Zaggle’s Q3 Profit Zooms 30% YoY To INR 20 Cr

Fintech SaaS company Zaggle’s net profit jumped 30% to INR 19.74 Cr in the third quarter of the fiscal year 2024-25 (Q3 FY25) from INR 15.22 Cr in the year-ago quarter. 

However, profit declined 3% sequentially from INR 20.29 Cr. 

Revenue from operations increased both on a year-on-year (YoY) as well as quarter-on-quarter (QoQ) basis. Zaggle’s operating revenue surged 69% to INR 336.89 Cr in Q3 FY25 from INR 199.51 Cr in the year-ago quarter. On a QoQ basis, it rose 11% from INR 302.56 Cr. 

Including an other income of INR 3.5 Cr, the company’s total income for the quarter stood at INR 340.41 Cr.

Founded in 2011 by Raj Narayanam, Zaggle provides a spend management and corporate employee benefits platform. Its offerings help businesses automate their accounts and issue prepaid cards. Its portfolio of SaaS products also includes tax and payroll software. 

Narayanam said that Zaggle expanded its customer base to over 3,300 during the quarter under review, signing contracts with companies like Zomato’s Blinkit, BigBasket, Mumbai Metro One, Mahindra First Choice Wheels and Hitachi India.

At INR 192.06 Cr, the company earned the highest revenue from the gift cards segment. This was an increase of 86% YoY to 14% QoQ. Revenue from program fees increased 54% YoY and 7% QoQ to INR 135.51 Cr.

On a standalone basis, Zaggle’s adjusted EBITDA jumped 6.5% QoQ and 37.6% YoY to INR 31.46 Cr. However, adjusted EBITDA margin declined to 9.4% from 11.5% in the year-ago quarter and 9.8% in the previous quarter. 

In a statement, the founder said that Q3 FY25 was a “milestone quarter” for the company, recording its highest revenue, adjusted EBITDA and PAT. 

The company undertook its first qualified institutional placement (QIP) round via which it raised INR 594.84 Cr by issuing 1.13 Cr equity shares to eligible qualified institutional buyers in December. From the issue, the company utilised INR 59.14 Cr to repay “certain” borrowings, while the remainder INR 514.99 Cr has been “temporarily invested in deposits with scheduled commercial banks and in monitoring account”.

Back then, sources told Inc42 that the company was looking to make three more investments and acquisitions by March 2025 to expand its offerings. Without mentioning more acquisitions, the founder did hint at the same. 

“For FY25, we are confident of achieving 58-63% growth in our top line. We are also evaluating inorganic growth opportunities to expedite this growth and the discussions are at advanced stages,” he said. 

During the quarter under review, Zaggle acquired an additional 53.32% stake in Span Across IT Solutions for INR 320.3 Cr. The SaaS company said that the acquisition led to a gain of INR 2.28 Cr in its top line. 

Where Did Zaggle Spend? 

The company’s total expenses zoomed 72% YoY and 12% QoQ to INR 314.15 Cr. In the statement, Zaggle said that the increase in incentives, cash-back expenses, and operational expenditure aligns with its overall expansion of the business.

Cost Of Gift Cards: The company spent INR 185.79 Cr under this head, almost double than the INR 97.09 Cr it spent in the year-ago quarter. 

Incentives & Cashback Expense: The company increased its spending on cashbacks by 47% YoY to INR 82.89 Cr in the quarter under review. 

Employee Benefit Expense: This expense increased 55% YoY to INR 17.11 Cr during the quarter. The company said that the rise in employee costs is primarily due to an increase in workforce to support business growth. Besides, it also said that its total ESOP expenses in FY25 are expected to be in the range of INR 9.5 Cr to INR 10 Cr. 

Shares of Zaggle ended today’s trading session 2.94% lower at INR 472 on the BSE.