Pine Labs’ New Mantra: Forget PoS; Software Is The Future

As it announced its first quarterly results after listing, fintech giant Pine Labs began its earnings call with a presentation on its new payments and currency management products. The demo involved a look at the UI and user experience for those using Pine Labs today.

This is unusual among Indian tech companies for certain. Most prefer to stick to the template and do a Q&A.

But this is also Pine Labs’ way of saying things are shifting. Such a presentation is after all the norm in the software business. This is the Pine Labs 2.0 that came to the fore ahead of the IPO.

Before we delve into this shift, let’s look at the numbers.

Net profit grew to INR 6 Cr in Q2 FY26 from INR 4.8 Cr in the previous quarter and a loss of INR 32 Cr in the year-ago period. Operating revenue grew 18% YoY and 6% QoQ to INR 649.9 Cr during the quarter, while other income of INR 23 Cr took total income to INR 672.9 Cr.

The digital infrastructure and transaction platform, which includes its core in-store and online payment solutions, posted a 12% YoY increase to INR 440 Cr. Meanwhile, revenue from the issuing and acquiring platform surged 32% YoY to INR 209.8 Cr.

The numbers make for a strong case that Pine Labs is transitioning from a PoS company to a global payments software maker for enterprises, banks and merchants of all sizes.

Here’s some context: Only 29% of Pine Labs’ revenue this quarter came from subscription and rental streams — the traditionally PoS-led side of the business. Meanwhile, a significant 71% came from SaaS and tech-based services, showing how quickly the company is hurtling toward a software and platform-led future.

“We are a fully diversified fintech platform operating across online and offline channels, using digital payments infrastructure… In terms of revenues, we continue to be extremely diversified between merchants, banks and financial institutions, and also enterprises, corporates and brands,” Pine Labs CEO Amrish Rau told analysts in the call.

And it’s a line that’s become oft repeated in the run up to the IPO. The company listed at a modest 9.5% premium, but if indeed software is the future, then there’s a lot more value waiting to be unlocked.

Moving On From Hardware

Rau has repeatedly said that the company is witnessing growth across multiple verticals, and that viewing Pine Labs purely as a PoS player misses the larger story. This quarter, the company attempted to back that narrative with numbers.

Subscription and rental income, essentially the revenues tied to POS hardware, constituted a big chunk of Pine Labs’ business. This was the core, but that has now fallen below 30%. Revenue from sale of software, SaaS, and other tech-led services is now the major driver. This is why the company bagging the payment aggregator and cross-border payments licences is a major coup.

The customer base has grown to banks, retailers, and enterprises, who are being encouraged to buy Pine Labs hardware, with the platform, integrations, and value-added services layered on top. This is the layer that will unlock long-term sustainable revenue.

Because hardware is low-margin and capex-heavy, getting out of that game naturally boosts profitability. In effect: revenues grew 18% this quarter, but contribution margin rose 21%. Depreciation costs have almost halved – from 12% of revenue earlier to just 5% now.

The move away from hardware-included deals to capex-light software deals, is more efficient and margin accretive. However, the company cautioned in its shareholder letter that these revenue streams “have lower absolute revenue per deployment, which naturally moderates reported topline growth”.

There’s some credence to this: Despite this being a “non-seasonal” quarter, Pine Labs posted its highest-ever adjusted EBITDA, INR 122 Cr and expanded margins by a healthy 500 basis points. A big part of that strength comes from high-value tech services like issuing platforms, UPI credentialing, bill payment rails, and affordability solutions. These grow without requiring Pine Labs to deploy more devices.

International business, which is naturally more software-driven, is growing fast too-up roughly 30% year on year. Cross-border payments will be the icing on this cake when it takes full shape. Put all of this together, and Pine Labs’ transformation looks real, at least for now.

Which Segments Are Driving Growth

Now, let’s look at which segments are driving this change. Pine Labs has seen strong growth in its issuing, prepaid and wallet infrastructure business. The issuing platform, which powers everything from prepaid cards and brand wallets to refunds and transit solutions, grew 25% year on year.

Moreover, while India business grew 31%, international markets grew even faster at 35%. That shows Pine Labs isn’t just exporting products, it’s exporting entire workflows. Currently, 18 major global airlines run their wallets and refund systems on Pine Labs’ rails. The company has also built deep integrations with retailers across Australia, Southeast Asia, the UAE and the US.

Alongside issuing, Pine Labs’ value-added services (VAS) business also continues to grow. VAS volumes grew 37% year on year. This is the layer that connects 400+ brands with 40+ credit institutions, essentially the affordability engine that enables EMIs, offers, and targeted promotions at checkout. The company has now added new products like UPI offers and EMI World Pro, widening its cross-sell potential.

Among other segments, Pine Labs’ online payment gateway business is booming, growing 75% year-on-year. Large ecommerce players like Myntra and Meesho are now using the company’s payment gateway.

Pine Labs Steps Up Global Push

Even though the international business is still in the early stages, the management has made it clear that the company is not holding back its global ambitions.

Pine Labs now operates across Southeast Asia, Australia, the UAE and the US, though India is the core market. A key factor working in its favour is that many of these markets are more mature in terms of digital payments, which means Pine Labs’s platform/software approach instead of replicating its India playbook.

One trend the company emphasised is the steady rise in dollar-denominated transactions. This helps diversify revenue away from the Indian market and provides some natural margin benefits, but it also introduces new execution challenges. Competing with acquirers and payment processors in these regions requires not just technology strength but long-term relationships with banks, regulators and large merchants.

Pine Labs has started to adopt a more asset-light model, with examples being the Emirates NBD’s acquiring platform, GCash in the Philippines and CIMB in Malaysia. Pine Labs wants to be the backend tech partner for big financial institutions, not a consumer-facing brand, which it hopes will bring the long-term value that big software institutions are built on.

However, operating internationally also raises questions around sustainability and scale. These markets are competitive, regulations differ widely, and maintaining service reliability across regions demands significant ongoing investment. The early wins are encouraging, a lot will depend on how well the company can expand beyond pilot deployments, deepen existing partnerships, and prove that its India-tested infrastructure can stand up to global standards.

Converting these partnerships into long-term, high-quality revenue rather than just early momentum will be a big challenge.

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• Bumper Response For Aequs: Contract manufacturer Aequs’ IPO closed on Friday with overwhelming investor interest as the public offering was oversubscribed 101.63X

[Edited by Nikhil Subramaniam]