AvenuesAI Limited (539807) Earnings Call Transcript & Summary

Ladies and gentlemen, good day, and welcome to the 2Q FY '22 Earnings Conference Call of Infibeam Avenues Limited, hosted by InCred Equities. [Operator Instructions] Please note that this conference is being recorded. I now hand the conference over to [ Mr. Shri Shankara ]. Thank you, and over to you, sir.

Thank you, Ritika. Good evening, ladies and gentlemen. We welcome the management, welcome the participants for the 2Q FY '22 results call. We have with us representing the company, Mr. Vishal Mehta, the Managing Director; Mr. Vishwas Patel, Executive Director; Mr. Srikanth Rajagopalan, President; Mr. Hiren Padhya, the CFO; and Mr. Purvesh Parekh, Head of Investor Relations. I now hand over the call to Vishal Mehta for his opening remarks and later we'll follow with the question-and-answer session. Vishal Mehta, over to you, sir.

Thank you. Thank you very much. Good evening to all of you, and a very warm welcome to everyone to our FY '22 second quarter earnings call. We are very, very happy to announce that Infibeam Avenues had the strongest quarterly performance ever. We have outperformed on several parameters, be it payments, including bill payments, marketplace platforms where we serve clients like government e-Marketplace, GeM as well as enterprise clients like Jio. The newly launched secured lending business as well as all businesses that we're into which achieved the high and are experiencing a very, very strong traction. From a transaction processing volume of $19 billion in FY '21, we are now at an annualized run rate of $40 billion, which is split as $25 billion from digital payments and about $15 billion from government e-Marketplace. In an article by Financial Express this month, GeM had mentioned that they will easily achieve a gross merchandising value of INR 1 trillion, approximately $14 billion in FY '21 itself versus $10 billion it targeted earlier. Even without the integration of Indian railways and others, and it will double its GMV to INR 2 trillion, approximately $28 billion in FY '23. We are accelerating towards our own guidance that we gave earlier to process the total transaction volume of $100 billion. We are happy to announce that we added 1 million merchants in just 6 months of this year with 0.5 million in September alone. Our entire tech stack, payments and platforms together is now used by over 4 million merchants. We have also onboarded some of the marquee merchants in the payments business this quarter. We will continue to build a very strong merchant pipeline and we are soon going to launch a product called Tap-on-Phone to target off-line retail merchants in the payments business. This is perhaps the last leg of retail merchant segment that we currently do not cater to. As a reminder, all the transaction processing volume that we report and we currently cater to is online only. The launch of Tap-on-Phone allows us to get into the offline merchant category to capture payments. Offline retail will open many, many opportunities for us as our tech portfolio is broad-based, including platforms which we allow the cross-sell opportunity of some of our products and features. We have also launched the standing instruction module, and we'll be relaunching multi-network card-on-file tokenization solution, both as per RBI guideline. On the strategic front, we continue to build on the payment stack and broaden the platform stack as well. There are ample of opportunities for us in this space. We continue to invest in very high-growth opportunities and lending is one such space where we aim to monetize on the growing merchant data and the transaction data that we have. The number of merchants will only grow as digitization becomes a de facto choice for merchants and enterprises. To monetize on this data and that we will gather these transactions overall these years, we have initiated investment towards building a very strong artificial intelligence-based credit lending platform, and we've been making this investment for the past few quarters. And we will work towards narrowing the credit gap that exists in India today, which is worth over $250 billion as per World Bank. We have established a very structured process to set up a new team comprising of industry and domain experts to steer this business of lending platforms. Partnerships with banks and NBFCs is also progressing well. Please note that we are not taking any exposure on lending. It's a 0 liability and a 0 risk business for Infibeam Avenues, and it is a profitable business model given that we are the prime integrator. We are only going to be an enabler for the partnering lenders to use the analytics from our systems. We should be able to launch this business this quarter itself, which is before December 2021. By when we will provide more updates. Another piece of lending is the Buy Now Pay Later product. This is a consumer-facing product, and we are seeing growing demand of BNPL, which is By Now Pay Later in the market. Our bank partners as well as market research suggests growing acceptance and usage of BNPL payment option. In this regard, we are enabling our CCAvenue Payment platform, some of the industry best BNPL service providers like HDFC Bank, Bajaj Finserv, ICICI Bank, Zest Money, Mobikwik, et cetera. We act as an aggregator and earn an upfront MDR, which is the transaction processing cut across all the market lending BNPL options without accumulating any NPAs or any collection worries. Once again, we do not intend to get into the lending business or the consumer lending business as we do not know this business internally. Our forte is technology, and we will continue to build on this. As a first step towards lending, we launched a secured lending business exactly 1 year ago as a profit driver. We are currently doing this from our own internal accruals. Secured lending is secured against successful payment transaction for which money has already been received by us in our nodal account. Our secured lending business is seeing a very strong traction already. We disbursed on an average $50 million each month in Q2 versus $50 million of -- in the whole of Q1. So it's almost grown by a factor of 3x. We are at an annualized run rate of $600 million compared to our earlier guidance of $200 million. We aim to do $100 million a month as we exit FY '22 and achieve an annual run rate of over $1 billion. In other words, we have just increased our guidance from earlier $200 million to $1 billion this year itself. Please note, we continue to make profits in our core payment gateway and marketplace platform businesses. We generate 60% EBITDA margins and 29% PAT margins, and hence, new business launches an expansion in additional revenue and profit drivers for us. Every investment is incrementally forward investment but profitable, if this money does not go and covering losses for customer acquisition and other areas. We have been able to reach to this stage without any additional funding support. At the same time in Q2, we have fully repaid any and all debt of about close to INR 1,520 crores we had in FY '21. We are a 0 debt company as of today. We are also seeing a very strong traction in our B2Biz. That is where we are building into a Neo Bank framework for corporate customers. It integrates well into our strategy of offering complete Neo Banking experiences to corporates, including balance checking, opening of bank accounts, collecting payments, making payouts, bill payments, lending and many more. We have direct customer acquisition strategy and also through white label partnerships with HDFC Bank we intend to take this forward. We are targeting to onboard thousands of corporates on this platform going forward and process high transaction processing volume through this platform. The TPV process and the B2B does not form part of the total transaction processing value that we report today. We are serving many large corporates, including IOCL, Mahindra & Mahindra, Hyundai, Bajaj Ashoka Leyland, Bisleri, Landmark, Puma, Cathay Pacific, you name it and more. This B2B platform independently competes with some of the other payment companies only focused on bulk processing. As a reminder, again, the processing volume from this particular B2B platform is not accounted for in our transaction processing volume guidance. On the subsidiary front, the Go Payment subsidiary incubated in our office has now expanded into payment issuance, and it is built on our own payment issuance switch. It is working on some of the large projects with multiple top banks, including HDFC Bank, Yes Bank and more. Our [ investee ] company, which was earlier called RemitGuru, now called Fable Fintech is incubated in our office, and it is also set to grow at a very strong path in B2B as well as B2C remittances. In the platform business of a partnership and relationship with large enterprise clients like Jio and others continue to grow. We have made marketplace platform live for JioMart last year. In second quarter, we've integrated payment as well in JioMart. Jio's faith as well as many of our large enterprise clients' faith to use more of our technology platforms is a testimony of the scalability of our platform business. Even top private and international banks in India have white labeled our payments platform, while some international banks use our enterprise payment platform for card processing. This talks highly of our systems, processes and services that we offer to large scale-based enterprise customers. To strengthen and expand our technology offering and to capture the upside in the fintech space faster, Infibeam Avenues is planning to raise capital -- primary capital. We have never raised money in this scale post our IPO in 2016. And since then, we have continued to build a profitable and a scalable business. The cash generated quarter-after-quarter from operations had been used to fuel our growth. We see ample of opportunities for us. We have built a very unique business model with very strong moats that drive both growth and profitability for us. As we build a superior ecosystem of payments from payments acquiring to issuing domestic and international remittances, Neo Banking, lending and cards build on a global payment network as well as the payment network internationally, we need to apply a larger investment to these businesses as we aim to be one of the top fintech companies in the country. In this regard, we are looking forward to raising capital through primary mode as growth capital. With this, I hand over the call to our CFO to quickly update us on the quarterly performance. Over to you, Hiren. Hiren, all yours.

Good evening, everybody. India offers huge headroom for growth in digital transactions. The digital payments market is poised for a strong growth and mobile payments is expected to grow at a CAGR of 45% for the next 5 years to touch $3 trillion. COVID has accelerated the pace of digitization after demonetization. This is early days for India. We expect high growth to continue in the sector. This decade will be dominated by the fintechs. It is important to capture the underlying growth in the sector. And we have built a strong, scalable and sustainable business to capture the upside to the fullest. Infibeam in the last few quarters has been focusing on growing its top line and at the same time, ensuring profitability. We have proven time and again through our business model and our business strategy that growth can be achieved with profits. The company in this quarter has accelerated growth and achieved a record total processing volume of INR 64,300 crores, that is approximately $9 million (sic) [ $9 billion ] and is at the run rate of $40 billion. Gross revenue was up 44% on a quarter-on-quarter basis and 109% year-on-year basis to INR 311 crores, that is $42 million. EBITDA margin, excluding our subsidiary Go Payment was 60%. Go Payments is contribution positive. Company's profits from continuing operations grew 33% quarter-on-quarter and 55% year-over-year. We will continue to push the limits in all the businesses to keep achieving higher TPV and hence, higher revenue and at the same time, ensuring profits. We achieved high growth without significantly compromising on the take rates as we added a few large merchants and offered preferential take rates to them. Our India payments and platforms business are predominantly part of stand-alone accounts, contributing over 90% of the total revenue where our EBITDA margin has actually grown to 63% in Q2 versus 61% in Q1. We have outperformed in our core business. We are debt free now, have a cash conversion ratio of over 100%, consistently generating positive free cash flow. And in the stand-alone business, we continue to generate higher ROE year-after-year. Our performance in the quarter has been exemplary, and we have shared it in detail in our earnings presentation and our press release. Now I request the moderator to now open the floor for question and answers. Thank you.

[Operator Instructions] The first question is from the line of [ Unnati Bhavekar ] from K.R. Choksey.

You've been giving this split of net revenues between transaction revenue and other operating revenue. And then I believe the transaction process based revenue represent the net payment gateway and platform-based services revenue that accrues to Infibeam. I just wanted to understand what is this other net operating revenue that it comprises of? Does it -- or will include all new business revenues such as your AI-based credit platform, Neo Banking services, then Go Payments services and software-as-a-services revenue. So that is my first question. And second is, by when do we expect the other net operating revenue to become a sizable portion of the total revenue? Do we continue to believe that the transaction base revenue will be the dominant driver over medium to long term?

You are right. You're absolutely correct. This is a Srikanth. The other operating revenue is basically -- we have services revenues. We have derivative works revenues. We have support AMC's VAS based revenues and so on and so forth. So these are all non-transaction based. And this is also linear actually to our models, and it is not linear to our people, but it is actually a business model, it's actually a growing model and we have our existing large enterprise accounts signed up for which our revenue will get accrued actually to the company. And with respect to the -- in order to educate the investors, actually more from our business model perspective, we made out this chart saying that what is going to be a network rates driven revenue in terms of transaction base, both for our payment business and for our platform business and of course, non-transaction-based revenues. And both the revenues are to spin-off our business model, and they are in line with our industry patterns and also in line with our nature of our business.

We've been hearing is that over a period of time as the value-added services will become a sizable portion of the business, it will kind of lift of the margins, and it will make it more consistent. So that is the reason this question. So do we believe that this non-transaction-based revenues will become a sizable portion in the near future? Or will it take same time or it will remains as the same kind of a proportion?

Right now, at the moment that we are focusing the TPV-based revenues and TPV-based revenues, more the TPV because as an organization, as a business, we are fine tuned actually for the TPV increase. And the throughput is basically a measure of success. We always believe that higher the TPV higher the revenues and so on. Therefore, that -- having said that, we will not discount the non-transaction-based revenues that will also grow. Maybe the rate of growth in non-transaction-based revenues like subscriptions, license, TPVs and AMCs and stuff like that may not be as similar to the transaction-based revenue. But having said that, that will also grow.

Okay. And I've been trying to compare your market share with other RBI given data sets. So is it fair to say that you've actually kind of grown the market share while as of fiscal year '21, the digital payment transaction value has actually fallen for the entire country. But then in your case, actually, it has been growing and you've been actually capturing the market share. Is it fair to compare your TPV with the RBI given data?

To a larger extent, what you're saying is right. And I think while on one side, we don't look at the market size and market share and so on and so forth as a measure of our performance. But at the end of the day, that is a deriving factor but we are focusing actually on our own business and our own TPVs and so on and so forth. And I think over a period of time that, that is a resultant factor of market share will automatically a byproduct result that will come. But as of now, yes, we are growing actually exemplary very, very well, and our progression is actually on a geometric side and not on arithmetic side.

Okay. But as you said that you've been trying to gain the corporate clients for bulk payments and so on and you have been offering them a better rate. So will it not continue to affect the take rates going forward in the immediate future?

That is the model of our business and that is part and parcel of our business model. And as a B2B model, actually, that is something which we allow to really do that. But as Vishal mentioned in the speech, actually that we are not including TPV of B2B actually in our TPV calculations. But in terms of net take rates, yes, because it's a nature of the business, and it will continue to happen that way.

Do you plan to kind of report it as well the bulk payment that you do for the corporate in the total TPV?

If there may be a need actually. It's a competitive info and competitive data. And as and when there is a need, we will definitely do that.

[Operator Instructions] The next question is from the line of [ Deval Shah ] an individual investor.

My question is for Mr. Vishal Mehta. He has told regarding -- that he will be raising capital. I want to know how much capital we are raising and on equity or debt from which mode we are raising capital?

Sure. So when we talked about raising of capital, we are a debt-free company. In fact, we have cash and cash equivalents in a few hundred crores. So whatever conversation and commentary we had provided in terms of capital raise is equity capital, not debt capital. Srikanth, do you want to take over in terms of what we will be utilizing the capital for.

Yes. Sure. [ Deval Shah ], the primary capital as we talked about earlier, that this is the growth capital, and this is not required for our working capital and so on. This is basically required to accelerate our growth in terms of technology upgradation for our enterprise payment platforms, technology upgradation for our GeM platform -- sorry, Marketplace platform, new country expansion. But for the COVID probably we'd have started definitely one more country by this time. But I think that we have a little bit lagged behind that. And once the COVID situation settled down, then we will be definitely starting country expansion actually for that growth capital. And lending actually is a huge business. And we have -- we did not visualize that we will touch $1 billion by the end of this fiscal. And I think we may be touching actually $1 billion as a secure lending itself in this business -- in this fiscal -- by the end of this fiscal. So therefore...

How much we are planning to raise the equity capital?

Sorry.

How much we are planning to raise equity capital from...

Yes, I'm coming to that. So all put together that we have not fixed any specific number actually in mind. And because we are really trying to really attract some marquee investors who will be strategically and financially actually beneficial to the company. So therefore, we are fairly flexible actually on that. But depending upon the investors actually that kind of a number may marginally vary here and here. But having said that, this is going to be used actually for our growth of the company.

So it will be a right issue or the liquidity shares will be issued to the new investors?

It will be a primary capital. And by and large, actually, it will be by way of our strategic investors and financial investors, who is best actually for the company's expansions and company's growth actually.

Okay. Can I ask second question?

Sure.

Do we have Neo Banking license? Or is there any procedure we are going on the process of applying it?

Say it again. I couldn't understand the question.

Do we have Neo Banking license because we have started Neo Banking services, right?

Yes. So let me take this Srikanth.

Sure.

There is no license required for Neo Banking, Neo Banking acts as a over the existing banking interfaces. So it's like an aggregator of all banks screens. It does not require a payment license or our Neo Banking license or anything.

The next question is from the line of Ravi Mehta from Deep Financial.

This is Manav Vijay. So first of all, sir, am I audible?

Yes, you are.

So sir, I have 1 question regarding the net take rate -- net taken that we have. So now in this quarter, if my calculation is correct, we have come down to around 6 basis points compared to I believe, 7 basis points last quarter and close to maybe 8 basis points last year. Now considering and obviously we continue to be profitable. Now considering the hyper competition that we are having plus the capital that we intend to raise. So the aim is -- so the aim is to grow profitably continuously? Or let's say, would you want to maybe, let's say, take the profitability slightly later but actually grow disproportionately or, let's say, over the next 1 to 2 years or let's say, maybe for next few years?

I will take this first question, then possibly Vishwas can handle the second one. You're absolutely correct Manav Vijay bhai that the net take rates have come down by 0.6 bps actually in terms of net tax rates, but there is a reason for that. Last quarter, it was 6.6% and this quarter it is 6% actually. And fundamentally, that -- the same quarter of last year, it was same 6.6%. So by and large, if you really look at it, actually, our volumes, our have actually gone up 1x over and possibly 2x over. For the entire FY '21, our TPV volume was -- value was INR 19 billion. And today, we are at the run rate of actually $40 billion on an annualized basis. So despite that 1x growth, 110% growth, I think we are able to really manage the net take rates drop actually only by 0.6 bps actually because of the computing reason. On one side that we can stick around to our 7 bps take rates and 6.5 take rates and so on. But probably, we may have to really compromise a little bit of actually our TPVs. Therefore, that is the balance one has to really take in the entire business so that we don't lose that kind of an opportunity. And value is a gain, volume is a gain. And do you believe that by retaining more and more customers and more and more merchant additions, about 1 million additions in a span of 6 months is not a joke actually Manav bhai. So therefore, that has been done actually with a little bit of compromise on the take rate. And we also believe that the travel sector is not fully opened actually in the country. So the moment travel sector is completely open in the country, there may be a slight moderate actually tractions on the net take rate as well. So therefore, the strategy is to really grow the business in terms of overall business size so that the profitability will be the derived factor actually.

So taking on from what Srikanth said, Vishwas here. So taking on from what Srikanth said is that the reason of us going aggressive is that the numbers of new merchant additions has already been told. 10 lakh merchants in less than 180 days is what we have been able to onboard. And I think that merchant addition and other things by little bit compromise on the take rate, which anyway, the main sectors like entertainment and travel numbers will come in good numbers in this quarter. As you are aware, as people travel more and go out more. So that way the take rate will also increase better for this quarter. But having said that, the new merchant addition, so the main idea here is that the money that we are making from our payment business has to be supplemented with something larger. And that's where the lending piece comes in and many other value-added services that we are planning for corporates and SMEs is where we are going to earn. So the whole idea here is to go aggressive, get them the merchants, tie them up and then offer VAS, lending and all the other stuff. So that's where the real monetization will come in. That's where the real money that will come in over and above the take rate that we are talking about, which we are already doing at scale, we'll improve further, Manav.

[Operator Instructions] Next question is from the line of Arvind Dutta, an Individual Investor.

I have 2 questions. So the first question is that in terms of the market share, in the TPV business, how do we compare to other players in the payment business ? Are we among the top 3 players? And what is the difference between the industry leader and us? And my second question is, is there any update on the new umbrella entity license and when is the RBI likely to announce the licenses to new players?

Vishwas, would you like to take that?

Okay. So the TPV business with other new start-ups are claiming and many others . While we are a listed entity, so we only discussed the real electronic payments that have moved from a customer's bank account into our account and then to the merchant. What some of the competitors are also doing is that the bulk payout that they are doing by just uploading a file, like, say, if Dream11 winners are there after a match and just process that file to do the payouts for all winners, they're accounting all that as their processing volume, which is not the case. So same thing, that's why when Vishal said, in the B2B business, the Neo Banking business, when we do the process -- when you do the payouts to all the vendors or to all these kind of stuff, we don't count them as processing volumes. So the TPV word is very, very, what you call, very lame because we are the only listed entity in the country today. The others are start-ups. So even an internal transfer from one account to that account or like even if we are doing the merchant settlement, they will count that as the processing volumes. So TPV, no one knows for sure what's the real metrics, how they count it. We are counting a clear cut payments that moves from the bank -- from the customers' bank account to our nodal bank account to the merchants. So that's real processing. But having said that, TPV wise different numbers are floating, definitely now with one of the biggest players. So there is a lot of -- then we are the second, we believe. But then there are a lot of new start-ups like Razorpay and Cashme also claiming and still they are not a listed entity and not in the open domain, how they calculate their transaction. While it does a bulk payout also as a carrier account that has transactions or others is a question mark. So we probably believe we are the #2 player there in the market as far as the TPV is concerned. But as the profitability is concerned, yes, we are only listed fintech in the country and a profitable one at that.

Regarding , NUE basically, that is you all know that...

Yes. Basically as the new License is concerned, yes, there are 4 or 5 parties consortiums that have applied. We have participated in a consortium with Reliance Industries and 2 other foreign majors through this. RBI is looking at the application was the last update that we got. So maybe RBI will be scrutinizing the applications and maybe form a committee and other things going forward. But as of now, all we are -- what we know is that they are just scrutinizing the applications. That's the status from RBI.

The next question is from the line of [ Hemal ], an Individual Investor.

I have a very quick question regarding this quarter. As you're saying that your Neo Banking, the merchant -- as you explained, as you're getting the merchants onboarded and then cross-selling, one of the things that you're doing is merchant lending out there. This quarter, can you please maybe there in the presentation, I can't find it how much lending did we do to the merchant? And what was the potential revenue from it?

Purvesh, would you like to create a data?

So this quarter, we've done secured lending to the extent of $156 million. That's 3x what we've done in the quarter 1. And we've given a guidance of $1 billion by the time we exit the financial year FY '22. This particular segment -- sorry, we're not reporting it separately in terms of revenue. But this secured lending is growing month-on-month for us, and the traction is increasingly there from the merchant side.

So in addition to what Purvesh has said, that we started this lending piece actually in September 2020, come practically from 0 level. And end of last year, that is March 21, we ended with $100 million actually of our loan size. And then we guided the market that we will do by the end of this fiscal $200 million, which is 2x. And based on our Q1 and Q2 performance, our present run rate is about roughly $50 million per month actually. This would mean that we are already doing $600 million on an annualized basis. which is 3x of our guidance number. So therefore, we believe that considering all our workings and considering the relationship with the merchants and so on, by the end of this fiscal year, we will be a little crossing actually $1 billion. That is what we said in the speech earlier that we will do actually 5x of our guidance number. And we are energized to actuate this kind of growth. And this is one of the growth drivers actually for the company from the bottom line perspective.

Just trying to understand, so how do you -- as I understood, this was where you're paying the merchant faster than the settlement or clearing and settlement would happen, this is one way of getting the money faster and for that many number of days you generate through your fintech partners or banking partners where you generate some incremental revenue out of it. Is that the model out here? I mean am I correct?

That's right. That's right. Basically, that under regulation, depending upon the merchants, we have T plus X number of days, which is a permissible days for settlement. But in this kind of a case that we may do it actually T plus 0. So there will be a faster acceleration of settlement. And therefore, that for that, we will charge some bps actually extra from the merchants. And our cost of capital is practically, I would say, very, very miniscule. So therefore, that would be the profit driver for the company.

So for us to think of as a metric to -- I know the volumes are definitely important, but these are very low short-term lending high volume churn. That's the one way to think about it, right? So what would be a potential objective like in the next 2 or 3 years, given the number of merchant days as you have, given their volumes, what penetration and what volume size would you be aiming for given what you know from your internal data?

Yes, I will give you a little bit of data. We are right now doing INR 800 crores per day, let's say, or INR 600 crores per day, let's say, in terms of processing. So what we are doing actually for a $1 billion means INR 25 crores per day. So INR 25 crores per day resulting into a $1 billion loan size. So out of our capability of $600 million. So INR 600 crores per day to INR 25 crores per day. So that is basically the growth opportunity in this piece.

Got it. So you're saying merchants are liking it a lot and are willing to pay extra for it?

Absolutely. Why would they say no to that? Because they are getting cash on the day 1, right?

Having said that, that is the 1 part of the lending. If you see there is a whole slide that you've put in on the entire new lending mechanism, the platform with the AI-based thing, that will -- this kind of express lending will metaphor into many other things that is there, be it invoice factoring and other things. So we already see our presentation. There's already a whole slide to it. So it will go further to that to much an invoice discounting to things in the coming days. So I'm no in liberty to say more, but the entire platform will matter for to not just this express lending, but many other things also.

The next question is from the line of Supratim Basu from Americorp Capital.

I was just looking at the numbers and trying to make sense of some of these changes that have happened Q-o-Q. So 2 comments that I have. And then if I could get your explanation on that. One is sort of the gross revenue level. The take rate seems to have gone up from 42 bps to 48 bps on a -- from 1Q to 2Q? But if I were to look at gross revenue this quarter, second quarter versus gross revenue last quarter and EBITDA of this quarter versus EBITDA of last quarter. It looks like all the incremental margins that -- incremental revenues that you have accrued this quarter has come at half the margin of the previous quarter. So it looks like the take rate -- net take rate on the incremental revenues has gone down pretty dramatically. So could you explain this disconnect, please?

Yes. Supratim, let me just take this question. So you would have really seen that our merchant size is 2.4 million, and our present merchant size is 3 million and our addition is 1 million more in the last 6 months, and that means there is an attrition of 4 lakh merchants actually. So the take rate effect is also there actually on that 4 lakh merchant. And having said that, in this particular quarter, especially post COVID, considering the competition reason, we are actually have to really balance their take rates at the gross level and also at the net level, considering the fact that there is a bulk payments, there is the -- new customers are at the different pricing altogether. But at the same time, we need to really manage the overall net take rates, we should not really drop it actually significantly below the marks and water levels and so on. So we have, in a way, drawn up a water level actually, and we manage the system actually based on that. And however, the additions of customers have come at the cost of a little bit of compromise actually on our pricing, as Vishal mentioned actually a few minutes earlier. And I think the trend -- our strong belief is that the hospitality segment and the travel segment where we make actually a significant traction in terms of gross rates and also net take rates. And that has not been -- even today, it has not been fully opened. Both in the international sectors' point of view and also from the India sectors' points. So therefore, once it gets opened and even some of the post-COVID situation, it is not actually fully over. So once some of the sectors are getting actually over, we believe that this take rates will go for not to -- upwards actually. Having said that, what has really happened in the last quarter and also in the quarter prior to the last quarter, is that there are certain sectors where we were very, very weak. For instance, education sectors, we were very weak. But I think the COVID really helped us to really improve the education sectors in terms of our business verticals. So this is actually one of the reasons our education sectors are not actually based on big base. It is based on fixed fee base. So therefore, that is also another reason why you are seeing actually little bit of deep in the...

_ Srikanth, that will explain the variability on the EBITDA side. My first...

No, no, even net take rates also, even net take rates also because level.

Yes. So no, so what I'm -- okay, so the net take rate also, but the question really is, this gross revenue that you are reporting INR 311 crores, that is your -- that correlates 1:1 with INR 64,300 crores, of TPV, correct?

Right.

Right. So INR 311 crores on INR 64,300 vis-a-vis INR 216 crores last quarter on something like INR 50,630 crores, something like that, right?

Right..

So when -- yes, so when I look that, your gross commission, the gross take has actually gone up from 52 bps to 48 bps. So there are 2 factors that I'm seeing here. One is that actually the Payment Gateway has been able to charge more on a consolidated basis or your client mix has actually improved in the TPV. So you mentioned travels coming back, hotels are coming back, et cetera. So I'm assuming that because of that, because their share has gone up, this gross take rate has gone up. 42 to 48 bps on a Q-o-Q basis. But the EBITDA numbers have gone completely the other way. That doesn't make sense to me. So it looks like you are collecting more from the merchant, but you are actually paying out more than standard to everybody else within the ecosystem.

The answer is yes and no Supratim. The another factor which probably we have not maybe articulated in the press release or maybe in the presentation is that the gross revenue includes actually some of the license revenues actually from our platform business. So therefore, on an apple-to-apple basis in order to determine the real take rates actually on the payment side and on the platform side on the licensed base revenue, unless I split the licensed base revenues out of my gross revenues, the numbers will dance in a different manner altogether.

So that's what I asked you first, right? That's what I asked you first that whether this gross revenue corresponds to 1:1 with the TPV.

Well, so that it's subject to license fee. So there is a license fee component, there is an AMS component, there is a support component and there are certain amount of inspiration fee component that is also included here in the gross revenue for which it is not actually translate exactly to the TPV. So that is the reason why the numbers are actually dancing in a different manner, but I can work you through actually on an offline basis.

Sure. Sure. Sure.

Thank you. As there are no further questions, I would now like to hand the conference over to Mr. Sri Shankara for the closing comments.

Maybe Purvesh, you can give a closing comments.

Thank you, everybody, for being a part of this call, and we look forward to seeing you in the next quarter.

Thank you all for your time.

Thank you.

On behalf of InCred Equities, that concludes this conference. Thank you for joining us, and you may now disconnect your lines.

Thank you so much everyone.