Network People Services Technologies Limited (NPST) Earnings Call Transcript & Summary

Ladies and gentlemen, good day, and welcome to the Network People Services Technologies Limited Q3 FY '25 Earnings Conference Call hosted by Kirin Advisors Private Limited. [Operator Instructions] Please note that this conference is being recorded. I now hand the conference over to Ms. Vaishnavi Ambokar from Kirin Advisors Private Limited. Thank you, and over to you, ma'am.

Thank you, Sriji. On behalf of Kirin Advisors, I would like to extend a warm welcome to everyone attending the NPST Limited Q3 FY '25 Conference Call. We are pleased to have with us NPST's senior management team, Mr. Deepak Chand Thakur, Chairman and Managing Director; Mr. Ashish Aggarwal, Joint Managing Director; and Ms. Savita Vashist, Executive Director. This call is scheduled to run approximately 40 to 50 minutes to ensure that everyone has a chance to engage. We kindly request that each participant limit their questions to 2. This allows the management team to address as many queries as possible within the given time. If we are unable to answer any questions during the call, please don't hesitate to reach out us at [email protected]. We will gladly coordinate with the management team to arrange the discussion. We greatly appreciate your understanding, cooperation, and we look forward for a productive and engaging session. With that, now I will hand over the call to Mr. Deepak Chand Thakur. Over to you, sir.

Thanks, Vaishnavi, and thanks, everyone, for joining the quarterly call so early today. Good morning, everyone. Like I always say, this is the only time when we connect to all of you and your questions help us understand the market do well. These inputs have helped us in rectifying directions and build a stronger growth story for the organization. If you ask us how has been our last quarter, let me tell you that we have realized that we have a break in our car so that we can drive faster and control better. Thanks to all my advisers. I know you guys have a lot of questions around numbers today, but I'm more confident than ever about the organization's growth plan. Let me tell you that our numbers have dipped, but our overall performance in the key parameters that we look at has never gone down. In fact, our business risk has been mitigated last quarter and the revenue model has strengthened. We have been honest, transparent and believe in good governance. Hence, we informed our shareholders right at the end of Q2 that we expect business impact in short term. So we are firm with the point that the impact is temporary and we'll be back soon with similar growth numbers that you have seen quarter-on-quarter. Some of the critical points that I want to mention and I want to address upfront. Obviously, there are a lot of questions around what has caused the dip. So let me tell you that we have 2 business verticals, the Technology Service Provider and the Payment Platform as a Service. In second vertical, we provide payment platform to banks and aggregators. Our primary source was a bank from the Cooperative segment. It was during the end of Q2 when the bank policies changed and the acquiring policy was to be relooked for the cooperative banks. This took some time where we got space to really look at the future challenges we can come across. This has caused the dip in payment platform vertical, having an overall impact in the P&L. We did not anticipate it will impact the entire quarter, but it did. We were better off since the policy changes. We are now better off. And we have completed the entire policy changes and the cooperative banks can restart the acquiring business. That's the recent update. The new onboarding, which was completely halted has now already begun. In the last 9 quarters, we were swarmed with customer demands due to the nature of the digital payment industry. We would never anticipate such challenge. As a future risk mitigation and solution to this challenge, last quarter, we completely fast-tracked our technical journey to add more banks in the ecosystem, which will take away -- which will derisk these challenges as well as the new product addition, which we were -- which were majorly in the pilot stage, we were able to push that completely into production. Beyond the existing banks from Cooperative segment, we now have private sector and a payments bank. Apart from these 3, we have 2 more banks lined up from the small finance bank category. So our entire offering is complete. We soon intend to commit the best success rate in transaction in the entire industry, thanks to the focus we had on the technical upgrade last quarter. In fact, all 3 banks have started onboarding customers already. What we essentially have done is derisked and diversified the business model in payment platform to averse the future challenge and deliver better results. But that's not where we have stopped. We were agile and quick enough to bring all the future road maps early to derisk and diversify the entire payment segment. Yes, I mean the entire payment segment. We have used this space to build the revenue engine from other segments, which was otherwise to be built a year later. We have added RegTech as vertical and built an AI/ML engine for predicting fraud as well as bringing stronger compliance in the entire banking ecosystem. We want to contribute to the regulator's vision of stronger and better digital payment ecosystem. Since we are the only one working between banks and payment aggregator, we have massive understanding of this requirement, and we have built our own IP in RegTech. We are confident being the first mover as well as industry expert in domain as well. In fact, we recently won the award for this product in Bharat Fintech Summit. Apart from RegTech, we launched Credit Line for UPI, which is an opportunity for banks to encash on UPI network. We went live with one bank, and we are in the midst of multiple tenders right now. We are building the Credit Line platform for NBFCs. BBPS, which we launched last quarter, we are soon to monetize it here on, in fact, this quarter itself. Our bet on offline payment by becoming partner to bank on building QR and Soundbox solution has paid well. We have not only received incremental orders, we have added more accounts in this space. That's majorly our story for last quarter. You can say that we have been like fishermen who couldn't go to see due to storm, but we sat and fixed our net during this time to get a better cash tomorrow. That has been major efforts for last quarter. Let me take you through numbers. Our revenue for the quarter 3 has gone to INR 23.23 crores. I know that's not what you would like as against INR 31.39 crores in Q3 last year and INR 68.97 crores, which was a marquee quarter for us in last quarter. While the revenue got dipped, but EBITDA and PAT has remained strong and positive that we have ensured. Our EBITDA is 35.33% at INR 8.21 crores and PAT is about INR 5.14 crores, which is still maintaining 22% PAT ratio. We have still managed a healthy P&L and our 9 months consolidated numbers are upward with about 78% growth in revenue, 96% in EBITDA and 133% growth in PAT. Our guidance for this year seems getting impacted due to Q3 results. However, we are trying our best to achieve better and stay put on the numbers. But like I said, we believe in being transparent, and we feel the guidance may have an impact, but this can be ascertain only by the end of quarter 4. So that has been the major point is about the last quarter. The rest, I think it will be more of a Q&A that we can better address your queries. Thank you for being with us during this time and believe your support will help build a strong and sustainable growth story for the organization, which we always look forward to. Yes, Vaishnavi, you can take up the questions, please.

[Operator Instructions] The first question is from the line of Akshay from CD Integrated Services Limited.

Yes. Sir, I had a -- I had the question regarding -- recently, we heard the news that Razorpay and Cashfree stop direct integration with third-party service providers like Juspay. And -- so can you put some light on that? And what is the impact of this type of development in our types of business?

For the captive business, Razorpay and Cashfree has the ability to build their own payment switch. So they don't need a third party. Ideally, everyone else has a dependency on third party who build their technology platform. So Juspay has been the technology partner. And I think they have invested and reinforced building the technology themselves internally, and now they don't need Juspay. So they have their own internal team, their spend accordingly will increase. So that's majorly how this structure is between Juspay and these guys.

Okay. So, so means we don't have this type of partnership and our types of business don't impacted by such developments. Is this right?

No, we don't have a partnership with large players. We don't work in this model. We work majorly for the acquiring banks. And then we also work with payment aggregators who need our platform. The ability to have their own switch and behave like a bank rest with these top 4 to 5 payment aggregators.

Okay. And my second question is that in the last con call and online investor meet, you were extremely confident about almost achieving the INR 240 crores revenue with 75% to 100% growth guidance. However, the actual sales has been very, very poor this quarter. You already have given the reasons for the same as well. But given this significant miss, what is your revised guidance for the next quarter? And why should means investors trust now your projections going forward?

See, to be very honest, this is a temporary impact. And like the moment we anticipated, we informed that there will be a short-term impact. However, we didn't anticipate that it will last this longer. And that is the reason why my entire Q3 got impacted. Well, about the trust, of the investor trust, I feel that this is the first quarter where you have seen the impact. And we did not sit only on one single point, and then we realize what more has to be done. And that has been relentless efforts all these days in the last 3 to 4 months. So guidance, when it comes to guidance, I feel that we are still focused on that number so that it doesn't change. But to be honest, it will be only at the end of quarter 4, where we'll get the entire result because now we have multiple banks with us.

Okay. So are you confident of achieving...

Sorry to interrupt, sir. I would request you to rejoin...

I'll just -- I'll continue to answer. Yes, please. Yes, Akshay.

Yes. Yes. Yes. I just said the last question that are you confident of -- means you've stated your minimum guidance is in the lower end of your guidance is 75%. So are you confident of achieving that in the quarter for -- means for the full year?

Let me be honest. I personally feel that it is difficult to achieve 75%, but that we are still trying. So my confidence is not 100%, a little lower than that. But that is what we are still working on.

The next question is from the line of Venkatesh from JM Financial.

Yes. A couple of questions from my side. Now firstly, the results in this quarter were not good. You were also aware. You're hosting a call at 9 in the morning, where 15 minutes the market is going to open. Wouldn't it have been advisable that you hosted the call either yesterday evening, maybe the results came late. It would have been advisable to host the call at maybe 8:30 or something so that people got a fair idea of what exactly was happening. The second aspect, other way to inform investors would have been that you also put out a presentation yesterday. The presentation talks about just numbers. It doesn't give you any idea whether this was a one-off problem or this problem could have been -- can -- has got, you worked on it and you have resolved some of these issues. This could have been mentioned in the presentation also. Why is it that you've not put in that thought of actually mentioning this in your presentation?

Honestly, Venkatesh, this is the first time. We take this. We are not even aware that this would help in the presentation. But we'll take this up for the next time every quarter to put such kind of pointers also in it. Our intention, if you look at the presentation, we have completely changed the presentation. If you see all the presentations for last -- all the quarters, if you could see, we have changed the presentation and we have added a few slides in such a way that people can understand that what was there earlier and what we have right now. So what is the change which has happened. However, I completely understand the notes would have definitely helped. So we'll take this up. And if you want maybe post this call, we can put this note also. And I believe this transcript will anyways be available for everyone.

Yes.

So yes, point taken.

Just a suggestion, either you mentioned it in the presentation or you put out a press release, what exactly? The qualitative aspects which do not come through in the presentation. Some data point would be very useful, especially before if, for example, the results are poor or results are extremely good, it is good to give an explanation why that has happened in your press release or in the presentation.

Honestly, Venkatesh, never in earlier calls, we have got this input when the results were good. It is only today when we are getting these inputs. And like I said, this will be added and we can take it further. There is no harm about it because we have -- and we knew that there should be more visibility about this to our investors, and that's the reason why you see the presentation itself has changed to ensure that all these points are available. If you need more notes on it, we will definitely put it. But the attempt and the effort has gone into it. Second, about hosting this call early at 9:00 a.m., I think we took advice and accordingly, we have hosted. However, if it was to be even earlier than this, then I think we have actually taken the advice and gone ahead with this. So there can be differences in advice, but I don't think -- you also know that we have ensured that this is as early as possible so that people are more aware and they can actually take decisions. But anyway, point taken. We'll do -- we'll see the next time.

Yes. Just 1 or 2 questions about the business. Now see, in 9 months, your revenues have grown 78%. So as of now, you're actually tracking ahead of your 75% to -- lower end of your 75% to 100% growth guidance, okay, at least on the lower end.

Correct.

Now you said you had a problem with one cooperative bank, which has got resolved now. So we are -- maybe in February. And you also mentioned in your opening speech that we will go back to the original growth numbers quarter-on-quarter and Y-o-Y kind of growth numbers. So why wouldn't you -- I mean -- but you're still saying 75% looks slightly tough. So is there like 75% looks slightly tough, but you can at least get to 50% kind of growth Y-o-Y. Some kind of -- what is the minimum growth you can do? I mean you can give a conservative number, but is it something which you can share?

See, there's a spillover to this quarter. That's the reason why I said otherwise, we would have definitely crossed 75%. There is no doubt about it. And at the same time, the revenue engines have multiplied. So we are going to get a full-blown numbers here onwards, in fact, more than what we were looking at earlier. But if you -- but then it gets balanced out. It gets averaged for the entire quarter. And that is the reason why I said that by end of quarter, we'll get the right numbers. However, -- and at the same time, if I give you a number right now, push it to you, that will be wrong on my behalf. If at all, I don't have the visibility of the closure of the quarter. So to be very honest, yes, the numbers will be -- definitely be better and much, much better than your Q3. However, if you ask me to benchmark it with 75% to 100-odd percent, that is where I'm saying that we need more clarity to actually come out with those numbers. But there is no doubt about it that we'll do good, we'll do definitely better than Q3, much higher than that.

The next question is from the line of Keshav from Niveshaay.

Yes. So as I can see there, I've been getting the employee benefit expense. So does it mean like you have hired them or is it like they have left the company?

No. So the entire structure of the organizations remain as is. We are fundamentally very strong in terms of what we are building and what we are investing. So there is no change at all. The increase in cost was in Q3, majorly because of ESOPs and because of certain variable payments. So all taken together, it has come down to this number in Q4, and that's not because anyone has been fired or there has been any challenge there. In fact, we are hiring more and our positions are still open. And right now, there is about 50% more hiring. I mean, we are at 300-plus people organization, and we have 150 open positions in the organization.

The next question is from the line of Priya Jain from Green Capital.

So my question is very far from your quarter results. So my question is, how is NPST integrated AI into its service to drive innovation and more customer-friendly applications for Interface?

So for about 1.5 years now from the time we started the payment platform, we are always looking forward to what more problem we can solve in the industry. We have a lot of visibility around banks' functions, compliances and at the same time, the payment aggregator gateways and merchants' functions and their compliances. So all taken together, it is very, very difficult to process billions of transactions and bring out a meaningful information to manage compliances and predict frauds. So we have fraud engines in the market, which is reactive in the sense it can tell you how fraud has happened, but it cannot tell you the possibility of fraud in it. It cannot tell you that your compliance rate is getting impacted. For that, you need a strong machine learning system. You need AI to build those models. And we have been able to train our engine with about 644 million data, transaction data. And that is what I was talking about RegTech, where we got awarded. So that's how we are integrating AI in the system. And wherever we have payment platform, this will be one of the core deliverable for the banks and the aggregators and even large merchants. So that's the core focus right now. And then learning from this, we'll definitely be looking at more areas around the business impact, the business growth and many other areas.

Okay. Fair enough, sir. And my next question is with budget allocation to our digitalization. How big opportunity do you foresee for the fintech industry in general and [ NTPC ] in particular?

So like I said, RegTech is extremely big. The bigger the transaction volume in the country, bigger is the risk associated with the digital payment. Now this realization and this quality of information we have very clearly right now. And all taken together, we have -- we believe that the budget approves of the entire fintech and payment industry's growth path. And at the same time, Mitie's focus on building the rural India and how the rural penetration has to be looked up, that is clearly called out. NABARD is more powerful than ever to bridge the gaps. The cooperative segments are now more empowered with better and stronger policies. So all of this will pave the way for our growth story.

Sir, I have one more follow-up question on this. How many banks are in pipeline? And how many will you add in next quarter?

So we were at 12 banks last financial year. We are almost at 18 to 20-odd banks right now. And...

That's a very...

And we have -- and when it comes to payment platform, we were just 1 bank and now we have 3 banks and 2 are in pipeline this quarter itself. So that's the number.

Good to hear sir. Thank you, and all the best.

Thanks.

The next question is from the line of Rajesh Jain from RK Capital.

I understand that the guidance will be impacted this year. What is likely to be on growth rates going forward for FY '26 and FY '27 based on whatever visibility you have now? What is the most conservative number that you can give for the next 2 years?

See, to be honest, the numbers for next year, we have never given. We have only given numbers for this financial year. We want to account whatever happened in Q3 and how we are closing Q4 and then give the number for the next financial year. We -- our aspiration, our wish list is to maintain whatever we have achieved, whatever we intend to do around 75-odd percent. But the final numbers, I would say that let us reserve it for the Q4 call.

Okay. But on a high base of the last few years, you are still maintaining your aspiration at 75%, even it's not an official guidance, but your aspiration, you think it is achievable if things go well over the next few years?

Yes, because there -- see, there are a lot of new segments which we were able to tap last quarter due to the time and space we got. And all these segments will be definitely be monetized in next year. However, the number calculation for those monetization will happen only during the process. And that's the reason why for me, if I have to give guidance, I can give guidance on payment platform, and I can give you guidance on the bill aggregation. But when it comes to other segments, RegTech, Credit Line, in fact, offline payment has also picked up. So if I have to give guidance for 2 more segments to be added, that will be difficult to account. That's why I said my -- our wish list will still remain same, but it is only at the end of quarter where we can actually see the monetization impact for the other segments.

Okay. And sir, what are the opportunities in the RegTech space? Can you explain a little bit in detail? And who are your competitors in the RegTech space?

Okay. So the global RegTech market is $37 billion. And the payment alone, if we look at, is between $2 billion to $5 billion in India. The product that we have built, we intend to -- so we are the first mover in that, and it doesn't exist. I don't want to detail out more in the call due to competitive information. We are readying up for massive industry launch for this particular product. So competition for this product does not exist because this is built on the huge data points that we had already. And anyone claiming it has to go through 644 million transaction record to arrive where we are. So yes, I can give you a market size, but monetization will be also on SaaS-based model going forward. The more you utilize the platform, accordingly, you pay for it. So this will be more on SaaS-based model. That is what I can say. Yes, that's about it.

Okay. And last question, is PaySprint or Sprintax, are they in the same business? And are they a competition for you?

PaySprint is my customer. They can consume services from me.

Okay. Okay. Okay.

Sprintax, they are my customer.

The next question is from the line of Gaurav Didwania from Qode Advisors.

So my question is, can you give us exactly during what time were the revenues affected? And starting what time has the business been back to normal?

Somewhere around -- Ashish, from the billing perspective, can you give certain...

I think somewhere about in the month of August, if I'm not wrong, got impacted.

End, almost. End of, I think somewhere billing got impacted somewhere end of August, that means the billing price would have been somewhere in September early. And this has gone to almost about January 3, fourth week. Yes.

January 3, fourth week. So we can expect about 2 months of full revenue in March quarter, for example.

Yes, that will come across.

Got it. And the second question is you always quoted the GTV numbers.

This time, it will be difficult. It's almost 90% drop almost. So difficult to quote now.

The next question is from the line of Hardik Gandhi from HPMG Shares and Securities Private Limited.

Yes. Just wanted to know 2 things. First, to understand the kind of business model we have, how much of the revenue is fixed and how much of it is variable? And how is the billing system work? Just to understand the dynamics of it.

So in 2 verticals, the first vertical works on -- so to help you, you can pull this from the annual report as well. But I'll explain right now. But if you can -- if you want more detail, it's there in the last annual report. So we have 2 verticals. One is Technology Service Provider, second is Payment Platform. The Technology Service Provider vertical works on software license and Software as a Service model. So when you say variable, I would -- I don't know if you consider SaaS as variable model, but payment per -- I mean, pay-per-use model, wherein you have revenue coming in from the TSP vertical. That's one portion. The other one is license-based model, wherein some of the large customers, they don't believe in pay-per-use, they buy the entire license. That's one. In the Payment Platform, it is entirely -- yes. Sorry?

License would be a fixed thing then. Correct?

License is a fixed thing. But then it comes with -- now because this is our product, the manpower provisioning and the customization change request, everything gets paid per man-day or per man-month. So that is where the incremental revenue comes in. So any order that we book on the license model, we also get paid on the man-days and the man-month that we invest. So there is a portion of license, fixed license, AMC and then there is a portion of this variable income. The second one is SaaS-based model, which is pay-per use. When it comes to Payment Platform as a Service, we believe everything in -- everything should be a SaaS-based model. So the more you use platform, the more is you -- more is that -- and accordingly, you pay for it.

Understood, sir. Understood. So what was exactly affected, which model was affected in the last quarter and what was the...

Payment Platform, which was almost about 70% to 80% of our revenue share coming in. That is the platform which got affected last year, last quarter.

I think sir I missed the initial details, but what exactly went wrong there?

So like I said, there was this policy changes in the Cooperative segment. And our platform was live with the cooperative bank. And that is where until the policy change happened, we had to wait, and that is where the business got impacted. However, what we have mitigated this is with a cooperative bank, obviously, it has gone live again. And along with that, your private sector bank, payment bank, small finance bank, we went extremely aggressive and we were able to add multiple banks in the platform so that we have more customers through these banks to cater to.

Understood. And the last question from my end. [Technical Difficulty], I understand we are...

I lost you. Can you ask again? I lost you.

Yes. Am I audible now?

Yes.

Yes. So on the future growth, right, I know we are going into a very new product, which you think is very niche. It's one of a kind and everything. But on the existing business front, are we targeting any noncooperative international banks or something? Because there, I think so still a lot of adoption of UPI and other payment solutions are pending. So just wanted your thoughts on that.

I didn't get your question because I just mentioned that we have already added private sector and payment banks in the platform.

On the international front because there I think there is no...

On the international front, see, international front, I think -- let me say that again. Whenever there is -- you have NPCI taking or government taking UPI, RuPay to global front through those countries, that is where the opportunity opens up. Right now, the opportunity is majorly around NRE, NRO accounts, NRI accounts, who can add UPI as one of the payments platform in their mobile app or they can transit. However, this has to open up further. So I still feel that if you go via UPI, there is still a lot of time that you have to invest maybe a year or more. But if you go as a payment expert, you will definitely have a footprint earlier. So that has been our strategy so far.

The next question is from the line of Saurabh from Sahasrar Capital.

So Deepak, I wanted to ask about the TimePay app. So I reviewed some -- I saw the reviews on the Play Store. And I'm seeing that the users are not very happy with the app. It's not about -- means there are problems that -- there could be problems that the UI is not good, its buggy or laggy, maybe for some devices. But the problem that users are expressing is that their money is getting stuck while making payments. So I would like to know what is happening there?

I feel that -- I mean, every single of those issues have been addressed because -- okay, let me tell you that we did not have larger focus in TimePay. And every time anyone has asked us about this product, we have said that it is slightly futuristic in nature. However, last quarter, we took a decision to also take this towards monetization. And that is the reason why you will see a lot of action happening on TimePay now for last 4 to 5 months maybe. During this time, since this is the stage wherein we have just gone ahead with a renewed pressure on taking this product customer-centric, we have come across these challenges. There is no denial to that. However, now we are -- we have product, tech, business team completely aligned to TimePay, and they are contributing to complete revamp of the solution. Second point, when it comes to the money getting stuck or anything like that, there is a very strong compliance from our sponsor bank, RBI, NPCI, wherein as per the complaint, ombudsman complaint, we are supposed to resolve this in specific time. So we do not have any complaint as such, which is pending, and all of these have been settled really well. So it will -- it is a slight bit of journey more, maybe a month more, wherein we will be up to the mark as per the industry.

The next question is from the line of Parikshit Kabra from Pkeday Advisors LLP.

I just want to first -- I just want to first begin by saying that I appreciate you taking the call this thing. It wouldn't have been an easy call to take up today morning, but I appreciate that you have maintained the discipline of doing the investor calls every quarter, even though you don't technically have to. So your update so far has been very helpful, Deepak. Just one thing I wanted to ask is since Jan fourth quarter -- fourth week was when things started returning back to normal. In the last couple of weeks, what kind of return of your existing customers, your old customers, your -- how quickly are they rediverting their traffic to you? How quickly are you able to add new customers? How is that run rate going for you? Are you finding any reticence in your old customers?

So yes, there was a lot of challenge in reinitiating everything, platform being completely new and then adding more banks to it. So obviously, there was an impact. And that's why the scaled-up team were able to maintain that. So most of the aggregators whom we work with, they are now all aligned with us. And at the same time, the onboarding process has completely begin (sic) [ begun ] for all the banks. It's not that one bank, but all of these banks. When it comes to run rate, it will -- in fact, I would say that it is -- it will pick up. I mean it is still picking up. So the numbers will be difficult to share right now, but these are early stages wherein first [ 2 ] -- I mean, when I say fourth week of January, almost by then, we were completely able to close the pilot and then start the onboarding process. So numbers are still working in the sense, it is early stages wherein they will now go through that initial numbers, initial numbers and then they will actually put the entire traffic. So that's what I see right now. So Feb and March, you will get.

Got it. And now that you have 3 sponsor banks and 2 more in the pipeline, how -- going ahead, how will you channel your -- fund your leads towards one bank or the other? How do you -- how will you be prioritizing the decision -- the new business?

So banks are the decision-maker now as per how we have actually looked at the entire structure, wherein banks will have -- all 3 because we have now 3 banks. Each bank will have to be the decision-maker of getting these guys onboarded. So if at all, one of the aggregator is onboarded with 2 of the banks, that is the advantage with us and the advantage for them also because now any downtime or any success issue, they will have 2 banks to support as an alternate system. And that was the beauty of EvoK 3.0, which we launched. So we feel that this will also further add to the increased confidence in traffic. So the decisions will come from banks and then depending on how many banks these guys are onboarded, we will get an advantage.

Got it. So basically, every acquirer that you get on board, you will make them available to all the 3 or 4 or 5 banks and the banks will decide if they want to approve or not, whichever banks approves, you will provide the acquirer the ability to use all 3 of them, 4 of them, 5 of them or whatever number that is available through your single API?

Yes. Correct.

Perfect. Last question, the RegTech and UPI credit lines, when are you planning on launching them and commercializing them?

RegTech on payment platform, not credit line. RegTech on payment platform, we have already completed. We are talking to a couple of big 4 to launch this solution as one of the best in industry because we know that it doesn't exist. It should be by mid-April that we will have a complete full-blown product. However, let me tell you that this product, we have already deployed as a mandatory feature for all our acquiring banks. So wherever we go as an acquiring bank, we ensure that this is deployed because this is more of machine learning and AI process. It is ultimately building a better IP for the product. So it is already live. I would say it is already commissioned in a certain phase right now.

Got it. And UPI credit line?

UPI credit line, we already went live last December for Canara Bank. Now we are waiting for the upgrades in credit line. There are 2 more tenders where we are part of. So it's already there. The product is live. As and when we go ahead, as and when the industry takes it forward, the guidance that we get from NPCI, we get it more and more monetized.

Got it. And this will be a take rate that you take on the loans that you disburse, how -- what is the revenue model here?

So the first year, the revenue model will be purely TSP because the credit line is yet to be looked at. So that -- because there is lending involved in it, there will be a lot of inputs, which will come as and when it goes ahead from banks. So right now, it is ETB, bank's existing customer. So it will be more of a TSP business, where we'll get paid for license. We don't want to do SaaS model initially because the transactions will be lower. And as soon as it moves ahead, we have multiple banks who have the credit line in it, then the acquiring piece will also start moving. So I feel that first year, '25, '26, it will add to the TSP revenue. And it is later -- later end of -- or I would say, later half of '25, '26 is when we will be able to see that as payment as a lending platform, where we can then start looking at the revenue from the SaaS-based model.

The next question is from the line of [ Ashish Soni from Family Office ].

And regarding the Slide 12, I think NFC Devices, you said it's $37 billion. So what's our target market we want to target? Because I can see practically Paytm and PhonePe all over the place. So what are exactly we're targeting in this?

So Paytm, BharatPe, the way they have captured the market with these devices, now banks also want to cap these devices. Each tender from a PSU bank is as big as 1.5 lakh, 2 lakh odd soundboxes, and they pay for it. If you compare with Paytm or BharatPe model, we are not in the cash burn business. In fact, we can be your technology service provider, and we can support your soundbox, QR code, the entire recon, the entire platform on a subscription-based model. That is our pitch in the industry. So yes, so we started with about 1,000-odd soundboxes earlier. We have gone to as much as 50,000 soundboxes by the end of this year. So we see huge jump right now happening in this particular segment, especially after PIDF fund coming in, where the government is supporting for the expansion of the payment infrastructure development in the country. Now that, in fact, subsidizes the cost for banks. So out of 30 -- I would say that for us, even if it is about 0.5 million to 1 million soundbox being serviced every month, that will add tremendously good revenue for us. So the target is to have at least 1 million soundboxes being managed through our platform.

Okay. And about international markets, so can you throw light what's the update on that, last time, I think you were doing some sort of mapping, if I recollect, based on the last call or maybe a quarter earlier. So where are we on that?

So this quarter end, I think we'll have an office in Dubai. So we have already applied for it. Middle East is the market where we are actually penetrating first. One of the deals for Middle East, we have already closed. I think -- I guess we might have -- we might be monetizing it. And the deal is more from the -- being the payment expert, the software business provider. So yes, Middle East will be -- Dubai will -- we will have our first office by March, mid maybe or end.

And what services are you planning, sir? I didn't understand that piece clearly.

So these banks usually don't have the interoperable ability or they don't have the acquiring network. They are entirely dependent on Visa, Master to bring their knowledge around acquiring, whereas Middle East market follows a lot of -- they really look at RBI, whatever innovation it does and then they adopt. This is the story of Middle East and African market. So we being a technology partner to Indian banks, we have looked at someone who can actually provide the software solution for them. So a platform wherein they can manage their customer -- merchants, a platform where they can manage the reconciliation, they can manage the overall interoperable payments. So that is where we are working with them.

Okay. Just one suggestion, if you can elaborate for next year, financial planning this Slide 12, maybe add more depth to it, that will be helpful for investors. That's a suggestion from my side.

What is Slide 12? Sorry.

Slide 12, the levers to broaden...

Slide 12, sorry. Okay.

So if you can expand that for our reference in terms of what we are targeting, that will help in terms of what is the strategy of the company maybe next financial year forward?

See, like I said, I think I indirectly answered this, but let me reiterate the fact that last quarter has been really a lot of pressure in ensuring that we sail through, maintain profitability, maintain positive EBITDA and at the same time, bring the agility that we have, plus diversify, derisk whatever we can. So the result of it is next year, the revenue will not only be from payment platform alone, but monetizing the other segments also. So our bet on the revenue will still be our online payments, which we have maintained, the TSP business. Offline payment will start adding revenue. Bill aggregation will also start adding revenue. I see these coming really well for the next year when it -- the visibility around the monetization I have. And beyond that, the new lines of business around credit line and RegTech, they are, I think only by next year, we will come to know as in the process, what kind of monetization we'll be able to do. So that's how we intend to strategize the growth.

My only suggestion was if you can add like how much percentage you are targeting your revenue in strategy in this slide for the next...

Right now to be open, the existing business portfolio of the organization will be almost about -- will contribute about 85% to 90-odd percent and the new portfolio that we are building should add at least 10%, 15% in the P&L.

The next question is from the line of Prateek Chaudhary from Saamarthya Capital.

Sir, just my question first is on the payment platform because that's where we have had most of the churn that has happened. So in the time that this disruption was taking place at the cooperative bank, our clients might have moved to other platforms who were giving similar service. So how -- again -- and this was one of the questions that was asked previously also. So how easy would it be for us to get back those clients? And second, would there be any changes as far as the take rate is concerned? Because now we are starting with new relationships with these newer banks, who are our sponsor banks in this claim payment platform. So would this mean that our take rate would undergo any significant change going forward?

Yes. So you rightly pointed out earlier also, like I said, I think the first part of your question, we -- I mean, because these guys got impacted, they obviously moved out to other banks. But the industry needs multiple banks to manage such huge volume of business. Secondly, what is the value-added services and what is the problem that you're solving, which bank is able to solve the problem really matters. And that's the hook wherein these guys come back. And we took almost a month to bring back these customers. So we have already gone through that journey. So I would say that now it's about the onboarding, which is going on. They are already in a phase wherein they are putting in numbers, they are committing numbers and then the transaction volume. So all that is going on right now. So that journey we have gone through. The second one is the take rate. I would say that the take rate will change because -- and it will balance out because now you don't have one bank, you have multiple banks. So each bank has its own policy, how they want to monetize. So the moment they go ahead, the moment they go in the structure, the kind of engagement which we have, we personally feel that the volume will balance out for whatever changes the take rate will go through. So whatever change it is, I believe that it will not have an impact on the revenue, if that is what you mean, because the numbers will actually balance out based on the volume and the take rate taken together.

Great. Great, sir. And this RegTech platform that we are building on top of our payment platform, what additional percentage basis points would we be able to earn basis this service offering?

Like I said, it is only in the April when we go launch, we will be able to commit the monetization. So it will not be basis points for sure that I can tell you. But it will be pay-per-use. So that means it can be based on transaction. It can be based on the number of merchants. It can be based on the number of the compliance reports. So all taken together, it is a massive data point that you will be mining. So let us reserve it for the Q4 end because we are yet to get the number. That's why I'm not committing the RegTech number right now.

Right. And just a final question.

Sorry to interrupt, sir. I would request you to rejoin the queue for your follow-up question. The next question is from the line of [ Subhash from Value Investments ].

Thank you for taking the call so early to clarify for the investors. So you mentioned about the RegTech and you also said you are also in talks with a couple of big 4 accounting firms. What was that about? Like why are you in talks with big 4 with regards to...

So we -- see, when you say RegTech, you are actually bringing compliances and you are bringing auto audit process.

Got it, sir.

So you're actually creating that audit in the system, which otherwise is only on demand or periodic in nature. What we intend to do is that make it real time right then and there itself. So there are certain advices we are taking where we are talking to these guys. We are also adding their inputs, and that's why. That's the point here.

So only to take their advice?

Take the advice and then how do we partner with them. So...

Got it. Got it. Okay. Because you also mentioned that along with your -- when you go to acquire a bank, you said that this RegTech will also be part of your service, right? So if you're offering to the banks, then would it reduce the work for the accounting firms in their audit work?

So when it comes to financial audit, that's not what I'm touching. I'm talking about the compliance audit that you should be doing for the transactions and the merchants in your system. You should be looking at the re-underwriting process. You should be looking at the process that you have implied in the acquiring system. So all of that has to be inbuilt, which otherwise is more of a manual job or more of just a website being claimed that this is where it can work. So that's the layer that we are deploying. Hence, we are making it mandatory to push it on the acquiring system wherever we go forward with. Second, that's to ensure that our banks are much stronger and they have very strong value creation in the industry, wherever -- whichever bank we work with. Second, monetizing it further is where -- that's the second part -- the first part. The second part is monetizing it where we feel that working with these big 4 makes a lot of value creation.

Got it. Thank you so much for the clarity. My last question is about the numbers again. So I know that you clearly said the 75% gross margin is achievable, but you're not fully confident. But when I look at the revenue that you achieved in 9 months, it's INR 146 crores. So the remaining would be like INR 75 crores. So in the last quarter, you did INR 68 crores. So assuming that this quarter was the only quarter which got affected due to the change in policies in the cooperative banks, would you not be able to do at least the same revenue as Q2 in Q4?

So, I was very honest, even for this quarter, I said that there is a spillover, which has happened in this quarter for the month of January. However, the full-blown income is now going on from here onwards. That entire calculation will happen later. That's why I don't want to commit a number where -- but yes, that is definitely in our sight to what you are saying.

The next question is from the line of [ Yash ] from Stallion Assets.

I'm sorry, I actually missed the additional commentary in the call. I joined late. So apologies if my question is repeated. So I just wanted to understand what was the major decline in your revenue on a Q-on-Q basis? Like did you lose a customer? Or just if you can just sort of brief me quickly like what happened? And my second question is that your FY '26 guidance of -- [Foreign Language], FY '25 guidance, I understand that you'll revise in Q4, but would you be able to possibly give FY '26 as well, if we do have the visibility of revenue for FY '26? Those are my 2 questions.

So first one, I'll just share what exactly I have shared with everyone here right now. So we have 2 business verticals. One is Technology Service Provider, second is payment platform, okay? In the second vertical, we are providing the platform to banks and aggregators. Now our primary source was a bank from the Cooperative segment. Now it was during end of Q2 when the bank policies changed and the acquiring policy was to be relooked for cooperative banks. Now this is where we -- when we got to know this, we put up this message on NSE that there will be a short-term impact on our revenue. Now this is temporary in nature. However, we didn't know how long this will take. And it has taken the entire quarter in fact. Now this has caused a dip in the payment platform vertical. We did not anticipate this earlier, but we are better off now because the policy changes has been completed, the acquiring business has started. So yes, that's the major reason. Secondly, like -- I mean, I don't know if I'm supposed to touch the FY '25 guiding question once again because I think I'm answering this -- I have already answered 3 times. For FY '26 also, I think there was one question, which I clearly mentioned that we have a lot of visibility around the payment platform, around the new line of business that we have got through offline business, which is coins platform and then monetization of bill aggregation, which was launched in Q3. So these 3 will contribute well and the credit line business. So Q -- so financial year '25, it was entirely payment platform. But in FY '26, we have 3 more verticals. All taken together, we have maintained the wish list for the similar growth strategy. However, I would still reserve my answer for Q4 end.

Sure. So the cooperative bank that you're talking about, so like -- so now they are not a part of our customer list or...

They are.

The last question is from the line of Mahesh Seth, who is an Individual Investor.

Yes. My first question is that how is the planning for adding value-added services progressing?

So very interesting, good question. So when we say value-added services, as and when we go ahead, we come to know what are more problems in the ecosystem, which can be solved by bringing the value-added services. So auto reconciliation was one of the problem statement, which we have solved in EvoK 3.0. And let me tell you that we have been able to add revenue through this value-added services in 2 new contracts that we got between Q3, Q4. So as and when we go ahead, we will definitely find more options around it, like dispute resolution. The dispute resolution in UPI was entirely manual in nature. Now we were one of the first one to step into it because our aspiration around building a strong merchant ecosystem for banks is very high. So we built the merchant online dispute resolution as a POC for -- with NPCI somewhere in '23 GFF, FY '23 -- somewhere August, September 2023. Now that we have been able to monetize here because now the volume of business has increased and the dependency on online dispute resolution is higher. So that is also we were able to monetize. So onboarding process is something which clearly depends if at all bank wants that as a separate piece, that is also sellable. So that is how we look at the monetization of value-added services.

Okay. Okay. Got it. Got it. That's a great impact, sir. And sir, my last question is like core banking like HDFC, RCI, et cetera. So now on core banking UPI part, how are we going ahead?

So wherever there is a demand for secondary switch, we go for it. Now we are also selling only acquiring only switch as well. I mean, majorly, the requirement will boost in the Cooperative segment because they will now be coming and acquiring. So wherever there is an acquiring switch requirement, they all are issuer in nature. Out of 640, 70-odd banks, I don't have the exact number. Let's say, on a higher side, 80-odd banks have the acquiring switch as well. So rest all 550-plus banks, they are all in issuer stack alone, of which all those banks who wants to add the UPI acquiring stack as well, we get that as an opportunity. So that is one. Secondly, wherever there are large banks and they see the volume increasing, they feel that it can be balanced by bringing more switch in place, that opens an opportunity for us. So these are some of the changes in the industry happening, and we are -- my sales team is actually able to create a better funnel than what we had last year.

Ladies and gentlemen, that was the last question for today. I now hand the conference over to Ms. Vaishnavi Ambokar from Kirin Advisors Private Limited for closing comments.

Thank you, everyone, for joining the conference call of NPST Limited. If you have any queries, you can write us at [email protected]. And once more, thank you, management, thank you, participants, and thank you, everyone.

Thanks, Vaishnavi. Thanks, everyone.

Thanks, Vaishnavi.

Thank you, sir.

Right.

On behalf of Kirin Advisors Private Limited, that concludes this conference. Thank you for joining us, and you may now disconnect your lines.