Zaggle Prepaid Ocean Services Ltd (NSE: ZAGGLE) Q3 2025 Earnings Call dated Feb. 07, 2025
Corporate Participants:
Raj P Narayanam — Executive Chairman
Avinash Godkhindi — Chief Executive Officer
Aditya Kumar GV — Chief Financial Officer
Analysts:
Ankush Agrawal — Analyst
Manish Ostwal — Analyst
Parikshit Kabra — Analyst
Devesh Kasliwal — Analyst
Shrinarayan Mishra — Analyst
Rohan Mandora — Analyst
Debashish Mazumdar — Analyst
Aman Saifee — Analyst
Kartik — Analyst
Presentation:
Operator
Ladies and gentlemen, you are connected to the Jagal Ocean Services Limited Earnings Conference Call. Please stay connected. The call will begin shortly. Ladies and gentlemen, you are connected to the Jagal Prepid Ocean Services Limited Earnings Conference Call. Please stay connected. The call will begin shortly. Thank you
Hello. Ladies and gentlemen, good day and welcome to the Jagal Prepid Ocean Services Limited Q3 FY ’25 Earnings Conference Call. This conference call may contain forward-looking statements about the company, which are based on the beliefs, opinions and expectations of the company as on-date of this call.
These statements are not the guarantees of future performance and involve risks and uncertainties that are difficult to predict. As a reminder, all participant lines will be in the listen-only mode and there will be an opportunity for you to ask questions after the presentation concludes. Should any other assistance during the conference call, please signal an operator by pressing star then zero on a touchstone phone. I now hand the conference over to Mr Dr Raj P. Naranam, Executive Chairman. Thank you, and over to you, sir.
Raj P Narayanam — Executive Chairman
Thank you. Sure. Thank you. Thank you so much. You know a good — very good evening to everyone. Thank you for joining the earnings call for Prepaid Ocean Services Limited for the 3rd-quarter of fiscal year 2025. On behalf of the company, I extend a very warm welcome to all of you. On this call, we are joined by Mr Avinaj, Managing Director and CEO; Mr Aditya Kumar, our CFO; and SGA, our Investor Relation Advisor. The financial results, press release and the investor — investor presentation are uploaded on the stock exchange and on the company website. I hope everybody has had a chance to look at it.
Now I would take this opportunity to just give you a business update. This has been a milestone quarter for us with multiple accomplishments. I’m happy to announce our harvest performance this quarter and for the nine months ended in terms of revenue, adjusted EBITDA and PAT.
The — this quarter, the company reported a healthy growth of 69% with revenues at INR336.4 crores on a Y-o-Y basis. For nine months, the company exhibited a growth of 77% and the revenues for the nine months stood at INR891.2 crores. Our adjusted EBITDA for Q3 ’25 grew at 38% on a Y-o-Y basis at INR31.5 crores.
For nine months FY ’25, our adjusted EBITDA stood at INR86.6 crores, demonstrating a growth of 48% year-on-year. The reported EBITDA for Q3 ’25 surged to INR29.4 crores, increasing by 44% on a year-on-year basis. And for the nine months, we reported EBITDA grew significantly by 81% Y-on-Y to INR78.6 crores.
The profit-after-tax for Q3 FY ’25 increased by 33% on a Y-o-Y basis to INR20.2 crores. And for nine months FY ’25, our PAT more than doubled to a INR55.5 crores, growing by 125% on a Y-o-Y basis. So if you just look at it, I will do a revenue number. Total revenue in Q3 FY ’25 was INR336 crores against a Q3 FY ’24 of INR199.5 crores, showcasing a growth of 69% year-on-year.
Adjusted EBITDA INR31.5 crores in Q3 ’25 versus 22.9% in Q3 FY ’24, which is 37.6%. Similarly, our adjusted EBITDA margin has — is at 9.4% versus 11.5%. Our reported EBITDA number has been 29.4% — INR29.4 crores versus INR20.4 crores. Our reported EBITDA margin as has been — as we previously have told, is about 9% to 10% range and that is what we had guided for.
In — I also want to highlight and thank all the investors in December 2024, we successfully completed the QIP of INR595 crores and I would like to thank our investors for showing trust and confidence in the business. The fundraise is in-line with our growth strategy of inorganic expansion. We are currently very pleased to also inform that we are currently evaluating five targets in the spend management and adjacent space such as merchant card software, payment infrastructure, etc.
Out of this, two are at advanced stages and moving towards completion at a fast pace. Okay. As you know, there are various steps to it. There is a term sheet, then there is a due-diligence, then there is a transaction document. And if required, we need to go-ahead and take approvals from the statutory authorities.
Okay. So in both these cases, we are at very, very advanced-stage and in due time, which is possibly in the next quarter, we would be able to give you a definitive timeline. Okay. We are looking-forward to a closure of all these three transactions in this calendar year. Okay, hoping to — we’ll continually share updates with you on a regular basis. With This, I would also like to welcome Mr Virat Sunil Giwanji to our team as the Non-Executive Director of the company. He is a seasoned banker with over 30 years of experience in-building, managing and growing businesses across assets and liabilities. He has been involved with Kotak Group for about three decades in variety of roles. During this journey, he has successfully managed the joint-venture with international partners like Ford Credit International and executed the merger of midsized bank RNG. He also served as a Non-Executive Director for over nine years on the Board of Kotak General Insurance Limited from its inception stage. His experience across diverse roles and business leadership will help accelerate our growth plans in the coming years. Now I want to just give you a little bit of our global macro conditions in the spend management space. You know, globally, the spend management space is rapidly evolving with the introduction of AI-powered solution to automatically detect the unauthorized spends and impactful dashboards, enabling users to control spend, save time, increase compliance and improve efficiency. We are very proud and pleased to tell you that Ragal is also using AI and machine-learning models on multiple fronts. Zagal’s AI driven chatbot, Razbot, it is called has achieved a deflection rate of 60% and we intend to enhance the deflection rate to about 99%, while 60% is extremely encouraging, but I believe we would want to move it to 99% plus. Deflection rate is the percentage of the queries that the bot is able to resolve by itself without any human intervention. We intend to increase the expanse of our usage for our AI bought across different product functions and to enable efficient business decision-making. Travel and expense is an integral and important part of our corporate spend. Zagal has entered into agreements with multiple travel companies such as, FCM, Travels and recently with TB of Access to offer bundled expense and travel solution to our customers, facilitating seamless travel booking, payment, reconciliation and filing of the expense directly into VGL. We are also building a tightly bundled self-booking tool that will integrate with preferred travel suppliers, thus ensuring consistency and cost-savings in travel bookings. Also want to take a minute and highlight that the current — the Union Budget 2025 introduced important tax reforms aimed at boosting consumption. There have been many questions and queries about how does this impact our revenues and profits. We want to take this opportunity to clarify that we see very little or no impact of this change in our sales business, which comprises of employee expense management, reimbursements and benefits. The employees in the INR5 lakh to INR15 lakh salary range only take meal benefits, which form a meager 0.48% of our current revenue. Incrementally, we see significant demand across our corporate customers for non-tax dependent wallets and payments. We have recently launched a health and wellness wallet for our customers. Along with that, we have also launched a packet area solution, employee gadget solution, et-cetera. We see a significant uptick in the number of wallets in our card to continuously increase and lot of these — lot of these solutions which we have offered are — would be lapped up by lot of employees within this corporates. Also to state that we have not seen any kind of customer complaint or customers coming back to us and saying, we want to do away with, as this particular program. So we have not heard that. Simultaneously, also want to clarify that the OTR, which is the old tax regime is still continuing, while we had expected since last two years that the old tax regime would be removed and only new tax regime would be used. But contrary to our belief, it is that they are still continuing with OTR, which is — which would be slightly beneficial to us. But we really — as we go-forward in our business, we really do not want to depend on any tax benefits per se. Additionally, we have partnered with multiple service providers in areas like financial services, healthcare, taxation, et, to provide value-added services to over 3 million-plus active users. We have recently enabled BBPS Bharat Bill payment system on our platform through which users can pay their bills directly from the Zagal app. Zagal app also allows our customers to book FDs and multiple such instruments and we are able to service them while offering very attractive FD rates of up to 9% per annum from various bands. Now I would want to take a minute and explain about the customers — the customer updates. We — as you would have seen in our filings, we have signed significant marquee clients including Blink, Fin Homes, Mumbai Metro, Hitachi, Mahindra Fest Meals, Narana,, etc. Commerce is gaining prominence in our day-to-day lives. We have also tapped into this space by signing contracts with clients such as Blinkit, Zepto. Blinkit has signed-up for our, which is the — which is one of the most newest offerings from fold. It is called branch recurring operating Monthly Expense. It’s a solution which is a new case within our Zoya product wherein corporates or retail brands can effortlessly manage their branch store-level expenses with secured payments, compliance checks and real-time insights for better financial control. Right now, as we speak, we have like hundreds of demos going on in this particular solution and we think that this could be our star performer in the coming year next year with more dependence on with absolutely zero dependence on any of the statutory or regulatory environment. We have a strategic focus on growing with our goal of deeper penetration within select industry segments. Our partnership with Zepto and Blinkit exemplifies this strategy. We are implementing an automated bill search and utility payment reconciliation system for, providing comprehensive visibility and control across their 500 DAC stores on a unified platform. Given our strong performance, we are upping our guidance. Previously, if you remember, the Q1 we had said we possibly will be growing at about 45% to 55%, 45% to 50% then in the quarter as after the closure of quarter one, we had said that we might grow at about 50% to 55% and now we are upping our guidance that we now we possibly will be able to do in the range of about 58% to 63% and this also may be a little bit outdone in — if the trends are to be seen. This is the kind of growth in our top-line for FY ’25. As we rapidly grow our top-line, we continue to focus on protecting and growing our margins over-time through increased operating leverage, enhanced efficiency and cross-selling. Additionally, our focus on new areas of organic and inorganic growth with deep profit pools is also expected to contribute significantly to our margin expansion in the coming years.Thank you. With this, I now hand it over to our CEO, Mr Avinaj.
Avinash Godkhindi — Chief Executive Officer
Thank you, Dr Raj, for your comments. Over the years, we have pivoted from a product-based approach to a platform-based approach, where we provide a bouquet of offerings to our customers to address the multiple requirements through our spend management solutions, be it for rewards, expense management, procure-to-pay,, which is our branch recurring operating monthly expenses solution, fleet, forex and much more.
The opportunity to digitize business plans through our software solutions bundled with payments is a highly-accretive opportunity for us. During the quarter, our SaaS fee/platform fee/service fee contributed to about INR8.9 crores. Our program fees contributed about INR135 crores INR. Proper Points revenue consisted of 57% of our revenue, which contributed INR192 crores.
It is very heartening to see that Zoya, which started clocking revenues only in April 2024, is contributing significantly to Zagal’s growth. We have achieved high acceptance levels for this product amongst our corporate and enterprise customers. We are providing payment solutions for rapidly expanding network of dark stores and branches, addressing the diverse spend needs through our solution.
Zepto also signed-up for Zaggle Safe solution to offer their employees expense management And benefits for a significant number of their employees using multiple wallets to enhance their benefits management. Another significant win for the brom use-case is our partnership with one of India’s largest retail players to digitize all their store expenses. The solution once implemented will be deployed across extensive networks of tens of thousands of stores. On the fleet side, we entered with an agreement with AGP Gas — City Gas, which is Pratham and Gas and successfully conducted the product launch in December 2024 with thousands of cars being issued and hundreds of gas stations being unable to accept our cards. There are several other clients in the pipeline and we see very good demand and deep profit pools in large addressable market on the fleet payment space going-forward with our platform approach, we anticipate growth rapidly on the back of new client additions, along with much higher cross-sell in our existing clients. Our partnerships with multiple travel partners such as Trip, FCM, Via, TBO, Yatra, etc., also the travel options and provides numerous choices to large enterprises for our travel and expense solution. During the quarter, we also announced key collaborations that Dr Raj spoke about. We have signed a significant agreement with Mastercard, which is a 7-year partnership. Under this partnership, Mastercard will recommend our software platform and card solutions to their corporate customers and other entities like banks and fintechs. Mascart did an extensive evaluation of solutions in the market before inking this partnership with us. This highlights our capability to provide value to our customers through multiple solutions such as expense management, Zawyer, our rewards programs, etc. This partnership is a global partnership. Further, the much-awaited HDFC Bank partnership has come in as a major addition to the list of our partner banks. In this agreement, HDFC credit cards will be bundled with our software, expense management and employee and benefits as well as our ZOIA platform and offer to their corporate customers. We also strive to build semiotic relationships and we believe in partnering with various industry players to stitch value-adcretive collaborations. We have entered into a strategic partnership with Strada, which is a large MNC HRMS solution provider. Working with multiple global Fortune 500 companies wherein they offer the Zagal SaaS and payment products to Strada’s clients. I’m delighted to share that we have won quite a few awards this quarter. Zagal won the Deloitte Technology fastest 50-2024 Transformation Tech Award he also won the 19th Employer Brand Awards Telangana’s Best Employer brand Zagal also won the best use of customer loyalty program FinTech at the Finnex 2024 and the best use of ad FinTech at the Finnex 2024. These awards only highlight our ability to go to the go the extra mile and provide value-accretive solutions to our users and corporates and we continue to keep the momentum going ahead. As always, our endeavor is to provide comprehensive solutions in the spend management space and to maximize our reach to new clients and increase our wallet share with our existing clients. With this, I now hand it over to our CFO,, to take us through a financial update. Thank you.
Aditya Kumar GV — Chief Financial Officer
Thank you, Avinash, and a very warm welcome to everyone on this call. I’m pleased to share that the company has achieved another strong quarter of operational performance, driven by robust and broad-based revenue growth of 69% Y-o-Y basis, reaching to crore. This growth has fueled by healthy expansion across all three revenue streams with program fee increasing by 54% Y-o-Y and the platform witnessing a significant 87% sequential growth in Q3 FY ’25.
The rise in incentives and cashback aligned with business growth driven by increased reverse offered to the clients users for spending through our product offerings. Other expenses have risen due to higher sales and marketing costs during the quarter, while employee costs remained stable sequentially but increased Y-o-Y basis, reflecting the additional headcount needed to support business growth.
Our adjusted EBITDA grew by 38% to INR31.5 crore in the quarter compared to INR22.9 crores in the same-period last year. The increase in depreciation expenses is attributable to the capitalization of new products. Our cash PAT, which includes net profit along with depreciation and ESOP expenses, increased by 34% on a Y-o-Y basis to INR26.2 crore.
Our PAT has increased by 33% compared to previous year to INR20.2 crore. For nine months FY ’25, our revenue from operations reached an all-time high, recording a substantial 77% Y-o-Y growth to INR891.2 crore. This was driven by robust expansion in program fee, which more than doubled with 110% Y-o-Y increase, along with impressive 62% Y-Y growth in our total platform.
Our adjusted EBITDA has by an impressive growth of 48% to INR86.6 crore. PAT has more than doubled, rising by 123% Y-o-Y to INR55.5 crores. Notably, our cash PAT has seen significant growth in increasing by 56% to INR72.0 crore. During FY ’25, we expect to record total ESOP expenses in the range of INR9 to INR10 crore.
With that, I would like to conclude my update and we are happy to open the floor for questions. Thank you.
Questions and Answers:
Operator
Thank you very much. We will now begin the question-and-answer session. Anyone who wishes to ask a question may press star and one on the touchstone telephone. If you wish to remove yourself from the question queue, you may press star and 2. Participants are requested to use handsets while asking a question. Ladies and gentlemen, we will wait for a moment while the question queue assembles. The first question is from the line of Ankush Agrawal from Surge Capital. Please go-ahead.
Ankush Agrawal
Yeah, hi, thank you for taking my question. Firstly, on the gross margins for profile, I mean, in this quarter, the margins are now about at 3%, even though I think in Q2 we had sort of indicated that based on volume-based discount that we get from merchants and the full-year margin should revert to about 7% to 9%. So your thoughts up
Operator
To you, Mr Agrawal, but you are not that clearly audible, sir. Your voice is sounding very muffled.
Ankush Agrawal
Is it better now?
Operator
Yes, please go-ahead.
Ankush Agrawal
Yeah. So the question was around the propel business gross margin. So this quarter, the margins have come down to about 3% even though in Q2, we have sort of indicated that based on volume-based discount that we will get from merchants, the margin should recover in H2 and for the full-year, we should get to about 7% to 9% gross margins for this business.
So your thoughts on why we are not seeing any improvement in this business, given that even at INR192 crores of kind of revenues, we are earning about 6% of gross profit on this business and we know that this business requires a lot of working capital as well. So just wanted to understand what is happening in this business?
Avinash Godkhindi
Yeah, thanks. Thanks for your question. I heard part of it, but I think I got it. Basically a lot of the ORCs, overriding commissions are something that come in the Q4. Q3, very small merchants, we were able to cross some of the base thresholds. These are slab structures. So the real increase in the margins, we anticipate to see some of it — we anticipate to see most of it actually in this quarter and then that’s where the you know that number is looking the way it is.
Ankush Agrawal
Yeah. But for the full-year, do you expect and we will reach that 7% to 9% on the full-year?
Avinash Godkhindi
See it’s a little premature for me to comment whether I’ll absolutely reach there or we’ll reach there or thereabouts, but we are more or less there or thereabouts somewhere in that.
Ankush Agrawal
Got it. Got it. The second question is on the overall cost base. So the good part about that allowance that cash max is sort of that we have been able to curtain that you had guided earlier as well that over-time as the usage of increases, we’ll be able to curtain the incentives cost, which is — which has been possible.
But if I look at the other remaining cost base, that has been expanding at quite a rapid pace, even though in a business like us, given that it’s a platform-based business, because they should ideally expand at lower pace versus the revenues. And now we are like sort of the cost base is growing at a faster pace than the revenues itself. So just wanted to understand where-is this cost increase happening, like where are you investing because of business cost basis and so on?
Avinash Godkhindi
See, I think the cost base in a business rapidly-growing business like ours where we are on the one-side, trying to cross-sell more to existing customers on the other side, developing capabilities like Brom. It’s fairly understandable, I believe that the cost base is going to grow. Overall, our focus is on our EBITDA and you know, PAT and that’s growing very healthily. Of course, there’s always room for improvement and we want to improve on this in the coming years. But the investment obviously is happening in-building capabilities. And as I mentioned in my speech, when one of the largest retail chains in India, largest conglomerates in India signs you up for tens of thousands of stores for your solution, then you don’t worry about anything. You just see if the contract is, you know, highly profitable or doing well, then you deploy or you invest capabilities to be able to make sure that program works. And for Brom, for example, we have signed so many of these accounts, I’m going to name the ones which we’ve announced, the blinkits, the Zeptos, the big baskets, the Dr Batras, the, the subways. So you can see that the number of these accounts that we have been talking about that these are the only a small set of the ones that you’ve announced to the street, right? So there is a lot of traction there.
Ankush Agrawal
Okay, got it. That was helpful. Thank you.
Operator
Thank you. The next question is from the line of Manish Oswal from Nirmal Bang Securities. Please go-ahead.
Manish Ostwal
Yes, sir. Thank you for the opportunity. I have a couple of questions on the business model. The first question on the — when I’m referring to Slide number 27 of the presentation, and when look at the performance of last three, four years, the company has grown strongly in terms of top-line, but in terms of operating margins and even the PAT margin, things not playing out the — in terms of improvement of the margin.
So basically the operating leverage is not playing out. But when you talk about the platform business, any platform business, the basic funda fundamental is the operating leverage benefit translate — translating into the PAT and the ROCE and et-cetera, but it is not reflected in our numbers. So can you help us apart from the 65% kind of growth we are looking at when you see the your growth converting into the higher profit growth also, sir. Thank you.
Avinash Godkhindi
Yeah. Thanks. Thanks, Manish. I think it’s important to understand that the revenue mix has gone through a change. The propel points revenue that even the previous questionnaire was asking us has a much lower gross margin profile, right? And that line of revenue, we have three lines of revenue, software/SaaS fees, program fees and propel point fees. Propel point fees has grown very significantly in the last three years and that has a much lower gross margin profile.
And hence some of these metrics may not look as encouraging. The way we look at it is how is our solution bringing value to our customer, a and overall is our EBITDA and margins growing. We can see operating leverage kick-in. It’s just that the way the accounting rules are, we need to account for propel points as a gross number.
Manish Ostwal
Okay, sir. And can you guide us in terms of trajectory of our margin in next couple of years where we see margins playing out?
Avinash Godkhindi
So we are looking at margins of about 15% to 16% in the next four years. That’s something that we’ve already spoken of and that’s what we are aiming towards?
Manish Ostwal
And lastly on the — this recently equity raise, which we have done, so what are the areas where we will be making the investment, especially inorganic side of the side? So can you highlight the areas where we’re putting our money?
Avinash Godkhindi
So we are looking at areas like the merchant card systems, we are looking at payment systems, these are the kind of areas that we are looking at.
Manish Ostwal
Okay, sir. Thank you hello.
Operator
Thank you. Yeah. The next question is from the line ofParikshit Kabra from Kday Advisors Limited. Please go-ahead. Parikshit Kabra, please go-ahead with your question. Your line is unmuted.
Parikshit Kabra
Hello, Kabra. Sorry, hello. Yeah, yeah. Sorry. Hi, Avinash. Congratulations on a good set of results. I was wondering if it was possible to provide guidance separately for your revenue guidance separately for your two different businesses, that is the program fees and the propel points instead of giving a collective guidance of 60%
Avinash Godkhindi
Thank you. Thank you,. The guidance is very strong on both items, right? Both items are — both revenue lines are going to grow very healthily. As you can see for the nine months as well, the growth on both propel points as well as our program fees has been extremely strong and even our SaaS fees has grown pretty well. So we are seeing growth across all three lines, especially program fees as well as total points.
Parikshit Kabra
Got it. All right. Fine. And then — but with the announcements that you’ve made and the fact that there are even more under the hood, I would have thought that your program fees should be outpacing the growth of your propell points. That’s not something that you’re seeing.
Avinash Godkhindi
So current year, yes, that’s going to happen. If you look at the nine-year numbers, I think Nine-Month numbers, this has grown at about 111% program fees, right? So that’s higher than propel points and the momentum is very strong.
Parikshit Kabra
All right, great. All right. Thanks a lot, all the.
Operator
Thank you. The next question is from the line ofDevesh Kasliwal from Antique Stock Broking. Please go-ahead.
Devesh Kasliwal
Yeah, evening, sir. Congratulations on a great set of numbers. First question was like what I understand is that the basis of the margin expansion is on the effect of reduction of cashback expense as well as acquisition cost. And I think you had mentioned around 33% of the overall revenue is cashback currently, what you’re estimating. So what can that be over the longer period of time? Like what can it come down to? That was the first question.
Avinash Godkhindi
See, the margin expansion would be through multiple ways. Obviously operating leverage kicks-in. Obviously, our cashbacks go down over-time. We’ll see a lot of our other costs also grow at a much smaller lower pace than our revenues. The acquisitions that we are looking at are highly EBITDA accretive and they are a great — coming at a great multiple for us. So those all would contribute in expanding margin.
Devesh Kasliwal
Okay. So a much concentrated question then. So if you look at the acquisition and retention cost, given the fact that we were trying to get customers with a higher revenue potential, it had gone up in FY ’24 to around 1.4 million, right? So what can that be? Like will that be a consistent number now or are we expecting that to increase given we are trying to achieve better customers and create a better system for them.
Avinash Godkhindi
No, see, every — every year we keep adding new customers and over-time, we see that a lot of these customers, the amount of revenue that we generate on a per year basis because we cross-sell, up-sell, there is more deeper penetration for the same product within the organization. You know the quantum of revenue grows disproportionately when comparing with regular inflation, et-cetera, right?
So that’s the benefit of a SaaS business because this sort of a business allows you to acquire the corporate and then keep generating, you know more-and-more revenues on a year-on-year basis as long as your platform is valuable to the corporate.
Devesh Kasliwal
Okay. And sir, the recent partnerships that we had HDFC Bank for the three-year period and the other client and all. So this will definitely increase the revenue per user that we’re getting, right, which has already seen an uptick from around INR1,000 to around INR1,066. So what can the limit on that on a yearly basis be like can it go to around 2000, 3,000 basically?
Avinash Godkhindi
So the partnerships will also help in a big bank HDFC, Mastercard, Strada, all these partnerships Are great partnerships, which would add both to our top-line and bottom-line. It’s a little premature for us to attribute a certain number saying this is how much we will benefit from these partnerships in terms of our per user revenue. But we are very confident that these — these are great names, great companies with great customer bases. And we’re very confident that this is going to add a lot of value to our top-line and bottom-line in the coming years.
Devesh Kasliwal
Okay. Thank you. Thank you, sir. Thank you so much.
Operator
Thank you. The next question is from the line of Srinada and from Barodha BNP Paribas. Please go-ahead.
Shrinarayan Mishra
Yes. Hi, thank you for the opportunity. Am I audible?
Avinash Godkhindi
Yes, sir.
Shrinarayan Mishra
So my question was again on the revenue mix. So directionally, like in medium-term, how do you see the revenue mix? I mean, how big can the propel revenue be of the overall pie, let’s say, in one or two years.
Avinash Godkhindi
Sir, we are seeing great growth in all three lines, right? But in the next two, three years, we see our program fees to grow at the fastest pace and because there’s a lot of traction there. And then of course, SaaS is very critical for us and that’s growing healthily as well. Propel Points continues to grow, there’s a lot of momentum in the ecosystem there. So that’s also growing. So hard for us to say how the mix would look in the next two, three years, but we definitely believe that program fees would be growing the fastest.
Shrinarayan Mishra
So the new customers which are onboarding, is there any possibility to categorize? So most of them are the revenues are going to propel or towards program and software fees. Any kind of color on that?
Avinash Godkhindi
Yeah. So the customers that you’re signing, for example, for their revenue sits with SaaS and program fees, right?
Shrinarayan Mishra
So most of the customers are there in those buckets. So this should go meaningfully. That’s what we should really try.
Avinash Godkhindi
Yeah, because you can’t propel points revenue on those — those products, sir, propel points revenue only comes on the propel contracts.
Shrinarayan Mishra
Right, right. And whenever you do cross-selling, then there are chances that the proper points could increase. But as of now, that’s not how it looks like, right? So in near-term, these two buckets would grow faster, right?
Avinash Godkhindi
Yeah. Yeah, yeah. These two buckets would grow first.
Shrinarayan Mishra
And just last question. So in Q4, so seasonality-wise, if we see Propel, so Q4 would be a bulky, right?
Avinash Godkhindi
And last two sir
Shrinarayan Mishra
Hello, can you hear me?
Avinash Godkhindi
Now I can hear you, sir. Yeah.
Shrinarayan Mishra
So Q4, Propel would have higher sir, right, in the overall revenue mix
Avinash Godkhindi
Not necessarily such revenue-wise year. So net revenue — net revenue-wise, obviously lower-margin per tonne, gross revenue-wise. Gross revenues.
Shrinarayan Mishra
So because for, the seasonality is in Q4. So again, Q4, we can see margins to look optically on the lower side. Okay.
Avinash Godkhindi
No, it’s again premature. So Q3, Q4 both is season for propel, Q3 being the festive season in India for rewards. So I think it’s hard for us to comment right now. But what we are seeing is that the momentum is great across, across our expense management platform and as well as propel is growing very well as well.
Shrinarayan Mishra
Okay. Okay. Thank you so much. Thanks.
Operator
Thank you. The next question is from the line of Rohan Mandora from Equirus Securities. Please go-ahead.
Rohan Mandora
Good evening, sir. Thanks for the opportunity. Sir, just wanted to understand your guidance for FY ’26, what you said is for ’25, so both on-top line and EBITDA margins, how one should look at it?
Avinash Godkhindi
So on the guidance, we just up the guidance to 58% to 63% for our top-line, right? Right. Was that for FY ’26 as well, it’s a similar guidance? I’m asking for ’26, ’25, this is FY ’25, right, this is FY ’25. FY ’26, you know, we’ll come back to you on that soon.
Rohan Mandora
Sure. Second was that there was this recently an announcement from RBI wherein a prepaid card can be used in UPI with a third-party payments app. So just want to understand its impact on our business.
Avinash Godkhindi
Yeah, these are all great pieces of news Rohan this opens up engagement on our app and there are certain steps to take to qualify and to get there but we are we are in the process and you know those are all very positive pieces of news for us.
Rohan Mandora
Right. So I understand that the addressable market here maybe increases, but just on the interchange, will there be any impact here or do we have any bargaining power here? Just trying to understand that, please?
Raj P Narayanam
So if you look at it, Rahul, the interchange on our UPI on prepaid is about 1.1%. What we see overall is that when the mix happens and the number of the transaction which will start happening, as you know on EPI and specifically on the — from the system, I think it will have a very positive blend to the overall — the number — overall interchange number.
So there will be a positive spike on the — on the number is how we look at it. And if you see one of the acquisitions which we are doing is also on these lines. We want to be able to actually run the entire EPS switch unit per se.
Rohan Mandora
Sure, sure. And lastly, just on the opex line items for 3Q, the employee expense at INR17 crores, which is higher than say the earlier run-rate of INR40 crore INR50 crores that you were having. So is this a normalized run-rate incrementally? Does this build-in the annual incentives and everything in this? Just want to check that. And also on the other opex, there is a jump from INR17 crores to INR22 crores, if you can explain that?
Aditya Kumar GV
Yeah. So employee cost is normalized, that includes INR2 crore piece of expenses, Rohan. And this is factored in normal employee growth level, which we hire the people. And OpEx growth because as we are in the growth phase, right? We are investing so much in the products. There were multiple products which were launched in Q3 in terms of the fleet, etc. All those investments are happening in that. That’s why the opex has been growth.
Rohan Mandora
So this again would be a nomination run-rate incrementally or is there any one-off in this other opex?
Aditya Kumar GV
It’s not like — since amount is not higher compared if you look at it as in quantification just INR4 crores, which is like reasonable per our set of the operations. So possibly you might see a little bit of lower expenditure in the Q4, but as the business grows, even that will be a percentage of revenues, that will be a normal number for us.
Rohan Mandora
Got it. Got it. And lastly, the conglomerate account that we talked about where we are — we have entered into partnership recently. What kind of an annual revenue potential can this kind of an account have? If you can just share some outlook here?
Raj P Narayanam
So you know, depends on the conglimerate, you know percent, what kind of use in a conglomerate. But on an average unit per account we can take, the potential could be to do about anywhere about INR50 to 65 crores per conglomerate is how you can look at it. You know, that is the number which we have done basis one conglomerate and we are thinking that in and about more or less the behavior would be same.
Rohan Mandora
Sure, sure. Thanks. And sorry, sorry, just lastly if I can squeeze in one more. The program fee revenue that we have, if you spend a if you can give the breakup between the three business lines for nine months
Raj P Narayanam
We will do that offline, we’ll send it to you.
Rohan Mandora
Sure. Okay. Thank you.
Raj P Narayanam
Thank you. Thank you.
Operator
Thank you. The next question is from the line of from Swan Investments. Please go-ahead.
Debashish Mazumdar
Good evening. Thank you so much for taking my question and congratulations on a very good set of numbers. And also congratulations for adding names like and Blinket to RPT. So I have three questions basically. So first question is linked to the program fees. If I see my program fees post-launch in Q3 FY ’24, we have reached a number of INR137 crores on a quarterly basis. And since then we are kind of at the debt range only. So the two points I’m trying to understand, one is, is it like is not firing up the way we thought from the initial the benefit that we got in Q4? And the second question is, are we at the — I mean, this is a contra to the first question itself are we at the inflection point for revenue to be booked going-forward because of the big names that we have signed in last two to three months? So that is my first question.
Avinash Godkhindi
So there’s certain amount of seasonality there at play and overall, a lot of these contracts are going through their go-live and you’ll see you know the benefit or impact of that in Q4, I’ll just leave it at that.
Debashish Mazumdar
So should we — should we take it like this way that Q4 onward — in Q4, the sequential growth in revenue would be or the program phase revenue would be significantly higher.
Avinash Godkhindi
I mean that would be too specific for me to comment, but I think you know the reads are good.
Debashish Mazumdar
Okay, thank you. The second question is when you look at my margin, obviously, currently it is under pressure or it is stagnant because of the proper platform revenue growing faster than our overall revenue. So just wanted to get some sense that what is the incremental revenue — or what is the margin for the program fees or intercharge revenue that we can book at the EBITDA level because we seems to be very confident of 16% kind of EBITDA margin over next four years.
And this is like from 9% to 16%, this is like almost doubling our margin levels. So is it like our oyer margin or margin is double of the proper platform margin that we report?
Raj P Narayanam
See the thank you for this question and I’ll give you a detailed answer for this. Okay. See, one of the acquisitions which we are doing is on a merchant card system. Okay. When you — when you deploy that particular SaaS product on — you know at the merchant store-level, your margins are going to increase significantly, okay? So today we just buy and sell, okay, and that is why those incremental margins of — on the issuance side don’t come to us.
Okay, the ability to enjoy the breakage does not come to us. When both of these come, the blended margin is much higher. Second is the rate of growth in SaaS as well as in program fees is going to be much, much higher. As I just told to another analyst is that this conglomerate accounts, which we have started cracking have a huge potential of anywhere between INR50 crores to INR65 crores per rate, okay.
If we are able to get about 10, 15 corporates over the next two, three years, we are talking — we are talking about a INR500 crore to INR600 crores now revenue coming from these conglomerates, okay, where the margins and these conglomerates operate more-and-more on the program and SaaS fee and less and less on the proper.
Okay. So the way we are looking at it is that the proper margin has to go up. The revenue on revenue on the program fees and the SaaS fees have to go up. That is how we are to your point.
Operator
Yeah. Please go-ahead.
Raj P Narayanam
Yeah. So I’m saying that there is a — there is a, you know maximum possible expansion of margin in beyond that, it might not go. But on the program fees, the ability to grow is much higher. So how we look at it and the — and why we are confident we have guided about 9% to 10% EBITDA margin for this year and we had said that maybe 10% to 11% next year.
So our range remains between 9% to 11% this year and as you know, next year, but post that there will be significant expansion as both these acquisitions which are in play would come into action and the blended margins would be much, much more higher. So if you remember, if you — you have tracked this for some time, you please look at our ’22 margins, ’22, we were at 16% EBITDA, okay.
And from that 16% EBITDA is what we came down when we started investing heavily into the various kinds of other programs, which we started to sell more-and-more and there was significant cost you know, which we had to incur in developing oil plus propel also started expanding.
So if you — if I were to go back to those 2022 days, it is not very difficult for me to see that how we will achieve about 16% EBITDA and that is our stated goal that we will reach about 15% to 16% EBITDA in next three to four years.
Debashish Mazumdar
Sure, sure. So thank you very much for the detailed answer. So just one addition to this, you must be tracking your intercharge fees EBITDA separately. Has it already reached to that, that 14% 16% bracket that you were talking about?
Raj P Narayanam
In terms of if you could just repeat the question or rephrase it.
Debashish Mazumdar
So what I’m saying is the intercharge EBITDA margin for your intercharge fees or program fees that you were
Raj P Narayanam
Taking is much higher. No, no, no, much, much higher, much, much higher.
Debashish Mazumdar
Okay, okay, okay. So that is what is giving us confidence of kind of…
Raj P Narayanam
Absolutely, absolutely. You put that, you remove, it’s much, much higher.
Debashish Mazumdar
Okay, okay. Take care. And the last question is, you have said that two announcements of acquisition — I mean, two announcements which are the final stage of discussion. Can we expect the acquisition announcement to happen to this financial year itself?
Raj P Narayanam
And if this financial year may not be possible while we will try our best. There are — as I explained earlier also, there are various processes which we have to follow. So all those processes takes time. We are at advanced-stage, may not be able to tell you exactly precisely that will we be able to do it in within this quarter, but we are very, very hopeful that all the three actually two are big ones, the third one is a smaller one that we should be able to complete all three in the next year.
Debashish Mazumdar
Sure, sure.
Raj P Narayanam
Before the next year-ends, we should be able to close it.
Debashish Mazumdar
Sure thank you so much. Thank you so much for answering my question and wish you all the best. Sure.
Raj P Narayanam
Thank you.
Operator
Thank you. The next question is from the line ofAman Safi from iWealth Management. Please go-ahead.
Aman Saifee
Hello, sir. Am I audible?
Avinash Godkhindi
Yes, yes, you are audible, Aman.
Aman Saifee
Thank you so much, sir, for the opportunity and congrats on a very good set of numbers. Sir, I wanted to understand on our program fees business. Sir, what I see is that you are consistently expanding your customers numbers on a quarter-on-quarter basis from past four quarters. And your existing client GMV would also have been increasing. And sir, while our program fees number has been flat from past four quarters, it has been in the similar range of INR136 crores also.
Avinash Godkhindi
So I think there is a lot of seasonality as I mentioned on the call as well. So looking at it from comparing Q4 of a year with Q1, Q2 or even Q3 of the next year is not necessarily a is a fair comparison. The other thing also, of course, is a lot of these contracts that we have signed are large enterprises.
So they have their own gestation period to go-live and many of them they go-live, but they don’t start you know the cards, for example, on the prepaid cards, the cards need to be first of all issued, then loaded and the whole training has to be done from the software and then the card usage starts, right? So we see that the — and a lot of the usage happens in the Q4. So we anticipate Q4 program fee numbers to be a much more robust.
Aman Saifee
So, you are trying to say that the customer which you would have signed in the quarter of March ’24 wouldn’t have actually started contributing to you yet.
Avinash Godkhindi
See, there is a lot of different behaviours, many of them have started to contribute, many of them can contribute a lot more, some of them you know, are in the process of contributing right because you’re talking of hundreds and hundreds of corporates here so behavior will be different.
Aman Saifee
So what is an average gestation period to come live on to your business?,
Avinash Godkhindi
It completely depends on the nature of the contract and whether we are taking only one solution, two solutions, we are also trying to now bundle solutions like I gave the example of Zepto where they are both on Zawyer and. It’s very effective to try and sell both or all three solutions right at the time of sign-up, right? So it’s — that’s our endeavor now.
Aman Saifee
So Vinaj, when we say about the seasonality, what is it exactly? Because when I see your program fees business and I divide it by 1.71%, which is generally your interchange income. From the Past four quarters, your GNV would have been at INR8,000 crores, it is not growing. That means the spends are not growing at the customer end. Is it the right understanding?
Raj P Narayanam
No, it is not the right understanding because if you do 1.7 months, that is what you have — that is a blended rate which has come in, okay. So there will be spends which are happening at a lower interchange, there are spends which are happening at a higher interchange. So while our GMV has been constantly growing quarter-on-quarter.
The blended margin which comes in, certain areas like on fuel, you have a — you have like a surcharge on fuel, okay. So if you look at the grocery, there is a less percentage which is there. Like that, there are various categories, okay. Only the e-com category, which is higher is like you have about 2.2%, okay?
So looking at that, what happens is it’s not GMV, if you track on quarter-to-quarter basis is consistently and constantly growing. What the mixture which you are seeing is basis the spends happening on lower interchange category and the spends which are happening on higher interchange category, that blend which is coming looks like to you, it will look like as if the spends — there is no-growth in the GMV, whereas we are seeing very, very decent about 15% to 17% growth on a quarter-to-quarter basis.
Aman Saifee
I understand, sir. Sir, just a last question in my request from my side. But sir, is it possible for you to share the safe profile and contribution on the program said because sir for as an analyst, it’s very hard to track how the growth is happening on the program fees side because you see your profile — profile revenue has been increasing on a very healthy, right? So it is rightly possible that your profile program fees would have been increasing, but not the same royal one. So it is —
Raj P Narayanam
See on there is hardly any program fees is a limited part of you know, on the on the platform. And propel points, there is the margin is always a little bit here there. There is no on points per se, we don’t see that there is any deviation there, okay. But in terms of if you look at as well as this, they have been growing very, very healthily. So both of these save as well as Y and we’ll be very happy to share, please set-up set-up a call with us separately and we’ll be very happy to give you any detailed information which you may want to seek.
Aman Saifee
That’s all, sir, sir. Thank you so much. That’s it from my side. All the best.
Raj P Narayanam
Thank you.
Operator
Thank you. The next question is from the line of Katik from Bandan Asset Management. Please go-ahead.
Kartik
Yeah. Hi, sir, just one small question on your software side of the business. Look, the growth rates are quite muted. Are they tracking the number of corporates which you have onboarded or it’s slightly lower? Can you just talk a bit about that?
Avinash Godkhindi
So we are tracking obviously both the number of corporates as well as number of users and the nature of SaaS businesses is that because we are dealing with enterprise and not SMBs. So these are very sticky types of revenue, but their growth rates obviously will be — will take longer for those to grow at a much faster pace than say program appropriate.
Kartik
And just with the brom the product which has been now live and you’re onboarding quite a few of customers, will we see an inflection? I think that is what you were trying to hint on the software side of the business that in the next couple of quarters, we could see an inflection over there where the growth rates would be quite higher than what they are in the previous past.
Raj P Narayanam
Yes, yes, absolutely,, we will definitely see that it will next two quarters, 3/4, there will be a marked improvement in terms of the — specifically in terms of the software contracts. And all contracts which we have signed on in the last three, four quarters are also going-live at a hectic pace. So overall, we see a huge positive in terms of next two, 3/4.
Kartik
Got it. And one last question. I think you called out other expense increases because of investments which you are doing. I would have thought the nature of your business such that the employee cost would have been major heads in which you will do investments, right, in terms of building out software, etc. So just curious why other expenses, what is this, which has led to this increase of INR4 crores on a quarterly basis Q-o-Q.
Aditya Kumar GV
So basically, there were a couple of products which went live during the quarter, right, that requires one kind of — and which can’t be capitalized. There’s a lot of expenses, which we need to put it every time whenever the new product launch happens. So especially in the Q3, we have launched fleet solutions with the couple of clients who also went live on that process. That reques an additional cost?
Kartik
Understood, understood. And given the healthy gross margins which are there in the software side of the business and what we just discussed, next couple of quarters, we will see margin expansion happening, right? I mean, just inferencing from what you said. Obviously, it depends on what the other parts of the business is how they — how they will shape up. But a lot of it of the software should flow down, right? That’s a fair understanding.
Avinash Godkhindi
Yeah, the software literally almost everything slows down and that’s the intent that we — we expand on the margins, that’s what is our continuous focus internally with all our teams. That’s what we are pushing for and that’s the end of it. Yeah.
Kartik
Fantastic. Thanks and best wishes.
Avinash Godkhindi
Thank you. Thank you. Thank you so much.
Operator
Thank you. Ladies and gentlemen, due to time constraints, that was the last question for today. I would now like to hand the conference over to the management for closing comments.
Avinash Godkhindi
Thank you. Thank you all for participating in today’s call. We hope we addressed all your queries and provided some valuable insights. We remain extremely optimistic and focused on the future growth of the company and we are excited about the opportunities ahead. For any further information, we request you to get-in touch with SGA, our Investor Relations Advisor. Thank you, and have a great day and a great weekend. Thank you. Bye.
Operator
Thank you. On behalf of Jagal Ocean Services Limited, that concludes this conference. Thank you for joining us and you may now disconnect your lines