On Postpaid back - how do you think about scaling up? You mention select set of customers. What's the roadmap?
Our always democratizing services, democratizing cards equal Postpaid mobile expansion country. As you see, we are bank limited - various banks have limitations. We are open and continuing to work with as many banks as possible. We have enough customers in the current platform itself. The numbers are encouraging - we quickly reached, on average span, what probably took a year and half earlier.
On marketing revenue break-up and what's driving the slowdown? Also unit economics on BNPL/Postpaid vs earlier.
On overall unit economics, we expect this to be within 20 bps, earlier. Obviously the input quality is very, very good signs. On BNPL, this is Postpaid. We'll discuss later, in a month. Marketing revenue, the largest components are advertising and travel. Travel had industry headwind at least on QoQ basis. Overall, we are writing near the bottom and we expect it to grow. Given context that we are putting upsell properties in app. As you have seen, app reviews simplified.
On the working capital - cash flow conversion dropped sharply, almost 550 crore. What's driving the sharp dip?
On the specific number, I'll come back to you, but I think we should be a little careful. Closure depends largely on weekend/weekday/holiday - we settle every day. For certain instruments, vast majority of certain instruments cards, are T day basis. There are fluctuations week to week and on basis. Specific bridge, I will explain offline.
Peak revenue per MTU since CY23 - any thought process on MTU increase and ARPU increase?
We are clear, MTU, MTU. We are lucky on MTU. They have stayed with us; quality customers. They have resilience to appreciate and stayed on the platform longer term. Monetizing is primary focus. And the best love that we could give them was no annoyance of advertising. We launched the loyalty program gold coins, gold points rather. We do believe, I mean, I can't probably give the number of what we did on Diwali month because we've not quoted it. Phenomenal. Let me hint - we target March month, crossed times Diwali month.
In Postpaid - earlier you all used to make 70-80 bps margin. Where are you broadly?
Piran, net answer is that we will have more avenues of adding revenue line items on UPI. Opportunities on onboarding merchants. Bigger profit time before. Expect.
On AI - are you confident on monetization or does this become a moat for existing products?
Distribution is the key. The product technology that we can make, our proprietary distribution. Differentiation is because we have this offering and in this offering we are upselling. No conflict - upselling instead of differentiating. There was a question asked once - would you like to patent or not? Earlier innovation, good. Right monetization on innovation equally. Proprietary distribution.
On GMV mix - in the next two-three years can blended payments margin keep moving up?
I think maybe just to simplify the variables, what we are seeing is we are seeing improving economics on the side. Hard to predict GMV. Of driver especially expanding acceptance network. But in a sense, I don't know if we're best placed to agree and guess what exactly UPI growth numbers will be. We focus on the gains sensibly to keep improving unit economics.
On credit card on UPI helping margins - any market share you track here?
I like that. We probably have more than some X than UPI market share. Card generic share is skewed by P2P transactions which are always larger volume, per ticket large. Game is P2P. Banks each TPAP apps it. We foresee that month coming far revenues toppled MDR revenues.
On Postpaid scalability - whitelist consumers, supply scaled faster. Could you reach previous peaks 12 months out?
Interesting. Numbers are very early, tens of thousands. So the opportunity is forward. Experienced country we signed 10-12 million customers. Surprisingly, most are platform. So we can try talking about a large, I mean, can we target a couple of million? The answer is yes. So I do believe that it is going to become pretty sizable hopefully. It obviously depends on banks because it is purely a product. We are happy with the banks we have, expanded technology. We will grow with partners.
On Postpaid - capital is not a constraint, consumers are. What does it take? J-curve when?
That's what I learned in the last 18 months is when steady wins the race, race too fast, race. We're not going to do anything fast. We're not going to do anything slow steady.
On the strong sequential growth in net payment margin - what's driving it?
Basically, we started to focus on credit instruments for the merchants and EMI. Guess what, festive season was phenomenal. We are killing it on EMI disbursement counter. We have partnered with issuers. It became extra chunk this quarter on net margin. Obviously, this will grow. We have linearly ramped before. We have the capability to do. And we're nearly half of the big guy in the town.
On indirect cost - how long is the runway?
I think we have mentioned in the release that for the rest of the year, we expect this range bound. Sense for the following year as well. We have seen significant cuts in non-sales people. Software expenses are on line. On indirect expenses line, there are opportunities to reduce cost. We can invest in sales while we save indirect expenses. This trend continues for a couple of quarters.
On Postpaid - is the product different from classic BNPL? Do you charge 0%/1%/2%/3% based on risk?
We basically do not have any option for paying later. It is a charge card equivalent. We don't extend it. Incidentally, Pranav, Buy Now Pay Later. One obligation is at month end. Another classic Klarna is three, six, 12 months if you want to rotate. We don't want to rotate the product. It is a fee-based product, not an interest-based product. There is no NIM element on the loan. It is a convenience fee from the spend side - people like you and me score 0%.
On payment processing margin improvement - how sustainable is this?
As an overall trend, we think this is sustainable. The credit card mix and EMI mix on basis can vary, but the overall trend adjusted for seasonality and sorts of things is relatively consistent over a few quarters. So obviously what we look at is instrument-wise and merchant type-wise, are we seeing improvements case by case.
On AI driving revenue - what's the big driver ahead?
Big revenue driver. I think a cost cut is anyways which we were doing and AI added acceleration to deeper optimize. It brings newer service, newer phenomenally do. Merchants well, e-commerce companies. So our merchant base will get re-cross-sell for AI-led infrastructure, product agents, et cetera. We are running pilots with internal customers. I am personally completely items creating otherwise couldn't created.
On payment processing margin - what's the medium-term outlook? 12-month forward perspective.
We have significant improvements in how we think about pricing and merchant-level profitability. The framework keeps improving. Generally speaking, we are flexible on the merchant side. Our teams can be very responsive to where the merchant preference is. On margins, mentioned earlier, mix is bottoming out. The few, two, years ago story about hey, faster non-UPI, is behind us. Slight mix and slight instrument changes - overall it keeps giving goodness on basis.
On EMI spends - subvention like Bajaj Finance does, or simply swipes on machines deployed offline?
So Piran, our goal is to aggregate financial institutions, which could be credit issuers NBFCs banks issuing EMI. Then second, brands. Classic brands - LG, Samsung, Apple. The triangulated ecosystem players combined market is unparalleled to Paytm. We are like, cornering, actually. Taking away share, chipping off erstwhile existing players.
On hiring 5000 sales employees per quarter vs 2000 earlier - what's the thought process?
You want to dominate in the merchant ecosystem. I will acquire a large enterprise onboarding online. Aggressive on merchants. 5000, wish 2x this. Money we are investing back. Dominate the ecosystem nobody's business.
On AI strategy, international expansion, and revenue acceleration to 30%+ medium term.
All three questions are very favorable. On AI - what we are going to do for small businesses, we are saying that we are the chief CTO, chief finance officer, chief marketing officer for shops. We are practically going to judge devices, run models, etc. - building specifically manufactured ourselves. Paytm is selling agents for small business and charging subscription and inference fees once the usage grows. On international - we have built acceptance hardware, software, stack to run in country. The bucket between three to five years will be starting to build from some of these.
Is the international focus emerging markets like Middle East, Southeast Asia?
Emerging, oh well, frontier emerging and developed - all of it. Yeah, but mostly emerging markets and the whole Southeast Asia is called emerging. Definitely developed markets also. Madhur and I, between shareholders, management, want to earn credits to attempt this. Short answer - India market remains center stage, definitely further ahead and later developed markets.
On AI investments and incremental compute cost - any worry?
Sachin, I can tell you very candidly. One thing I've learned and I think I should prudence - whenever investment goes beyond $20 to $50 million onwards, we will be sizing it up proactively and announcing in advance. So far, no material plan here.
On financial services - any color on what drove the acceleration? Was it Postpaid relaunch?
Postpaid was launched in September. So the numbers, financial numbers are currently insignificant driver. Merchant lending continues nice trajectory in volume terms. In terms of collection performance, increasing rate. Personal loan, we have given commentary that due to headwinds, we're not seeing growth there, but we are seeing better rates and economics. Again, not a major driver. Wealth gold mentioned positive signs. Other non-lending also.
On combined aggregation enabling omni-channel - what does the merger allow?
Omni is a basic understanding of the offline. Flipkart go, receive goods person, this is an omni company. Online businesses couldn't be onboarded entity. We have been lucky we kept it long and finally got this. Yes, not just this element, but there are other VAS elements like spend analytics, like settlement, like payout. All value-add items. So I think this is by the way a job and service we love this. It will probably take a couple of quarters/years.
On device D&A - what's the real timeline before circulation?
Yeah, so good question and as you would have remembered that we've continued telling for quarters that gross additions are bigger than net additions because we pick up the device when the merchant is no more active. Now I'm happy that this job is nearing completion. Next couple months it will be sorted. So what happens to the device? Well, there is always some component. We try to recycle as much as possible. Logistics that. Hubs in cities now.
On refurbishment - does the battery have issues meaning longer device life?
Refurbishment definitely increases the life of the device. It saves us. The average refurbishment including reverse pickup costs somewhere in the order of 25 to 30% of device. Reduces Capex meaningfully. We also think that at the moment, we can continue with or even scale up a little bit the pace at which we pick and refurbish.
On DLG disclosures - outstanding book excluding lender one moved away from DLG to non-DLG, substantial rise QoQ basis 80% plus. Is that the ramp?
I think the one thing to point out and you already know this Prateek, AUM number is meaningfully days. In the case excluding the one largest overall, continues largest partner who continues AUM with us, without DLGs. Reason partner's AUM under DLG has gone down, DLG has gone away. The other partners, we are seeing very, very good growth, both in merchant side and personal loan side. Lender one has more than doubled 12 months.