Event Participants
Executives
2 Avinash Godkhindi, Raj Narayanam
Analysts
8 Abhi, Anil Nahata, Ankush Agarwal, Archit, Deepak Poddar, Piyush Narang, Shivam Rathore, Siva Prakash
Financials & KPIs
| Metric | Reported | Commentary |
|---|---|---|
| Total Revenue | ₹423 crores | 28% YoY growth vs Q1 FY26; momentum across standalone business and subsidiaries |
| Revenue Mix – SaaS Platform Fees | ₹12.5 crores | Part of consolidated Q1 revenue; expected to be augmented from Q2 with DICE contracts |
| Revenue Mix – Program Fees | ₹160 crores | Slowed to ~10% growth YoY; consciously optimized for cash flow and working capital cycles |
| Revenue Mix – Propel Points | ₹251 crores | Largest revenue component; reflects incentive and rewards program volumes |
| Adjusted EBITDA | ₹34.7 crores | Margin at 8.2%, down from 10.1% in Q1 FY26; impacted by DICE costs, one-time expenses, and capitalization changes |
| Cashback % of Program Fees | 66.3% | Marginal increase vs 65.7% in Q1 FY26; significant drop from 69% in Q4 FY26 due to higher corporate credit card mix |
| Propel Points Margin (Consolidated) | 7.1% | With heavy attribution to Greenedge's higher margins |
| Propel Points Margin (Standalone) | ~5% | Significant improvement from Q4 FY26 margins |
| Standalone Revenue | ~₹390 crores | 18% growth vs ₹331 crores in Q1 FY26; resilient given Q1 seasonal softness |
| DICE Acquisition Cost | ₹68 crores | Asset purchase excluding GST; ₹55 crores optimization from initial ₹123 crore valuation |
| DICE Revenue (FY26 basis) | ~₹12 crores | Expected ₹15-16 crores in FY27 with 90%+ gross margins; contracts novation ongoing |
| Zag Money Card Run Rate | ~84,000 cards | 2.3x increase from 36,000 cards annualized run rate announced last quarter |
Geographic & Segment Commentary
Save (Employee Benefits & Incentives): Strong demand driven by new income tax regulations, adding wallets for new and existing corporate customers. Marquee onboarding includes Radisson Hotels, Slice Small Finance Bank, Veritas, and Nuama Wealth. 73% of new users came from existing corporates through upselling; billing for DICE-embedded clients like IDFC First Bank and Manipal Hospital begins Q2 FY27.
Zoya (Expense Management): Positive uptake with AI-driven rollouts of previously signed customers. A large retail chain has onboarded ~2,000 stores with 17,000+ stores pending rollout. New signings include Diesel Fashion, Lifestyle Apps, and Bharat CBM Retail. DICE-embedded clients (Hindalco, Bajaj, Navi) will begin billing from Q2 FY27.
Propel (Incentive & Channel Management): Enterprise traction demonstrated with a deployment managing 5,000+ channel partners, transitioning from legacy offline vouchers to multi-brand digital points, releasing blocked working capital. Marquee clients signed include Saint Domin, Supreme Pipes, and Phoenix India.
Fleet Business: 43% increase in total transactions YoY and 530% increase in transaction value, reaching ₹100 crores annualized spend rate. Signed first contract with HPCL (one of three OMCs) for a five-year Driver Track Plus (DT+) aggregator agreement to facilitate petroleum purchases and add bottom-line incentives.
International Expansion (UAE): Opening subsidiary in ADGM (Abu Dhabi Global Market) within Q2 FY27. Engagement with local government and banking partners received overwhelming interest. DICE acquisition provides client relationships validating product-market fit; entering with core product stack (Save, Zoya, Propel).
Zag Money (formerly Rio Money): Annualized card acquisition run rate increased 2.3x to ~84,000 cards. Launched twin co-brand card with Punjab National Bank across Visa and Rupay on biodegradable plastic; went live with AU Small Finance Bank on both networks.
DICE (AI Spend Management): Completed relocation of ~100 AI professionals from Pune to Hyderabad. Contract novation of 85+ clients underway, to be completed by end of Q2 FY27. Marquee names novated include Hindalco, Trident Group, IDFC First Bank, Lenskart, and ExpressBees. Revenue accrual starts Q2 FY27.
86,400 (formerly Mobileware – UPI Infrastructure): Revenue grew 29% YoY from ₹17 crores to ₹22 crores; EBITDA grew 400% from ₹2.8 crores to ₹8.8 crores. Signed first international partner (Lanka Pay), Union Bank of India for BBPS stack, and Maharashtra State Cooperative Bank for UPI. Processed over 2 crore transactions on peak day.
Greenedge (Loyalty & Rewards): NPCI revenue grew ~160% from ₹17 crores to ₹44 crores; EBITDA grew 66% from ₹2.6 crores to ₹4.3 crores. Driving deeper technical integrations for RuPay benefit program; in talks to onboard new banks.
TaxPayner (rebranding to Z Tax): Revenue of ₹80 lakhs in Q1 FY27, 65% YoY increase; on track to break even this fiscal year. B2B side growing ~120%, catering to enterprise income tax and GST compliance. Integrating with large payroll companies for embedded tax filing.
Company-Specific & Strategic Commentary
AI Investment & Zaggle Brain: Embedding AI natively across Save, Zoya, and Propel to automate complex spend patterns and compliance workflows. Project Shiva (Zaggle Brain) reduces new feature launch timelines by up to 50%; optimized 12.5% of expense cost base through FY26 via internal AI development. Patent filing planned; AI enabling larger, more complex enterprise contracts with higher values.
DICE Integration & Technology Acceleration: Asset purchase completed at ₹68 crores (from ₹123 crore valuation) securing complete spend management product suite, IP, and contract portfolio. Integration of payment rails with DICE software majority complete, with final completion expected by August 31st or September 10th. DICE AI-driven capabilities enhancing automated spend analytics, intelligent approval workflows, and predictive expense management.
Unobank Investment (Moneyhop): Strategic investment of ~₹8 crores in Unobank Private Limited, which holds RBI AD Category-2 license for digital cross-border payments, remittances, and forex services. Aligns with Save and Zoya products to enable Forex cards and cross-border payments. Regulatory tailwinds: AD Category-2 entities now permitted to process cross-border trade transactions up to ₹25 lakhs per transaction.
Capitalization Policy Review: Moving from capitalized to expensed costs for product development. ~₹6 crore product development cost expensed entirely in Q1. Policy being reviewed with advisors and auditors; approach is to expense more than capitalize over time. Immediate proactive measures taken in Q1 to moderate new capitalization levels.
Strategic Focus – Cash Flow & Capitalization: FY27 positioned as "transformation through consolidation." Focus shifting from merely profitable growth to improving operating cash flows and calibrating capitalization. Cash flow correction expected to take 16-18 months. Management taking conscious calls to move volumes to banks with faster revenue realization, even if it temporarily impacts growth.
Cross-Sell Initiatives: Leveraging AI to equip on-ground sales teams to pitch multiple products simultaneously. Q1 examples: APAC Financial Services cross-sold Save and Zoya; Campus Activate (existing Zoya customer) added Zaggle Save; QuestCorp (existing Save customer) added Zoya and TaxPayner solutions.
M&A Discipline: Taking highly selective approach to M&A, prioritizing value-accretive acquisitions in adjacent domestic and international markets. QIP proceeds to be deployed into adjacent sectors with meaningful synergies.
Guidance & Outlook
| Metric | Guidance / Outlook | Commentary |
|---|---|---|
| Consolidated Revenue Growth (FY27) | ~40% | Reaffirmed by Chairman Raj Narayanam; Q1 is typically ~18% of annual revenue; growth expected to accelerate from Q2 onward. Management stated "not moving away from that guidance as yet" |
| Standalone Revenue Growth (FY27) | ~25% | Reaffirmed for standalone business; Q1 delivered 18% growth on seasonally soft quarter |
| DICE Revenue (FY27) | ₹15-16 crores | Up from ~₹12 crores last year; ~90%+ gross margins; full revenue pickup expected from Q3 when all contracts are novated |
| DICE Contract Novation | Complete by end Q2 FY27 | 85+ client contracts being novated; marquee names already onboarded |
| EBITDA Margin Trajectory | 14-15% over 5-7 years | Long-term target reiterated; management noted current 8.2% margin is impacted by one-time DICE costs and capitalization changes; expecting margin improvement when DICE revenue kicks in from Q2 |
| TaxPayner Break-Even | This fiscal year (FY27) | Q1 revenue up 65% YoY; B2B growing ~120%; on track |
| Cash Flow Improvement | 16-18 months to positive | Management acknowledged correction takes time; no immediate "button to press"; improvements expected to materialize over coming quarters |
| DICE Payment Revenue | From Q3 FY27 onwards | Technical integration mostly complete; final completion by September 10th; payment-related revenues from DICE expected Q3 onwards "100% without a doubt" |
Risks & Constraints
| Risk | Context |
|---|---|
| Revenue Growth Deceleration | Consolidated growth dropped to 28% from prior 40-50% run rate. Management attributes to 10% program fee growth (by design) due to conscious decision to optimize cash flows by moving volumes to banks with faster realization. Program fee growth expected to "significantly improve" in coming months, but timing uncertain. |
| EBITDA Margin Volatility | Margin dropped to 8.2% from 10.1% YoY. Analyst noted "six quarters of volatile EBITDA margin." Management counters that margins have been in 9-10% range for eight quarters and targets 14-15% over 5-7 years. DICE costs absorbed without corresponding revenue in Q1 create near-term pressure. |
| Capitalization Policy Uncertainty | Moving from capitalized to expensed product development costs (~₹6 crores expensed in Q1). Policy review requires auditor concurrence; management acknowledged "we need to convince them also." Timing of full policy rollout unclear, creating P&L volatility. |
| Cash Flow Correction Gestation | Management admitted there is no immediate handle to fix cash flows; actions have gestation periods. Cash flow to positive expected over 16-18 months, meaning near-term growth may be suppressed while optimization continues. |
| DICE Integration Execution | Payment rails integration not fully complete (expected by September 10th); contract novation of 85+ clients ongoing. Any delays in novation or integration could defer revenue recognition beyond Q2/Q3 expectations. |
| Acquisition Dilution of Core Focus | Multiple acquisitions (DICE, Zag Money, 86,400, Greenedge, TaxPayner, Unobank) requiring management bandwidth. Q1 absorbed one-time costs including relocation, tech vendor payments, and transaction costs; risk of continued drag on profitability. |
| Seasonality & Geopolitical Factors | Q1 is historically soft (~18% of annual revenue); geopolitical tailwinds affected travel spend, impacting program fees. Management expects acceleration through Q2 and remainder of fiscal year. |
| Regulatory Dependency | Growth partly dependent on favorable regulations - new income tax rules driving Save wallets, MDR on UPI transactions benefiting 86,400, AD Category-2 cross-border limits. Any regulatory reversals could impact growth assumptions. |
Q&A Highlights
Revenue Growth Slowdown & FY27 Guidance
- Question: Revenue growth has slowed to 28% from 40-50% over past quarters; why the decline in both program fees and SaaS fees? Do we still maintain the 40-45% guidance? (Siva Prakash, ithought PMS)
- Answer: Q1 is typically ~18% of annual revenue; growth rate of 27% will significantly increase in coming months. SaaS revenue will be augmented from Q2 with DICE contracts (costs taken in Q1 but no revenue recognized until July 1st). On program fees, conscious decision to optimize cash flows by moving customers to different banks with shorter working capital cycles; recarding takes time. (Raj Narayanam; Avinash Godkhindi)
- Clarification: "Our guidance was 40% on a consolidated basis, and we are not moving away from that guidance as yet." (Raj Narayanam)
EBITDA Margin Profile & DICE Impact
- Question: With DICE consolidation, how should one look at EBITDA margins going forward? Is 8.2% the lowest point? (Deepak Poddar, Sapphire Capital)
- Answer: ~₹3 crores of DICE costs came in Q1 without corresponding revenue (contractually starts July 1st). When revenue kicks in, margins should improve. However, Zag Money is losing ~₹2.5 crores (investments); operational efficiencies are being offset by strategic investments. (Raj Narayanam)
Capitalization Policy Changes
- Question: What is the nature of expenses being moved from capitalized to P&L? Why selectively and not all at once? (Ankush Agarwal, Surge Capital)
- Answer: ~₹6 crores of product development costs on an immediate product were expensed completely in Q1. This is not selective - moving toward expensing all costs in ideal state over time. Policy being reviewed with advisors and auditors; requires convincing auditors on what gets expensed vs. capitalized. (Raj Narayanam; Avinash Godkhindi)
Program Fee Slowdown & Working Capital Improvement
- Question: At 10%, program fee growth is lowest in three years. Are we changing the 25-30% standalone guidance? When will cash flows improve? (Ankush Agarwal, Surge Capital)
- Answer: Primary focus is on three things: cash flow, capitalization, and cashback percentage of program fees (not raw program fee numbers). Growth was "by design" and should improve in coming months. However, "all these actions have their own gestation period... we don't have a real immediate handle that we press a button and this happens." Improved cash flow should be visible by H2. (Avinash Godkhindi; Raj Narayanam)
EBITDA Stability & Long-term Target
- Question: When will EBITDA margin become stable? It's been six quarters of volatility; 13-15% guidance seems to be vanishing. (Abhi, AJ Capital)
- Answer: Company has been in 9-10% range for eight quarters; 14-15% margin is a 5-7 year target. Current actions (capitalization changes, cash flow focus, revenue growth) are levers to move trajectory. Cash flow correction takes 16-18 months. Acquisitions' valuations have shot up 5-6x but aren't reflected in stock price. (Raj Narayanam)
Growth vs. Cash Flow Balance
- Question: Previously growth was good but cash flows weren't there. Now focusing on cash flows means giving up growth. When can we expect both? (Archit, Rockstar Equity Research)
- Answer: Both are being strived for simultaneously; no compromise on either. Working harder each quarter to ensure growth with positive cash flow. (Raj Narayanam)
Promoter Share Purchases
- Question: After TV interview mention of buying shares from open market, haven't seen much promoter purchase. Any plans to buy at current price? (Archit, Rockstar Equity Research)
- Answer: Company has employed professionals; whenever liquidity comes (₹5 crores last time), immediately bought ₹5 crores worth of stock. This is standard practice - "we have not sold a single share. We have been only buying shares." Continues as liquidity permits. (Raj Narayanam)
AI as Revenue Driver
- Question: When will AI become a meaningful revenue driver rather than primarily cost efficiency? (Shivam Rathore, MB Investment)
- Answer: AI has two impacts - internal (optimized 12.5% of cost base in FY26; reduced feature launch timelines by up to 50%) and external (solving complex problems for large corporates). "Zaggle Brain" (Project Shiva) patent filing planned; already seeing payback in contracts with very large customers. Payback will accelerate in coming months and quarters. (Raj Narayanam)
DICE Revenue Expectations
- Question: What revenue percentage is expected from DICE in FY27? (Shivam Rathore, MB Investment)
- Answer: Last year DICE did ~₹12 crores; expect ₹15-16 crores this year with 90%+ gross margins. Next year should be much better with full-year impact and payment rails integrated into DICE software. (Raj Narayanam)
DICE Integration & Payment Revenue Timing
- Question: Have we completed technical integration of payment rails with DICE software? When will payment-related revenues come? (Anil Nahata, Parami Financial)
- Answer: Majority of integration done; final bit completing by August 31st or September 10th. Payment-related revenues from DICE expected from Q3 onwards - "100% without a doubt." (Raj Narayanam)
Key Takeaway
Zaggle delivered ₹423 crores revenue in Q1 FY27 (28% YoY growth), but adjusted EBITDA margin compressed to 8.2% from 10.1% as the company absorbed ₹3 crores of DICE acquisition costs without corresponding revenue (accrual begins July 1st) and expensed ~₹6 crores of product development costs under a new capitalization policy. Management reaffirmed 40% consolidated growth guidance for FY27, arguing Q1 is seasonally soft (18% of annual revenue) with acceleration expected from Q2 onward. Strategically, FY27 is positioned as "transformation through consolidation" - prioritizing cash flow improvement over raw growth, integrating DICE's AI capabilities (85+ contracts being novated, ₹15-16 crores revenue expected with 90%+ gross margins), scaling Zag Money to 84,000-card run rate, and entering UAE via ADGM subsidiary in Q2. Long-term EBITDA target of 14-15% (over 5-7 years) remains, with management acknowledging cash flow correction takes 16-18 months. Key watch points: program fee growth at decade-low 10%, EBITDA margin stability, DICE revenue realization, and actual improvement in operating cash flows over coming quarters.