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00:00Let's quickly shift focus to our first management.
00:10We have Avinash Godkhindi, the co-promoter, MD, CEO at Zaggle, prepaid ocean services,
00:17a slew of new order wins coming through, two in particular that we'll try to talk about,
00:23Avinash.
00:24Welcome.
00:25Good morning.
00:26Let me first start off with the HDFC Life win.
00:31It's a one year order win that you've done.
00:34I want to understand first off with regard to nature of services that are going to be
00:38providing them and what component of these services constitutes your overall top line.
00:45Not just for HDFC Life, but for all the service, all the providers that you provide this particular
00:51service to.
00:53Thank you, Harsh, for having me.
00:57HDFC Ergo is the client, not HDFC Life, a small correction there.
01:01HDFC Ergo, it's a year to begin with.
01:05This is our platform called Propel, which is our channel incentive platform.
01:12It's one of our oldest, most stable products, which is also growing.
01:19The whole concept is that as you have brands, brands want their solutions or their offerings
01:25to sell.
01:26To sell those solutions, they provide incentives to channel partners and employees.
01:33This is about providing incentives to the channel partners, to their employees, to be
01:38able to drive traction.
01:40Overall, Propel is a very critical part of our business, and while it's been growing
01:47steadily at a larger base, we continue to see growth in Propel as such across different
01:55industries.
01:56All right.
01:57Avinash, we want to understand that in terms of quantification, how much will this add
02:01to your top line, one thing, and secondly, what are the margins for this particular contract
02:06and how will it overall blend with your margins?
02:09See, if you look at the last year revenues, the revenues were 775 crores, Propel points,
02:16which is one of the lines of revenue in Propel, was about 422 crores.
02:21We expect this to be a significant contract in the Propel business.
02:27Having said that, none of our customers or none of the industries, we have an industry
02:32concentration per se.
02:36This is not going to be a very significant number beyond that, but Propel as a line of
02:41business is very important for us.
02:44This is going to be a significant contract within that Propel revenue, overall revenue.
02:49Understood.
02:50Avinash, of course, contract tenure is just about a year, which is 31st August, it expires
02:56in 2025.
02:58How likely or on ground basis, whatever precedents you have, how likely is this to continue to
03:04get renewed?
03:05Let me put it this way, Harsh.
03:08Think of it from a HDFC or Argo's perspective or any customer's perspective.
03:12We have these channel partners that they need to incentivize every quarter.
03:18They'd use our platform, our solutions, our platform would integrate with their solutions.
03:23If you're providing a good quality service at a reasonable price, in our businesses,
03:30you don't see companies churn.
03:31These are large companies which like to continue with partners.
03:35Our overall churn historically has been 1.5% for a year.
03:40Those have been typically SMB customers.
03:43We anticipate or we hope that this contract would continue for a few years and get renewed
03:50in the coming years as well.
03:52Understood.
03:53Avinash, you've also entered into a pact with Blue Star recently and this is for employee
03:58expense management.
03:59Now, I want to understand that this particular contract is also for a year.
04:02Here also, I want to understand the details with respect to such contract and how much
04:07of a revenue addition in terms of top line as well as bottom line will it make to your
04:12overall financials?
04:13Actually, again, these contracts are for expense management for employees.
04:20These are benefits, very similar in nature if the contract works well for them because
04:28here we'd have integrations with their systems like HRMS, ERP, etc.
04:35If the product is working reasonably well for the corporate, we don't see churn in this
04:40line of business as well.
04:42Overall, again, very similar.
04:45Blue Star is a great name, a great partner, but none of these customers that we're talking
04:52of are customers who contribute very significantly to our overall top line, which is last year
05:02775 and this year we've given a guidance of 45-55% growth.
05:06So this is not going to be like 10% of our business, none of our customers are like that.
05:10That's not the nature of the business.
05:13Understood.
05:14So, granularity is what you're suggesting.
05:18Even though you're looking at a wider or you're looking to increase the kind of net in terms
05:24of the number of customers you have.
05:27Is that likely the way in which one should think of Zagreb?
05:30So, Harsh, we already have a base of over 3,100 corporate customers and we keep adding
05:36about 600-650 customers every year.
05:39That's the trend that's been there for the last couple of years.
05:42What's changed this year is two things.
05:44One, we are seeing addition of larger corporates, very large contracts, there are about 50 contracts
05:51in the pipeline.
05:53These are fairly big names that we'll announce in the coming quarters.
05:58And we also see a lot of cross-sell happening within our existing customers.
06:03So you'll see a lot of revenue increase from the 3,100 plus corporates that we have in
06:10the coming years, because we are focusing on cross-sell.
06:13Our cross-sell percentage during the IPO was about 16, now we are close to 20.
06:18We hope to, in the next three years, get to about 50% and that's what we are pushing
06:23for.
06:24In cross-sell, we are defining as any customer who takes more than one of our products.
06:28We have three key offerings today, there is Save for Employees, there is Propel for Channel
06:33Partners, like Dealers, Distributors, Agents.
06:36And then we have Zoya, which is our accounts-favoured platform.
06:40And what would the mix be among these three platforms, if you can break it up for us?
06:46Zoya is our newest product, Harsh, and now Zoya is contributing almost 40% of the spends.
07:00The other two are about 30 and 30.
07:03Zoya has really taken off, we launched it last financial year, we started to clock revenues
07:09in Zoya, and that has really taken off.
07:13Having said that, we are seeing very strong traction in both Save and Propel as well.
07:19And there's a little bit of spillover effect here, a company wants to work with a single
07:25vendor, a single service provider, for all their spends.
07:30And when they take one of these three products, we are now making it a point to try and nudge
07:36them to take at least one more.
07:39Understood.
07:40And Avinash, you've also entered into a pact with FCM Travel Solutions, this is for Corporate
07:45Travel Services.
07:46So I want to understand that, what is the nature of this contract particularly, and
07:52how is this going to aid your business?
07:54Yeah, yeah.
07:55So look, you are a customer as well, NDTV is a customer as well, and we have a lot of
08:01customers who want a single experience, a single app, a single dashboard, a single payment
08:08instrument, where all their employee expenses, travel, their benefits, like a meal allowance,
08:14everything comes in the single ecosystem.
08:16Nobody wants to give multiple cards, multiple apps, multiple logins, multiple dashboards.
08:20Through FCM and other travel partners like we have with Ria and Ease My Trip and Yatra,
08:29what we are trying to create is an option set for corporates to work with different
08:36travel partners.
08:37These are great names with each one of these, including FCM, and we want to create an option
08:44for our corporate customers to choose who's the travel partner that they want to go with.
08:50In many cases, they already have made a choice, like they would have chosen that they want
08:53to work with FCM.
08:54We are already integrated with FCM, so it becomes that much easier for the corporate
08:59to just plug and play and introduce Zaggle as the expense solution and FCM as the travel
09:05solution.
09:06Understood.
09:07So, this just adds another vertical to the expense solution.
09:12Is that how one can look at this particular deal?
09:16So, Harsh, basically, we already have a bouquet of travel partners and solution providers
09:22on the travel side, as I mentioned, and FCM is a great addition to that list of partners.
09:30The whole idea is to give the choice to the corporate, and they can choose who's the
09:35travel partner that they want, and if you're already integrated with that travel partner,
09:40then go to market.
09:42The GTN becomes much faster.
09:44Travel has been an integral part of our expense management solution, and we keep building
09:48capacity through partnerships and through building technology in-house for this purpose.
09:55All right, and Avinash, you've guided for doubling your revenues by FY26, so first off,
10:01I want to understand that what will be the key drivers of this growth?
10:06Secondly, which specific business segments do you expect to contribute the most, and
10:10do you think that you'll be exceeding the guidance that you've already given?
10:15We hope to.
10:16We obviously hope to, and the signs are looking good because we grew 113% last quarter, so
10:25we hope to exceed our guidance.
10:29Basically, the drivers are very simple.
10:31Lower penetration in existing corporates, more spend from existing users, more customers,
10:37more users.
10:38We have broadened our solution set through Zip, which is our Zaggle international payments
10:42offering, so we're now offering Forex solutions to corporate customers.
10:46We are offering fleet solutions to corporate customers, in addition to Save, Zoyer, and
10:53Propel.
10:54It's trying to capture spends 360-degree, all your spends as a corporate.
10:59If they're flowing through the Zaggle platform, you get a unified view of where are you spending,
11:04why are you spending, how can you optimize on that spend?
11:09With regard to just international expansion, not seen much on that count.
11:15You were planning to do that the last time we had a conversation, so what's the update
11:19like over there?
11:23As the saying goes, the swan or the duck looks very calm on the top, but there's a lot of
11:29paddling below the surface of the water, so we're doing a lot of work on the international
11:33piece below the surface, and in the coming quarters, you'll hear from us about what we're
11:39doing.
11:40We've already given a clarity that we're looking to enter the US.
11:43That's the chosen market, but we're doing some very detailed study, both on the product
11:49market fit as well as the go-to-market strategy for the US.
11:53Getting your ICP right, and ideal customer profile right, and your product market fit
12:02in your GTM is essential to win in the US market, and that's what we're working on,
12:10Harsh.
12:11All right, well, Avinash, thank you so much for giving us those insights on Zaggle, very
12:16interesting company, and thank you so much for taking your time and speaking with us
12:19at NDTV Profit.