% just in the first quarter that you have hit profitability. So you can imagine that there’s a lot of, lot of upside there.
Sameer Bhise
Fair enough. That’s all from my side. All the best. Thank you so much
operator
thank you, Samish. In order to accommodate a few more questions, we will be extending this call by 15 minutes. The next question is from Mr. Rahul Jain of Dal Capital. Rahul, you may please unmute your line and ask your question.
Rahul Jain
Hi. Thanks for the opportunity and some very strong execution. Most of the question have been answered, but let me make an effort. We give this unique user data on the financial services side. It seems slightly volatile. Is it there a way to read the seasonality on this? Or you think there could be a. Bigger stable pieces which could be identified. In a different count and there could be some smaller use cases where we see a more volatility in the user base.
Madhur Deora
So I think you’re referring to the number of customers who availed financial services. We. I think the historical trend is not seasonality as much as the fact that while we have seen growth in merchant loan, we have also seen a slight decrease in personal loan. We also were doing very well in PAYTM money on equity broking side. But as you know, market volumes are down because of certain industry regulatory events that took place second half of last year. So I think, I think the commentary on that is that our revenue has doubled despite this number remaining slightly flat.
Right. Which I think is sort of positive. On the other hand, I do understand that that is not as helpful a metric for modeling as we may have initially expected it to be. Right. Because our revenue per financial services customer in a sense has doubled. So like Vijay said earlier, we’d love to get feedback on what could be useful other than loan dispersal volume, which we have sort of discontinued with. We mentioned. We discontinued 2, 3/4 ago for the reasons that we mentioned earlier.
Rahul Jain
And another way. Yeah. Just to ask the question that previously asked, what could be the top, you know, one or two or three priorities for the company right now? Is it basically the execution or is it basically the reviving the lost revenue streams or it’s more about new offering that we intend to venture into.
Madhur Deora
I think we’ve sort of called that out in terms of focus area. Excuse me. So merchant payments is disproportionately the focus. It’s the core of the company. Right. So merchant payments and across the span. Right. So I know paytm probably gets more headlines for smaller merchants and financial inclusion. But what we did want to call out this quarter also is that we cover the entire space and including enterprise, both online and offline. So merchant payments is the core and there’s a huge amount of growth possibilities there, huge amount of innovation possible and we are going to drive that Right.
So in a sense that is a big focus area which is mentioned wallet in PNPL earlier and that is something which is not like a one month or two month thing but that is something that we are actively working on on financial services side. As all of you probably appreciate by now, merchant lending has been fantastic with our partners and really been a star and we run that business very conservatively but it just has enormous tailwinds which we benefit from now that we have got the business model right. And then on the personal and credit card side we just kind of wait for the recovery.
Right. It’s not one where we are going to push what you try to be ahead of the recovery. We’ll just wait for the recovery and we have a very good product and we think that should work well. So we’ve sort of listed out and I think internally we’re just super focused on AI which is something that we have called out in this meeting on every customer product and every internal process should be AI first and that’s something which we’re not seeing as sort of a thing that we’re going to start to do. That has been the posture of the company internally for the last one and a half years and that’s why we felt ready to start talking about it now.
Rahul Jain
Thanks. Thanks. I appreciated the color.
operator
Thank you Rahul. The next question is from Ms. Grishma Shah of Envision Capital. Vishma, you may unmute your line and please ask your question.
Grishma Shah
Yeah, good evening to the management team. And you know thanks for taking my question. I want some color on the GMB growth for this question quarter and how do you see panning out for the year? You know that’s my first question.
Vijay Shekhar Sharma
Ma’ am. I think if you notice the GMV growth is driven by UPI adting and expanding the merchant base and lately we’ve augmented our management team on online merchants because we already have had them onboarded for long and by focusing on more farming we hope to get even more growth. So all three buckets adding more merchants farming the current online large merchants and expanding of our expansion of UPI or same merchant growing more. So we do continue to see that payment has 4.5x growth left in this country on today.
Grishma Shah
Okay. The other question was on the MDR for large merchants. Is there any clue or you know you could help us understand if it’s some time away. It’s still a long time away what’s the sense on this.
Vijay Shekhar Sharma
And we are as aware as you are. So no extra comment or input that we discover so we, we will go by what happens and gets informed. We are not basing our business on one hope of the future. We are rather committed to continue to drive profitable business even today.
Grishma Shah
Okay, thank you and good luck.
Vijay Shekhar Sharma
Thank you.
operator
Thank you. Vishma. The next question is from Mr. Vijit Chen of City. Vijit, you may please ask your question.
Vijit Jain
Hi. Thanks for the opportunity and congratulations on a great set of numbers here. My first question just on the financial services side, you know, wanted to understand first is the number of customers that you provided, is that a unique number or is that, you know, would that include you know, a single customer availing more services and relatedly
Madhur Deora
it’s a unique number.
Vijit Jain
Got it. And relatedly Madhur, would it make sense to you know, provide also the number of transactions that actually happened under financial services bucket where you realize some revenue and and relatedly, you know, you have mutual funds, stocks and loan distribution under that bucket and the revenue incidents on each of them would be fairly disparate.
Would it make sense disclose the number of transactions under those broad categories for this quarter?
Madhur Deora
So the. So just to clarify, mutual funds is not there. It’s personal loan, merchant loan and equity broking and insurance. I think we separately would love to collate feedback on what would help. What would be the simplest way for analysts to model financial services better. So we’ll take this on board and really engage with you to get some feedback on that. And then we’ll also talk to other analysts on how many products. So if you have 5.6 lakhs customers who took financial services number of products would be would be a single digit percentage points higher.
It will not be massively higher. Right. So it’s not like we focus on hey, now that the person has taken a personal loan we should try to sell them equity broker. Right? So it is not really that journey. The three or sorry four separate high ARPU products for us they’re not necessarily one link to the other. So the overlap would be relatively small.
Vijay Shekhar Sharma
Also Vijit, important thing to note like Madhur said, it does not include mutual funds. So things like embedded insurance or mutual fund distribution which are non material for number of amount of revenue or bottom line generate. We have kept those numbers away from it all because that this is the material unique customer who have material revenue and bottom line.
Vijit Jain
Got it? Understood. Vijay, my second question. You know on you know the EMI on devices bit. Is this financial services distribution for you or will it be payment services?
Vijay Shekhar Sharma
Payments.
Vijit Jain
Okay. Regardless of which instrument is used, if.
Vijay Shekhar Sharma
It is an instrument used on device and we Are charging merchant for MDR and then passing interchange. This is a payment revenue. It could include AMI or credit card.
Vijit Jain
I see. Got it. And you know a related question on the enterprise POS side. Right. So from a market landscape point of view, is there, you know, I mean when I look at the various banks and who their POS partners are in the current system, of course there are number of players, some of them may still be on, you know, distributing old school POS devices versus you guys who obviously have a software stack on top, a lot of instruments, a lot of capabilities, etc. Right. So is that a big opportunity here? Switching enterprises out of old school devices which already show up in that RBI number into more modern devices and within that, how do you do that given these are bank relationships currently from a go to market strategy?
Madhur Deora
Yeah, I think there’s a very large opportunity on card side still in the country and obviously there’ll be developments around UPI and group card on UPI and then card as a form factor. So there’ll be industry level innovations as well. So I don’t want to talk too far ahead but let’s say over the next two, three, four, five years we do think that there’s opportunity for more card acceptance. However, we think that opportunity is the larger part of that opportunity is probably in taking these car machines a bit deeper. For that you need to have the payment gateway model that we have.
We need to have Field street and for us it ends up being an entire spectrum. Right. So all the way from, you know, we still do paper QR as well, although that is becoming smaller and smaller. But paper QR soundbox, you know, card sound box and then you know, Android card machines and obviously online payment gateway and everything else. So I think the larger opportunity is probably in terms of taking this deeper. I’m sure there are some large high value merchants that still use, you know, still want a hardware upgrade or something of that nature.
Which is part of the reason why we have also started as a very small part of our business partnering with banks and brands on what we call this post provider model. But that we don’t think is as attractive as a model.
Vijay Shekhar Sharma
I like to give some range number for this post quarter all because that our hardware like you said was liked and in a month we should do significantly less than 10,000 but little more than 5,000.
Vijit Jain
Okay, got it. Perfect. Thanks Vijay. And my last question here on the personal loans distribution side right now, good to see that there was a decent, you know, 2 million month quarter on quarter improvement in the MTUs on the customer side from a personal loan distribution recovery. You know how dependent from here on is that going to be on whether mtus go back to, you know, somewhere around the previous levels or you know or you do you think that the that business can grow even on this existing base?
Vijay Shekhar Sharma
I rather believe that it will grow only on the existing base because it is better to have a vintage customer whose value that you accrue or have understanding on the platform getting incremental customers and cross selling them and that to UPI customers are very low value customers etc. Etc. We’ve seen it in past so we are talking about our current MTU being way more than enough for the number.
Madhur Deora
And I think that’s exactly right. Which is that I think the person the big change in personal loan I think is going to be actually cycle dependent. Right. And like I said, anyone’s guess on when that would be but our partners tell us it’s maybe two to three, two three, four quarters away. Right. And it ultimately is their decision when they want to lend more. I think medium term the fact that we are getting not we’re not just getting into increase, we’re getting it partly because retention and engagement of customer is higher. So it’s not. So our empty increase is not just because we are adding more customers that we are acquiring more customers. You can see our marketing cost is actually one of the lowest it has been in a long time.
But what’s driving the increase is retention higher, engagement higher. So in the medium term we do think we’ll have more customers who are eligible. But yeah, next quarter whether this number grows to 7.5 or 7.8 or 7.9, I don’t think we’ll have any immediate impact on personal business.
Vijit Jain
Got it. And just last question on just switching to sticking on the same thing in general. Now that we’ve seen and you guys have seen a cycle in the industry on the personal loan side, is there any key fundamentals, fundamental way you think personal personal loans on you know, online kind of changes when it comes back into recovery, any significant big changes in how it will be done for the industry in general that you would, you know, highlight?
Vijay Shekhar Sharma
Oh, I would say how will it impact us in future? How will we behave? I don’t know what industry wise, I don’t actually know many other things about overall online industry distributing loan. I can definitely say that I would pursue personally us to do wealth or many other businesses which are not so cyclic even though wealth is a cyclic business trading. But there is a Opportunity to do for a few more things.
Vijit Jain
Okay, great.
Vijay Shekhar Sharma
We basically are under reviewed around financial services at large. That is what I say.
Vijit Jain
No, best of luck Vijay and the team for the future. And yeah, thank you for taking my questions.
operator
Thanks. We will take the last two questions of the day. The next question is from Mr. Samit Kariwala from Morgan Stanley. Sumit, you may please unmute your line and ask your question.
Sumeet Kariwala
Hi, good evening everyone. Thanks a lot for this opportunity. I had a question spec to the non UPI GTV that has been obviously coming off in terms of contribution to overall gdp. Now if the rupee credit card business is picking up, there’s some activity on the EMI business. Should we expect that to grow faster?
Vijay Shekhar Sharma
Faster is wrong word. Because of the very reason that there is still a finite number of people who have rupee credit card and that number is not very large because the common people are using more and more upi. So it will grow very good but faster between the two still will not be there the case.
Sumeet Kariwala
Thanks Vijin. Just one more question on the EMI financing business. Can you just talk about the product? How. How do you differentiate as compared to competition? What would be your market share key brands that you work with some more.
Vijay Shekhar Sharma
Okay, yeah, yeah. So EMI is a product where the trick is that merchant and consumer needs many more parties to subvention. So one of the biggest differentiation in our product versus many others who have in the market when we entered, we entered with this that we have at least five parties that can subvention the cost of financing. And subvention meaning that in a movement of truth on account a loan the loan could be paid by let’s say brand number two, retailer number three, the consumer number four. The any other entity like platform US can subvention further or even in the bank.
So we are talking about every party can pay the subvention cost is as a one first and foremost change that we were able to bring in the market. Second is that because we work with so many banks we are able to give that small shop in a small town an opportunity to give card offers. You know, typically you would see these card offers come on large retailers like Vijay Sales or Chroma or many other online merchant platforms. Small merchants do not get that. So we even added card offers which was second differentiation and card offer stands for card plus EMI both offers I’m saying here.
And third is because we work with brands with advertising also involved for them. So we were able to incentivize brands that you can advertise on our platform. Give us the incentive for our customer or our machines or our customer sends for our merchants that they are driving your product sales. So three big differentiation. First of all product like I said, more, more opportunities to get some mention or credit from. Second, more offers for the retailer from banks and financial institutions. And third that brand has an advantage because we have a consumer app where we are able to cross sell or give incentive to the brand to say I’ll give you this advertising in lieu if you give my merchant something more.
So very very differentiated. Nobody can match because these are sitting around on the differentiation of we have a consumer, we have a technology and we have a bank relationship. Anyways.
Sumeet Kariwala
Thanks, this is super helpful.
operator
Thank you Sumit. The next question is from Mr. Pratik Podar Pratik, you may please unmute your line and ask your question.
Prateek Poddar
Yeah, thanks. Just two questions. One is when I see marketing revenue from marketing services on a sequential basis they are down but your mtus are up. How should I think about this given that if you talked about engagement, retention, etc. Right.
Madhur Deora
Sorry, sorry to interrupt. Just to be clear, first of all quarter on quarter you always see some shifts in this line of business. There is some seasonality. I’m not saying this quarter was specifically because of that but I also refer to the comments I made earlier which is that on app experience we over the last two quarters have made payments far more prominent and non payments upsell for a large set of customers far less prominent because payments retention on the consumer side is something that we’re driving as a priority and that’s starting to show an mtu.
So the monetization of customers, especially new or medium light or medium engaged customers is going to come later. Of course if a customer is a very heavy user and doesn’t mind seeing a few ads or a few upsell office then they will see that. So we’re being far more selective and so that’s why we’re saying payments retention gives us long term upsell opportunities whereas it’s not about what this quarter look marketing service is really.
Vijay Shekhar Sharma
And one last line on this consumer are monetized when some advertiser, some marketeer, somebody who wants to reach out to them. So these two things will lead a lag any which ways.
Prateek Poddar
Fair enough, fair enough. And maybe just again sequentially when I see the merchant subscriptions and the new devices which are being deployed that number is lower versus what we did last quarter despite higher cost of sales in terms of the sales network etc. On a sequential basis again I don’t know whether that’s the right way to think about it. But just any.
Madhur Deora
Yeah, yes, it’s not entirely. Entirely. I see where the question is coming from. Again, quarter on quarter will have some aberrations but we also for example did more device pickups than we had done in the previous quarter because that says it’s a dramatic amount of CapEx. So the OpEx is significantly lower than the CapEx of a new device.
Vijay Shekhar Sharma
And you get to see a net number that is higher. So we may have deployed gross more and minus the net of the people who we pick up. So while the numbers absolute deployments are larger, we are reporting only the net.
Madhur Deora
And just to clarify that’s a double whammy on the number that you’re looking at because there’s employees going and picking up a device. So A I’m paying the cost for it and B I’m actually getting a a negative device count for them.
Vijay Shekhar Sharma
But we’ll continue to do it because we want more active merchants who are driving credit worthy growth.
Prateek Poddar
Yeah, I get it. And last question Vijay, is there a way to not or to optimize this refurbishment cost or redeployment cost? You talked about so many AI platforms etc, is there something in the pipeline which can significantly give you far better efficiency?
Vijay Shekhar Sharma
Actually if you notice we’ve especially shown the capex chart so that it doesn’t look like we are selling Capex as rental or Capex as payment revenue. That’s an important line item that we definitely continuously want to say and there I know, I mean we are becoming far more conservative in identifying it as a how many number of years we are going to see it active.
So if you know we charge the sound box in one year and two years and EDC in two years, EDC in three years, three years, EDC in three years and soundboards in two years. Now we wrote off lot of of these devices which were more than 12 months old and we didn’t see transaction. So the answer is that we are becoming far more conservative on accounting and additionally here we are thinking of creating even a longer term because longer term meaning far more features are incrementally coming. Right now we are going through that smartphone early age.
You remember that there was always a new soundbox, new smartphone that was coming. I do see personally that there will be a time when the replacement requirement or the change requirement will get far lesser than current. So efficiency scope.
Madhur Deora
I think if you just add a couple of things. So one of the things that we have talked about in the past and we’re doing is increase some of the features on the soundbox so that you are using the sound box not just for payments but for other things as well. So, and this will be a journey right about, just to take Vijay’s analogy, the first smartphone versus today’s smartphone, you do many more types of things with that smartphone, right? So I’m not saying it’d be exactly as powerful, but I think that’s the direction. So that increases retention and that reduces all the sort of downstream costs.
The second is, without giving away competitive secrets, we do dramatically more refurbishments than anybody else, even adjusted for relative scale, because we manufacture these devices in India, publishment hubs and so on. Right. Because we want to be extremely capital efficient here because that eventually goes back in the payback period math for the merchant. So we can price at a certain level. But if we have all of this working really well, then we can be more profitable at the same subscription revenue than our competitors. So we do want to drive down the sort of the cost of it or drive up the margin of it by being super efficient.
But of course there’s more one can do when you’re running a business at this kind of scale. Then there’s always operating efficiencies that you can drive and we do quite a lot of that.
Prateek Poddar
Okay, and just one last clarification. Look, if you had done DLG based disbursements, the contribution margins would have reduced, but the absolute contribution margin wouldn’t have changed a lot. That’s a fair understanding.
Vijay Shekhar Sharma
If we had done dlg, if let’s say our largest partner had done all DLG versus not, then our revenue would be slightly higher, but our direct cost would be meaningfully higher. So I’ll again point to the direct cost last quarter as kind of the ballpark number. And. The reason for that is if you go back to what we had said in the September quarter, that when you give dlg, you get all the DLG cost up front, but then you have higher trail revenue. So when you flip it around and you’re not giving dlg, then you don’t have the cost that quarter. But for the disbursement that you did in this quarter, you’ll have slightly less revenue over the next five, six quarters. So you get the cost impact in this quarter, whereas the revenue impact is distributed over time.
Prateek Poddar
Fantastic. Thanks. Thanks for this.
Vijay Shekhar Sharma
Thank you.
operator
Thank you, Pratik. 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’s website. Subsequently. Thank you all for joining. You may now disconnect to your lines.
Vijay Shekhar Sharma
Thank you so much, everyone. Have a good day.