Zaggle’s Q2 Profit Jumps 168% YoY To INR 20.3 Cr

Fintech SaaS company Zaggle posted a 167.67% jump in its consolidated profit after tax (PAT) to INR 20.29 Cr in the September quarter of the financial year 2024-25 (Q2 FY25) from INR 7.58 Cr in the year-ago period, primarily due to a change in product mix.

On a quarter-on-quarter basis, PAT surged over 21% from INR 16.73 Cr.

Revenue from operations zoomed 64.21% to INR 302.55 Cr in Q2 FY25 from INR 184.24 Cr in the corresponding quarter last year. Sequentially, it jumped almost 20% from INR 252.20 Cr. 

The year-on-year (YoY) growth in the company’s topline came on the back of a rise in the volume of the prepaid cards and credit cards as well as the propel revenue platform, driven by higher redemption.

Its adjusted EBITDA jumped 35.8% YoY to INR 29.5 Cr in the quarter ended September 30, 2024.

Founded in 2011 by Raj Narayanam, Zaggle provides a spend management and corporate employee benefits platform. It helps businesses automate their accounts and issue prepaid cards, in partnership with banking partners, to reward their employees.

Zaggle offers a diverse portfolio of SaaS products, including tax and payroll software. It claims to have issued 50 Mn prepaid cards in India and served over 3.03 Mn users as of September 30, 2024. 

Including other income of 6.01 Cr, the company’s total revenue shot up nearly 67% to INR 308.57 Cr during the quarter under review from INR 184.91 Cr in the September quarter last year.

Zaggle currently earns all its revenue from its India operations and does not have a presence outside the country.

Notably, Zaggle received approval from its board last month to raise INR 950 Cr to fuel its expansion plans.

“As part of our growth strategy, we are actively seeking strategic alliances and inorganic growth opportunities. We are strongly focusing on M&As with a combined strategy of small tuck-ins and larger investment opportunities, in the SaaS fintech sector, including areas like NBFC, payments etc,” Narayanam said.

The company also revised its FY25 guidance and is now expecting a 50-55% growth in revenue over FY24.

Segment Revenue

Zaggle generated a revenue of INR 126.11 Cr from the fee it charges customers for its services during the quarter under review, up 159.53% from INR 48.59 Cr in the year-ago period. However, revenue from this segment declined 64% from INR 126.93 Cr on a sequential basis.

Revenue from Zaggle’s propel platform increased 31.15% to INR 167.93 Cr in the quarter ended September 2024 from INR 128.04 Cr in the same quarter last year. On a QoQ basis, revenue from this vertical grew 43.73% from INR 116.83 Cr.

The company generated revenue to the tune of INR 8.51 Cr from the platform fee it collects in Q2 FY25, up nearly 12% from INR 7.60 Cr in the corresponding period last year.

Where Did Zaggle Spend In Q2?

In line with the rise in revenue, total expenses zoomed 60.30% to INR 280.50 Cr in the quarter ended September 30, 2024 from INR 174.98 Cr in the year-ago period, primarily driven by higher spending on gift vouchers, incentives and cash backs.

Point Redemption / Gift Cards Cost: The company’s spending under this expense head increased 41.93% to INR 161.93 Cr in Q2 FY25 from INR 114.09 Cr in the corresponding quarter last year.

Employee Benefit Expenses: Zaggle spent INR 17.90 Cr in employee costs during the quarter under review, a marginal decline from INR 17.92 Cr it spent in this bracket in Q2 FY24. 

On a sequential basis, employee costs rose over 27% from 14.09 Cr.

Incentives & Cash Back: The fintech SaaS company saw its spending under this bucket jump over 3X to INR 78.97 Cr in the quarter ended September 2024 from INR 25.78 Cr in the year-ago period.

Zaggle has been signing new partnerships and expanding its services. Earlier this year, it partnered with Open Network for Digital Commerce (ONDC) to facilitate issuance of prepaid payment instruments to the latter’s customers. 

Recently, it also inked a pact with Hero MotoCorp to offer the auto giant its employee expense management platform – Zaggle Save. 

In September, Zaggle acquired a 26% stake in Mobileware Technologies (now known as ‘86400’) for INR 15.6 Cr. 

Shares of Zaggle ended Wednesday’s trading session at INR 416.80 apiece on the BSE, down nearly 3% from the stock’s previous close.