Originals · Startup · Startups & Fintech
Zaggle's Q2 profit falls 30% to Rs 24.5 Cr even as revenue jumps 34% on festive rewards and the Dice deal
The Hyderabad spend management company grew its top line to about Rs 580 Cr and turned operating cash flow positive, but higher cashback, marketing and AI costs squeezed margins.
Zaggle Prepaid Ocean Services, the Hyderabad based fintech SaaS company that sells spend management, corporate cards and employee rewards products, reported consolidated revenue from operations of Rs 579.9 crore for the September quarter (Q2 FY27), up 34.2% from Rs 432.2 crore a year earlier, according to the press release it filed with the stock exchanges on November 13. Profit after tax fell 30.1% to Rs 24.5 crore from Rs 35 crore, and the profit margin roughly halved to 4.2% from 8.1%.
The pressure came from costs. CNBC-TV18 and Inc42 both reported that total expenses rose about 40% to roughly Rs 556 crore, led by point redemption and gift card expenses, which CNBC-TV18 put at Rs 349.1 crore against Rs 235.7 crore a year ago. The company's own release says other expenses rose mainly because of marketing for the Global Fintech Fest and other events, user acquisition spending on its Zagg.Money product, and higher technology and AI related costs, while employee costs grew as staff joined from its Dice acquisition. Adjusted EBITDA slipped 4.2% to Rs 44.6 crore, with the margin narrowing to 7.7% from 10.8%.
There were brighter lines. Zaggle said its SaaS revenue had its best quarter ever, largely because customer contracts from Dice were moved over to Zaggle, and that about 70% of those contracts have now been novated with the rest expected in Q3. Festive season activity lifted its loyalty and rewards business. Sequentially, profit rose about 40% from Rs 17.5 crore in the June quarter, Inc42 reported. Founder and executive chairman Raj P Narayanam said in the release that the company turned operating cash flow positive in the quarter at both the standalone and consolidated levels.
For the first half of FY27, revenue was Rs 1,003 crore, up 31.3%, while profit after tax fell 31.3% to Rs 42 crore, according to the release. The company says its next push is wider use of its co branded credit cards and UPI offerings among the salaried users already on its platform, along with scaling AI across its products. The quarter shows the trade off in Zaggle's model: rewards and cashback drive volume, but they also eat most of each rupee of revenue, with cashback alone running at 66.2% of revenue.
