30-Oct-2026 08:25:26
PINE LABS Q2 FY27 CONCALL: EXPECTS FY27 REVENUE GROWTH ABOVE 23–23.5% GUIDANCE; RETAINS 21% EBITDA MARGIN TARGET & PLANS 10 LAKH SOUNDBOX DEPLOYMENTS
• FY27 Revenue Guidance: Management expects revenue growth to exceed its earlier guidance of 23–23.5%, supported by strong demand across issuing, acquiring, online payments and value-added services. • FY27 EBITDA Margin Guidance: Management reiterated its expectation of achieving at least 21% adjusted EBITDA margin for FY27, despite margins remaining below last year's level in H1. • H2 EBITDA Outlook: Management expects significantly higher EBITDA in H2 FY27 compared with H1, supported by higher transaction volumes, flow-based revenue growth and operating leverage. • Q2 Performance: Revenue grew 24% YoY, while adjusted EBITDA increased 27% YoY, supported by market-share gains across major business segments. • UPI Growth Outlook: Management expects approximately 70% growth in UPI transaction volumes over the next year, supported by increasing adoption among organized retailers. • Soundbox Expansion: Plans to deploy an additional 10 lakh soundboxes, primarily targeting existing merchant relationships to capture UPI transactions currently processed through competing devices. • UPI MDR Opportunity: Management highlighted a potential 40 bps MDR framework, with approximately 11 bps potentially allocated to acquirers. Actual monetization remains dependent on implementation and commercial arrangements. • UPI Monetization Strategy: Management prefers transaction-based income over fixed monthly soundbox rentals, aiming to increase wallet share and recurring payment revenues. • Flow-Based Revenue: Flow-based income grew 25% YoY, while transaction volumes increased approximately 50%. Growth was supported by UPI, affordability solutions, data services, marketing and advertising. • Mid-Market Expansion: Approximately 1 lakh terminals were deployed in the mid-market segment over the trailing 12 months. Management continues to see around 40% growth in this segment. • Affordability Business: Management plans to expand installment payment solutions beyond consumer durables, IT and electronics into additional retail categories, with further initiatives expected in Q3 FY27. • Issuing Business: Growth is expected from prepaid cards, gift cards, gaming-related distribution and new products. An employee tax-benefit card is targeted for launch by November-end or early December 2026. • Online Payments: All four leading quick-commerce platforms are using Pine Labs' payment gateway. A major consumer biller is expected to go live during Q3 FY27. • International Business: Management expects continued expansion across existing markets, supported by new merchant wins and higher-margin payment processing services. • Overseas Scale: UAE operations are processing approximately 1 lakh transactions daily, while Malaysia is approaching 1 lakh POS deployments and the Philippines has around 50,000 POS devices. • International Revenue Outlook: Q2 revenue was affected by the exit of a low-margin gift-card distribution customer in Singapore. Management indicated that the EBITDA impact was immaterial and expects growth to continue from the adjusted base. • Contribution Margin Outlook: Management indicated contribution margins of approximately 81–83% in the DITP business and 52–55% in issuing, with an overall blended range of around 72–75%. • Working Capital Guidance: Management expects net working capital to remain around 13–15% of revenue over the full year, despite seasonal quarterly cash-flow fluctuations. • Operating Expenses: Cloud, infrastructure and tokenization costs are expected to remain approximately 8–9% of revenue. Management is investing in AI-led optimization and technology modernization. • Salesforce Expansion: Employee strength reached approximately 5,200, with around 675–680 net additions YoY, primarily in sales and field operations. New sales personnel typically take approximately nine months to become productive. • Capex Outlook: Higher H1 capex partly reflects ₹35–40 Cr of delayed procurement from FY26 and ₹20–25 Cr of supplier advances. Management expects further deployment spending but broadly steady underlying capex. • AI & Agentic Payments: Management is developing agentic commerce and payment infrastructure, with consumer-focused payment solutions expected to be deployed over the next two months. • Key Risks: Uncertainty over UPI MDR implementation, rising salesforce expenses, chip procurement costs, overseas execution and seasonal changes in merchant transaction volumes remain important factors.
PINE LABS LIMITED