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

Good afternoon, everyone, and a very warm welcome to everybody. My name is Anuj Sonpal, CEO of Valorem Advisors. We represent the Investor Relations of Network People Services Technologies Limited, in short NPST. Firstly, on behalf of the company, I would like to thank you all for participating in this event. Secondly, I would also like to thank the management participating with us today and for giving us this opportunity to host them for our Valorem CXO Meet. As you may all know, the Valorem CXO Meet is the first of its kind virtual analyst meet event series. And our intention with these virtual CXO meets is to take advantage of technology platforms like this by reaching out to a wider audience and to create a better understanding and bring awareness about our client company’s fundamental business and provide insights into their specific industry financials and future growth strategies. The format of this analyst meeting will primarily be in a Q&A interview format, where I will start off by asking the management some broad-level questions and then move on to questions from the participants. Please note that if you have any questions to ask the management, you can use the Q&A button at the bottom of your screen to post your questions, which I will ask on your behalf to the management. Now before we begin, let me mention a short cautionary statement. Some of the statements made in today's meeting may be forward-looking in nature. Such forward-looking statements are subject to risks and uncertainties, which could cause actual results to differ from those anticipated. Such statements are based on management's beliefs as well as assumptions made by and information currently available to management. Audiences are cautioned not to place any undue reliance on these forward-looking statements in making any investment decisions. Let me now induce you to the management participating with us in today's meeting. We have with us Mr. Deepak Thakur, Chairman and Managing Director of the company. Mr. Deepak comes with over 2 decades of experience in strategy and management, particularly within the fintech domain. His ability to translate complex market demand into scalable technology solutions has been central to NPST's growth, operational resilience and industry recognition. Now without any further delay, let's begin audience who are basically new to the company and looking at NPST for the first time and take us through the company's journey since inception, highlighting some key milestones that have shaped the company over the years.

Sure, sure. Thanks. Thank you, Anuj, for inviting. And first of all, warm welcome to everyone, those who have joined the call. I really look forward to interacting with you guys as and when we have such sessions. Somewhere in 2013, when we started NPST, our intention was to build a technology stack that can empower the vision of financial value chain in the country. And this stems from the thought that somewhere in 2006, government of India came up with a national e-governance plan. And then at the same time, we have also seen India migrating from 2G to 3G and 3G to 4G. During that time, we were actually working in certain organizations writing TCOs, writing entry strategy for Fortune 500 companies in India and at the same time, tracking the growth of digital aspiration the country was going through. So this was somewhere in 2006, '07 odd. So when 2013, the calling came around the entrepreneurship, we knew what we had to build. We knew that the world is going to be on the mobile phone. We knew that the world will be moving towards the applications. And we also knew that when the 2G bandwidth moves to 4G, it for sure will bring all the possible services on the app. And that is where we started thinking about and dreaming about how we can be a part of the digital growth story of the country. In '13, when we began, we began with a small effort around building immediate payment system. And we did a very small project of migrating an SMS-based banking to a mobile Internet-based banking platform. And from there, we have continued our journey of building UPI, building BBPAs, building several digital payment stack and at the same time, a holistic approach towards digital banking. And that's why although we began with a bank initially in 13-odd, somewhere around 15, 16, we today have about 30-plus banks under our kitty. We have nothing less than 15 to 16 different products. And at the same time, we'll leverage our experience, expertise and all the efforts that we have made over the last decade in building the services stack as well for the digital payment organization that we work for, banks, NBFCs or these are the kind of organizations that we cater to. And of course, now the aspiration is going global with whatever we have done here.

Thank you, Deepak, for that overview. So as you mentioned, the company helps banks, NBFCs and various fintechs to modernize their payment infrastructure. So could you help us understand the company's business model in a little bit more granular detail with the integrated banking and payment products it has for digital payment ecosystem and how the company is addressing the infrastructure interoperability and also the compliance changes faced by banks, fintechs and merchants in this increasing digital financial landscape?

Absolutely, Anuj. Those who don't understand fintech or those who don't understand the digital stack, I'll try to give you a very simple example. We believe that there should be an infrastructure that should support digital payments. There should be a railroad on which the digital payment should write. And there should be a protecting layer that can ensure that the entire ecosystem works without a fraud. Only then the entire system can work. With this, we started building our first vertical, which is technology service provider. Now TSP domain is where we are called as a digital payment infrastructure company. When you say infra, it's not the infra play, but it is about building the core processing around the digital payment. Now if you use UPI today, we are doing about 7% to 8% of country's UPI volume on our platform. If you talk about digital banking, we have about 35 million customers on a single mobile app that we are catering right now on which one of the largest public sector bank is riding. At the same time, when we talk about services, we have about 400-plus services riding on this particular platform. It may be banking services, it may be insurance, it may be investment, it may be utility services, you call it anything. Every single touch point that you may have today for the financial transactions, you will have NPST working on such kind of products. At the same time, it is also very important that the ecosystem cannot work if at all, there is seamless integration and seamless interoperability between multiple systems. Like today, you cannot imagine that what if you're still in the world wherein there is a code and only the application delivering that QR code can do a transaction. Rather, today, we don't even think who has offered that QR code to a shop, which mobile app you're using, where you have a mobile banking solution and where you have an account. And where does that merchant hold an account? It's absolutely decentralized, but it's one single railroad that supports this. We work on interoperable payments. We try to build that solution for banks, for fintechs, for payment aggregators, for merchants, for everyone. That is the role that we play. So when we call ourselves infra, we are actually building the payment processing for these entities to work seamlessly on interoperable payment. This particular business is across license model and SaaS-based model. So we began with a license-based model wherein we could give the solution on license, but then we realized that apart from 70, 50-odd banks, which are PSU private sector banks, there may be about 1,200 to 1,500-odd banks who are cooperative or small-sized banks. What about these banks? So we launched Bank in a Box last year. Whatever expertise we built over a decade, we try to put that in a single environment. And from there, we are giving it to banks on a SaaS model. model, we have SaaS-based model. And then all these expertise, we take it to the corporate world and we deliver services. So that's the first business that we have right now. The second one is Payment Platform as a Service, wherein everything that we have built, there will -- there are certain aspirational banks which would like to acquire merchants, those who would like to acquire payment gateways and deliver services to them. But how will they do that? There are a few banks who have the technology as great as the top 3, 4-odd private sector banks who can do this. But what about other banks in the ecosystem? So we capture those particular banks wherein we can give them technology, we can give them ops, we can give them the services that is required to acquire aggregators and merchants, those who can work on a payment platform railroad. That's the second vertical. Now this is entirely SaaS-based. Every single transaction across this particular domain, we get paid on either a monthly subscription or we get paid on maybe on a transition that flows through the system. And the last one is RegTech. RegTech is where we call out if at all there is any fraud happening in the system, if there are any challenges across mule account or challenges around how the system can be misused. That solution as well also is in a SaaS model. wherein we have subscription-based model. And at the same time, we have transition-based model. We have merchant-based model, wherein if at all, there are impacts in the ecosystem due to which the digital payment may get impacted for our customers, we secure it, and that's the RegTech part. So these are 3 business models, products line that we have, and each of these are on SaaS-based model. The first one majorly works on license and SaaS. That's how it works.

Great. Thank you, Deepak. You talked about -- you mentioned about the RegTech platform. So can you help us understand the business model here in more detail? How does this platform help customers? And what is the long-term monetization opportunity here?

This is something that I've personally invested a lot of time with some of the really great guys that we have worked in the organization together on the solution. Please remember that digital payment revolution in India is just a decade old. Somewhere in 2016 when the UPI began, if we take that as a starting point, I would say that '26 now, it's been 10 years that we have seen the revolution happening. But the fraud control system is designed for the banking system. It is not designed for the evolution that we have gone through in the last 10 years. This is a gap that we have identified because we were right inside the system where the infrastructure and the railroad was being built. Now if that's the case, then what happens is you're able to control fraud before the transaction happens. But when the transition is done, still there are challenges. About 5% of global GDP is impacted because of fraud. That's the impact it goes through. And if that's the volume that we are talking about, then even if we have a filter, even if we have a layer of fraud and risk management, which is designed for banking system, then why are we not able to control the transactions. The reason is there is not even one system that is post facto analytics. There's not even one system that can actually read what you're doing and tell you later on that all the transitions that you have gone through, although it is success, but there are stinkers and there are red flags in the system. And that is what we have built. So we have not built something which was maybe a call a decade back and then the improvisation over it. We've built completely fresh. So this system ensures that it scans the risk merchants and tells you in advance whether you should even onboard this merchant in the system or not. It's like a CIBIL score for you to issue a QR code or a POS. That means we can guarantee whether this particular merchant has followed every single guideline, and we can underwrite on our tool that this particular merchant is good to go and you can give them the payment. That is the level of understanding the system has gone through. And at the same time, every single transaction that flows in the system, we can tell you whether that particular transaction has followed all the right parameters and whether there is any risk flag that you need to look at right now and report to someone. So that is also part of our system. So we do merchant underwriting and then we do transition underwriting. And we give a very clear risk score against it. This is which bank can take a decision on what to do, whether to report, whether to continue with that particular merchant, whether to action on it. So that's what we have been able to achieve it. Quite interesting, we have almost about 98% accuracy in everything that we have predicted so far. And that is because we have been working on this for about 3 years now, and we launched only after training it with about 700 million transactions and about 300,000-odd merchants. So we can even predict the merchant category basis the transaction behavior. So if someone has taken a QR code for a barbell shop, we can tell you whether that's a barber shop or not or whether it is a betting gambling location. So that's the level of clarity this system gives to banks or the acquirers.

Fair enough, Deepak ji. Moving on, so the growth for NPSC over the last -- historically has been driven primarily from your TSP business, which is your technology service provider. However, the company is expanding more into higher-margin areas such as PP, AAS, RegTech, Merchant Solutions, international markets as well. So can you elaborate the strategic thinking behind this shift and also explain how these businesses are expected to contribute to future growth, margin expansion and long-term value creation?

Yes. So again, it's a very organized and designed structure now. We have also, as an organization, evolved -- we have also tried to understand in the past, what are the mistakes that we should avoid. So it's very clear that we have 3 verticals. One is TSP, second is payment platform and third is RegTech. The expansion is how do we bring in more SaaS revenue in TSP. The moment you start bringing in those revenue, your cost goes down and your revenue per account multiplies. So that's where we launched Bank-in-a-Box last year. So the universe also multiplied for us from about 50, 70 banks, we now have about 1,200 banks to cater to. And we started with one product, UPI. Now we have about 6 different products live on our Bank-in-a-Box. So we have multi-tenancy and then we have vertically the size of the overall banks. And today, we are also venturing into DPDP. And if so, then beyond banking also, when it comes to NBFCs, when it comes to the BFSI segment, those are also part of our ecosystem now. So the intent is how do we multiply the overall universe where we want to target. And secondly, how do we bring in SaaS revenue. So Bank-in-a-Box plays that major role. When it comes to TSP in the license model, how do we multiply more product in large banks. So that's where launching IBMB, launching DPDP, launching RegTech, that plays an important role. So more products designed for the larger play. That's the growth that we see in the domestic market. Now taking TSP to the global market. Trust me, when we go outside, we start with an India benchmark when it comes to digital payments. So we don't have to tell them where I come from. We just have to start our pitch because the benchmark is already created in the last 10 years. When we start with India benchmark and you're an Indian stack taking digital payment globally, you are sitting at a premium, and that is the value that we want to extract. So as a TSP, whatever we have built here in terms of the infra that we have created for banks, again, I'm not talking about the hardware. I'm talking about the software ecosystem. And again, the payment railroad that we have built, this is something that we are commanding a good premium value outside. So that's where TSP will have more revenue in license and SaaS, but higher margin as soon as we go to Bank-in-a-Box and as soon as we go to the international market. That's TSP for you. In Payment Platform, I think in Q4 results, we were very candid enough to accept the challenges that we have gone through. We have very openly told our investors that for about good year, 1.5 years, we have been trying our best to redo the PPaaS story that we did in '24/'25 journey, but '26 did not see that happening. So we decided to reduce our exposure here and not to focus more on the domestic PPaaS, just focus as much as required in the committed numbers so that our risk associated with the regulatory challenges our segment may go through, that is completely derisked. So that is where in PPaaS and domestic, we are trying to restrict ourselves. However, we don't mind redoing certain innovations to see if at all there is something more that we can bring in. Further, taking PPaaS to the global market and trying to see wherever India has gone with the UPI railroad. There can we extract something in PPaaS. That is where we will command premium. That is where we'll see the growth of PPaaS coming in. So that's the second vertical where we see the approach for the higher revenue and the margin both. And the third one is RegTech. It's an absolutely virgin territory. We have already -- we are one of the -- we have got one of the first deals in the country through one of the largest PSU bank. And now we are multiplying that. So there are calls coming in for POCs, there are calls coming in for paid version being to be implemented, and there are about 7-odd banks where we are in very active discussion. While we were doing this, we also want to know that a similar challenge exists outside. Wherever there will be a digital payment stack, you will always have a need for the RegTech. That is very clear. So this opens up the doors for us where we may have missed the digital payment bus in the global market, but it will definitely command a requirement for our IDP, which we have built. So that's about it. That's how we want to structure our revenue and the margin approach. Rest, I think when it comes to -- Anuj, did you ask me about the numbers as well or?

No, no, I'm coming to that. Actually, that's my final question. So before I take questions from everybody else, let's talk about your numbers. You've obviously demonstrated a very impressive growth over all your financials over the past few years. So can you discuss some of the major factors that have driven -- that have contributed to this growth? And also explain how you plan to balance your future growth in investments any acquisitions, et cetera, that you do along with profitability and the operational disciplines and also scale your business across multiple verticals?

Yes. Sure. So very first thing, if you see in 2 years, 2 years back, for the first time, we crossed INR 100 crores. And within 2 years, we crossed INR 200 crores. I mean, I agree that the expectation versus the number that the market was looking at, they definitely may have the larger aspiration around the NPST's growth. However, last year has been fundamental change in how we have designed the entire vertical and the approach towards market, revenue generation and then also taking care of derisking our business, which has impacted the overall growth journey. So all of that has been considered. Now here onwards, it's about 70%, 80% annual growth story that we see going forward. Where it comes from is definitely the global traction that we are getting. We began somewhere 6 months back. And looking at the sales cycle, looking at the overall journey that we have to go through to pitch in the solution and get the deal size that we are looking at. It's nothing less than 6 months to 1 year odd. So we feel that by the latter half of the year, this financial year or 1 quarter is gone, but later half of the year and the next financial year onwards, we see a real good spike coming in as and when we close and we start executing and post execution, we start realizing the revenue out of it. So that's the major trigger which we see from the global market. In domestic, we have some really good products, right, from DPDP to RIDP to the interoperability and again, the opportunity to collaborate with multiple other entities that we are working with. So all of that is, again, good revenue churn that we see coming in. Again, bank in a box should give us 50-plus banks at least in a year. And if that happens, we will not only be able to recover the overall investment we did, but we'll also be able to add -- cross not just breakeven, but we'll also be able to add some margin over it. So that's this year's target. Well structured around how do we go about SaaS in banking, how do we target licenses and how do we target the global market. That's the overall way to look at the numbers.

So let's start taking questions from the participants. On behalf -- so the first question comes from Ashish Soni. He's saying regarding acquisition overseas, which was highlighted in your last earnings call, EBITDA margins are generally lower than ours. What's management view on the same? And which areas are we targeting?

I actually missed answering the acquisition part, even you asked me that. So our plan is very clear, whether I mean that's the reason why we are taking time because we have to answer you guys. So what is the kind of top line that we get? What is the entry that we get by acquiring? And what is the bottom line that we can get out of it, the size of accounts and the list of accounts that we can add beyond what we have right now. So these are all criteria under which we have to select any account to pick up organization that we can invest on. And you must understand that this is a very rare combination. If we would have been P-funded probably, we wouldn't have seen a couple of criterias there, we would have moved out of it. But then we have to focus into this. So there are some organizations that we have looked at, and we have dropped them at a later stage. That has happened already. because of certain criterias, which was not rightly positioned. So we definitely will be looking at 2 verticals. One is TSP, second one is RTech. PPaaS, I don't think is an area that we would like to pick up anything from here. In TSP, domestic and global, both. And in RTech, how do we get presence in the global market. If at all, we are able to invest into an organization that gives me presence in the global territory with all these criteria, that will be the first organization that we should look into. So these are certain criterias in which we are currently evaluating the pitches and the conversations are going on. So that's about it. I can't go beyond this. I think I hope you've got the clarity on management's view on the acquisition. But yes, we are also on it. We also want to ensure that we should do it early. Yes, is there...

Yes. So his follow-up question is who are our competitors in taking UPI Global and which regions and countries are we targeting for these acquisitions?

I can't answer which countries and where we are targeting. I'm sorry. But competition will definitely come from all the TSPs. Those are doing really good in India. I think when it comes to UPI, you should know that one of the largest companies, Mindgate, well-funded by PayU. Then you have Olive, you have Servvatra. I can name these guys. You can definitely track them, you will come to know. I think you should also -- if at all, you really want to track it, you can track which all countries India has gone with UPI. I think that's one trigger I can give you.

Sure. Next question from Disha is what are the margins in TSP versus PPaaS? And what sort of margins do we see in international markets?

I think I have given these numbers already. See, the margin will differ when it comes to -- just a second. I don't want to give you -- so just a second. So see, margins on license will anyways range between 10 to 18 or 20-odd percent. And when it comes to SaaS, it will begin with minus negative and then it can go as high as 40%. And when we have the number of tenancy that we are looking at multiplied with number of accounts, the products. So when I say tenancy, I'm talking about 50 banks x number of products. So that's how we calculate it. So if it spreads vertical, horizontal, it can go from maybe -- so obviously, last year, we -- in the bank in a box, we started with negative. The whole investment was done, certification done, good investment in building our own data centers and all of that. So I believe this year, we should be able to clear about at least 15%, 18% odd margin or if we are able to track in more accounts, then we will be definitely crossing 20-plus for SaaS model. When it comes to PPaaS, the margin hovers anywhere around 25% to 20%, 25% to about 30%, 35% odd. That's where it hovers around. But when you go international, you can add anywhere about 15% on the premium. That's how you should look at the margins.

Sure. Next question from Rajiv Sehgal is last week, the company announced receipt of an order from a Maharatna company. Please advise the order size and duration. I think this is something that we cannot, but yes, go ahead.

Yes. Unfortunately, I am bound with the NDA and RFP clauses. That's why I'm sorry, I can't -- but I can definitely give you an idea about how the revenue will be generated and what value. I'll try to be as close as possible to your question. So yes, so this is a UPI account on which we'll be building UPI application. And the volume of transaction for the account will give us transaction revenue. So every transaction that will go through this application will get paid per transaction. That is very clear. There is also infra cost, which they will be paying us. And beyond this, as and when the products multiply on this particular application, beyond per transaction, if at all, there are more payment products like there are cards added to it. There are like prepaid credit card, these instruments gets added. Then there are revenue generation streams that opens up. So the revenue generation stream can be interchange. It can be the MDR, which you're familiar with in the market. So there are certain revenue creation that will happen for which we will get share. So that's a per transaction revenue and then there is a revenue share that will come to us. And the volume being a PSU, again, not to name it, but it's tremendously big with the kind of vision they have. So we believe the volumes will be in crores -- running in crores maybe weekly, monthly, that's how it will go.

Sure. I think there are a few follow-up questions who are asking the same thing in terms of value of orders as well as bids. Unfortunately, I won't be taking any more of these just because the answer is the same due to NDAs. There's not a lot we can answer here. Moving on to a question from Owais is how far is the international business pipeline acquired? And how much does it add to the P&L? Is RegTech also part of the international business? If so, how much percentage is going to be from the overall business?

So far, our pipeline has TSP and our pipeline has PPaaS, both. RegTech is in early stage right now. So that will take time. As far as P&L, this year, we can guarantee that there will be numbers coming in from both -- from TSP as well as PPaaS. And the numbers are good, that I can definitely say because someone asked me in Q4, what is the percentage contribution that may come in? And do you have enough pipeline in your hand? I clearly said that of the total projects that we have taken, we have about 40% pipeline already existing where the numbers is extremely clear and visible, which will get added to this year's P&L. And I'm talking about the confirmed -- when it comes to the overall pipeline, for sure, Q2 and Q3, how we close that, maybe the executions will happen in Q3 and Q4. So you should see a very good numbers pumping up in the last 2 quarters.

Okay. Moving on, the next question from Deepak Poddar is, can you throw some more light on the new product, which will drive growth for us? And will it be -- will it help in EBITDA margins improvement as well?

I mean, the good part is we did not stop product innovation, although we were working with -- working around derisking the overall platform. And today, it really helps. Why? Because there are certain products which we develop and there is a demand to it. So there is a pull, Shil. We don't have to push it. One is super app, extremely good product. It's about digitizing the entire ecosystem and bringing into a single interface. That is what it does. So this definitely improves the margin. Secondly, the value of the product is also on an average, whatever we are selling is at least 3x of the size from the payment product. Beyond this, we have been able to break this product into SaaS model, into Bank-in-a-Box model. So the coming quarter, we are launching that product in our Bank-in-a-Box model. And the same product is also going globally. So this is one product that really is exciting our customers. RIDP is the second product, which definitely has a lot of demand, majorly because it is -- if not a mandatory return guideline. It is a problem stating guideline, which someone will have to follow. Until then, the tools have not been designed. So moment you see a demo, the moment you see that solution, you can start linking all your manual efforts and all the challenges that you have anticipated and tried to solve the monitoring. We see that someday any guideline with which this becomes a direct plug-in, this will be like a rocket that we sell. Right now also, even at the moment we demo it, it is 8 out of 10 people really love the product. So that's the second product, which we feel has a lot of value. Third is we were one of the first ones to get into IBMB interoperability, which is Banking Connect. So we have interoperability in mobile app, which is in form of UPI, but we do not have interoperability banking. So today also, if you want to make a payment from netbanking, you go to any payment page, you click on net banking and then you select a bank. And then when you select a bank, then it opens up the Internet banking page of a bank. Imagine we have still not solved that problem. So Banking Connect solves that problem. So when we launch that product, you really don't have to select a bank page, you have to go through net banking, login password, that's completely out. That is, again, a very, very important product when it comes to the payment stack, and we have the whole solution in license as well as SaaS. So these are 3 solutions which we feel is going to pick up well.

Next question from Ria is EBITDA margin has come down in FY '25 -- sorry, it came down from 37.4% in FY '25 to 31% in FY '26. So he says for a fintech company, usually EBITDA margin should have gone up with the growth in revenue. So why are EBITDA margins coming off?

When I began this presentation, I tried to give you a very good clarity on what role we play in the industry, so TSP, PPaaS, and RegTech, you see. And TSP is where 90% of revenue has come last year. In '25, it was just contributing about 15%, 20% where the margins were anywhere around 12%, 18-odd percent in DSP. So that from 15%, 20% going up to 90% of total revenue contribution will definitely have an impact. And that if you're not with the company for the last 2 years, just to let you know, we have this second vertical, which is payment platform, which was contributing almost about 85% in '25. That came down to less than -- just about 5% odd in '26. That one was about 30%, 35% odd margin business. The reason to come down is, again, the regulatory risk and the challenges that we have faced through. The paying capacity of our customers had gone down completely. And this was completely a SaaS-based model. It was not a license fixed fee model. So if their business goes down, it definitely impacts the payment platform. And that is where we face the hurdle. And that is the reason why in this call, we clearly inform 3 different businesses, the license model that we have built in on the first one and taking it to the SaaS-based model going from 70 banks to about 1,200 banks universe so that we have more customers to target and adding more products so that we can multiply tenancies than going global and taking it forward. So these are some actions we have already done in FY '26. So '27 and '28, in fact, changes a lot of us for us.

His follow-up is, in fact, how will the EBITDA margin behave from here to FY '29 based on the projection of 70% kind of revenue CAGR.

'29, I believe we will be much better. From here to -- if I take 29 journey, then in next 3 years, our EBITDA margin will be much better than your '25 numbers that you have right now. I've already given you the reasons for that.

Sure on the EBITDA margins, where does the actual 40% to 50% EBITDA margin come from? Is it mix, operating leverage, lower support costs, lower customer acquisition, lower implementation? What specific mix gets you there and by when?

3 to 4 points. One is, I've been talking about going global and adding premium to the product cost that we have and the margin that we can add in. So that is one. Second is -- we have procured several licenses. We have invested heavy into converting and the overall development cycle into AI-based solutioning. Third, our future goals are going to be -- although we started with RIDP as our first AI product, but we are not going to stop there. We have not given you projections around what are the new solutions that we are going to build. All these projections and numbers are on what has already been built. So our future investments and developments are going to be on AI-based solutions. which not only has a quick delivery span, but it also has higher margin and greater demand. So those are new solutions which will again add to it. And the last one is the scale at which we are operating right now. Earlier, the organization 2 years back in '24 was a team which was heavily tech-focused. Now the organization is sales focused. We not only have a product team, we also have solutions. We also have sales, we have marketing. So all of these departments have been built in the last 2 years. And that scale will help us focus on the outreach that we are -- we intend to do with more product lines, markets and the models that we have launched. So the scale at which we are operating is also -- is quite high right now. So we have team for domestic. We have team for international. We have team for RFPs. We have a team for SaaS. So that's where we see the overall play. So yes.

Okay. His follow-up is you are aiming for 200-plus tenants by FY '29. How many tenants are live today? How many are paying? What is the ARPU per tenant? And what is the churn attrition assumption? How long does one tenant take from contract to revenue?

ARPU, I wouldn't share. But yes, right now, I think we are -- we launched somewhere in February, and we are already on about 12, maybe 12 to 15 tenants already there. And it takes anywhere between to 4 months. Ideally, a license product takes about a year, 6 months to 1 year, but this is like 2 months to 4 months cycle. It doesn't go through an RFP process. It's quick. And I believe right now, the pipeline that we are sitting on is nothing less than 50. So yes, what else?

What is the churn assumption?

I think we have just started. So there is no churn right now.

And how long does one tenant take from contract to revenue?

Yes. So contract to revenue, like I said, the sales cycle may be fastest, maybe 2 months and longest maybe 4 months. And once you sign the deal, go-live is about 45 to 60 days, where the revenue can be kicked in.

Next question from Nalin Kant is what kind of deal funnel or pipeline we have, especially in overseas contracts, which is giving us a visibility for 70%, 80% CAGR for next 3 years? And what is the risk of this guidance?

I think I have already given 3 product, which is around super app, the payment platform.

So broadly on the business verticals, but not a deal pipeline or something that we can talk about.

No, I cannot share that right now. You see every competition is looking outside. So again, the kind of conversation I am having right now, I don't think my competition is doing it. So it's -- that's why -- what I can tell you is definitely around the verticals and what we are taking to market.

Sure. Next question from Abhishek Kal is there was a spike in the receivables to INR 103 crores. What is the time line we are looking for these payments?

That also I have very clearly said last year, the kind of pressure we had after PPaaS revenue went down to pick up the services and the overall TSP businesses, we leveraged the cash flow we had, and we ensured that we were able to close deal as fast as possible so that we don't go through a year-long cycle of closing business so that we are able to get as early as possible, whatever we can in our books. And that is the reason why the 90 days, 180 days odd debtor was created. But now it's on track. I mean, quarter-on-quarter, these realizations will happen. And that's the only reason why there was a spike, but the realizations are on track now.

Next question from Rusmika and Shubham asking the same question. So U.S. banks are scared and fearful from models like Mythos and Anthropic. Will such AI models impact the company SaaS product offering or RegTech?

So we don't work on those models. Usually, those who have adopted too deep and have structured it so deep are the ones to go through it. We have -- I mean, we are still not there. So fortunately, it does not affect us. However, there are very good guidelines now coming in, which is again an opportunity that we should look at, in fact, not a risk, wherein RBI clearly calling out that banks need to have resistance against this kind of impact AI may have in the ecosystem. So this talks about the risk in the railroad. This talks about the risk in the system, the kill switch that they are talking about. So all of that opens up gates for us to further leverage on what we have been trying to do in RIDP. Yes, we are not exposed to those kind of risks right now. But yes, the opportunity for sure.

Okay. Next question from Suraj Mehta is what is the business model for Quins, number of target device CapEx? And do we get any only rental? Are you looking to turn bank's CapEx into OpEx? What is the differentiating factor in our device?

Yes. So I think that's quite a commodity conversation in the market, so I can definitely share a lot more. So one is the soundbox model. It not only works on -- so when you say Quins, it's 60% to 65% software and services and just about 35%, 40% odd of hardware. It has a Soundbox. It has QR generation. It has the entire merchant management system. It has the several software configurable systems. It has terminal management system that ensures that all the devices are connected and communicate the right messaging to the right merchant linked to that particular QR code. So that's the complexity the Quin system handles. For this, we get paid on monthly rental. That's the fixed set of revenue. And then these are majorly large banks, RFP and small banks, again, SaaS-based sales cycle. Beyond this, I don't think banks have evolved for now. Although we have product in place, and we have been talking about this, unfortunately, banks have not evolved beyond payment stack over QR code, although there can be lending ecosystem, there can be multiple more asset and liability-related conversation that can be brought in over Quins, which we have been trying to pitch in and explain. But I think it is important that the model is at least another 1 year old for banks to start taking up the advantage and the opportunity with the size that they may have with coins in the market. So it will take time. For now, I think we should stick with the revenue around rentals and the -- yes, that's all.

Okay. Next question from Suraj Mehta. While NPST has successfully captured market share in the midsized public sector and regional cooperative banking sectors, larger private sector banks often build their core payment switches in-house. What is your strategy to displace the legacy switch systems at Tier 1 private banks? Or do you view small to midsized institutions as your primary volume growth engine?

We tried getting into the private sector bank. Unfortunately, we feel that, that space is very crowded in terms of the way they view tech and the way they have structured their solution already. Meanwhile, they have built extreme agility and the -- and they cannot disturb their ecosystem with the way they want it to work. So and the other universe is PSU, cooperative, RRBs, small finance bank, and that's quite large and now NBFC. So if we are talking about this universe, I don't think as an organization, we are left with enough bandwidth to start focusing on those areas. That's why anyone questions me around the private sector bank, I mean, the ICICIs and the SDFCs of the world, I don't see a larger opportunity for us right now unless there is a new product or new domain launch that allows us to get into that segment, and there is an equal opportunity. Please remember that our digital journey started at the end of '15, which is 2016-odd. And our competitors were in this market since 2010-odd. So covering that gap in PSU cooperative bank is still okay after 10 years. But going back to private sector and opening that particular gate, I think that's quite a demanding task, and we would like to stay away from that.

Sure. Next question from Shas. Who are your competitors in direct tech from listed space, I think even Iris business is a competitor. Is this true?

No. So like I said, the solutions have been built over -- so there are regulatory guidelines given, right, basis which the EFRM system are to be built, basis which the biometric system are to be built. We don't do that. We stay away from the traditional ask of banking ecosystem. What we have built is post-transaction processing, and that is where we would like to invest and build our forte, majorly around how the governance can be improved post transaction, how the risk can be flagged and how the compliance can be managed. So these are certain areas that we focus on right now.

Next question from Rusmika. As the business transitions more towards SaaS how will working capital requirement behave in future, considering the targeted revenue of CAGR of 70%? And a similar question from Richard, how will the cash conversion cycle receivable days look 3 years from now? How much of the capital raise is for working capital buffer?

See, the SaaS ratio will play a critical role 4 quarters down the line when it comes to higher SaaS revenue coming in because the number is really big. Now we are talking about after INR 200 crores last year, we are talking about 70%, 80% yearly growth. And in that, even if we talk about 1/3 or 40% of SaaS revenue, which just began third, fourth quarter last year, -- from there, increasing the revenue share, I think we should give it at least 4 more quarters, 4, 5 quarters at least. So it will slowly pick up. But when it picks up, it multiplies really fast. Like from February until now, we have about 12-odd banks. I mean, I really need to look at the numbers, but 12-odd banks already onboarded and they're live on it. If you are talking about this space, then I believe the SaaS will start giving a really good numbers in the next financial year. If you can ask me a specific question, maybe if I've not answered something.

No, I think the question was simple around cash conversion cycle receivable days. So how do you see it in the next couple of years? How much -- how will it improve? So...

Yes, I think...

Any number that you can put on that?

I mean, very early to share that number right now. I mean, can you just put down that question and we can -- I can ask my CFO or someone to answer that.

Sure. Next question from Shriram Iyer is, did we lose out on future domestic PPaaS market opportunity by virtue of being out of the market due to our sponsor bank issues? Can this happen to any of our other business segments?

We need to understand that the overall -- no. So the answer is, is there a similar nature in the other business? The answer is no. And that is the reason why we completely derisked it. And we brought in an extreme clarity on PPaaS and TSP so that there is a clear line between the 2. We are a tech provider in the market. We are building infra, we are building railroad. So that's where we get paid. So that's not the challenge. The answer to your -- to your question about the sponsor bank and all, did we lose out? I would say that it's not about bank, it's about the category of banks that we were working with. So if you see working with cooperative banks and then moving on to the highest structure of small finance bank, then private, then PSU. Now that takes that's where we probably -- when we started when this happened in '24, and we were completely out of transaction for a good 1 year. And then when we restarted, we realized that the market has changed completely. So the other part is it's not about the bank alone. It is also about the impact on the payment industry. After -- so if the paying capacity has gone down. So even if I bring down my price from, let's say, INR 40 or INR 0.50 to about INR 0. and the market cannot pay me more than INR 0.3, then in that case, we are supposed to take a call. So for a year long, we were trying to push lower price. We are going through a price discovery. We were going from INR 40 to INR 10, INR 10 to INR 8. That did not happen. And then when we realize that this is just not picking up beyond INR ., it's time to move on and build something else. So that's the overall journey. So partially, yes, partially no.

Okay. Next question. We're running out of time, but I'll take maybe 1 or 2 last questions. Manish is asking, are we seeing more players getting into a segment of business such as RazorPay entry into UPI switch?

They try doing it, no doubt about it. But I mean, they are more on the acquiring side and their forte is about the merchant business on the acquiring. And our forte is about bank and banking as a service. So we try to build bank stack. We don't build the merchant stack. So and that is RazorPay. That is what we do. So we understand banking. We understand regulations. We understand the overall compliances sticking around it. Razor pays of the world, they use UPI switch to ensure that whatever they are delivering, whatever they have built, there's more efficiency and more revenue generation on it. So I believe the objective is very clear right now. Beyond this, I don't know their strategy. So that's how it would work.

Let me take one last question. How is the adoption of offline UPI, UPI 123PAY and CBDC progressing? Are there any new tech around security and safety in transactions? Has the switch upgrade been favorable across Tier 2, 3 and rural areas?

UPI 123 is still taking time. There is -- there are certain very strong use cases, which we believe this year, we should be able to execute. But at the same time, it is a bit slow right now because the kind of product it is in the sense, voice-based payment, voice calling and all of that, there needs to be an education concept and then sales. So we are in that stage right now where conceptually we are trying to build the market and then take it forward on the sales cycle. So that's why it's taking time. So there is a journey that we are going through right now. When it comes to -- so there was UPI 123...

CBDC DC.

CBDC is more of the regulatory and the government design. They have to -- I think there are certain use cases which are super strong when it comes to CBDC. But as a country, we have not arrived there, something like programmable digital currency. So such kind of use cases will push CBDC adoption. But for now, because we don't have the market use case, the CBDC adoption somewhere is restricted to only the switch parameters. But like UPI has a QR use case, it has merchant use case. So you will see a major adoption and a lot of innovation investment happening around it. If we are -- if at all that CBDC case around programmable currency has really picked up, then you will see investment, then you will see banks opening up their budget and all of that. So I think we have to look at the regulator and the government around this particular product.

And lastly, has there been any new tech around security and safety in transactions? Has the switch upgrade been favorable across Tier 2, 3 and rural areas?

That's a continuous process even if there is no regulatory demand. See, the regulation is so well designed when it comes to RBI that there are regular audits, there are regular questions, then regular upgrades, which you have to follow. And now that we have launched our own bank in a box, we have to follow that very, very stringently. So we are PCI compliant, PCI DSS compliant. We are ISO 27001 compliant. We are certain certified. So all of those certifications are in place. So by virtue of that, it's a continuous process that we have to follow. So we have been doing that regularly. And I mean, it's -- I would say security is more of a commodity built inside the payment product for now. So that -- which we have to follow, nothing big about it.

Great. Thank you, Deepak Ji. Unfortunately, there were a few questions that we have not been able to answer due to time constraints. Some of these questions are related to more forward-looking as well as Q1 related data. So unfortunately, we would not be able to get too much of details on that. So I'll skip them. But if participants, if you have any further questions, please feel free to reach out to us, and we'd be happy to try and address them as best as possible. Again, Deepak Ji, thank you so much for your time, and thank you, everybody, for taking the time to come and join us today. Thank you, everyone.

Thanks. Thanks, Anuj. Thank you, everyone.

Thank you.