Network People Services Technologies Ltd Q4 FY2024 Concall Summary

Key Takeaways

• Triple-digit growth, non-linear margin expansion: Revenue grew ~108% YoY in Q4 and ~216% for the full year, while EBITDA margin improved to 33.5% as the IPR-led platform model scaled without proportional cost increases.
• API vertical is now the dominant engine: The Evoke (API) business grew to ~70% of revenue from 60-65% at the start of the year, driven by payment aggregator and merchant rails, while the legacy TSP business receded to ~30%.
• Product flywheel is spinning: Two new products launched (BBPS, ODR) with initial orders, offline payment product Qynx added four banks and ~20,000 merchants, and a payer-side solution is nearing pilot completion.
• Margins have room but costs are coming: Management will either maintain or slightly improve the current margin, but explicitly warned that cost ratios will increase this year as the company invests in second-line leadership, marketing, and product build-out.
• What to watch next quarter: Whether the 15% QoQ growth cadence holds, SBM Bank goes live as scheduled, and any early traction from the new BBPS and ODR products materializes into revenue.

Growth Engine: The API Pivot

• Revenue split shift: The Evoke (API) vertical grew to ~70% of revenue by year-end, up from 60-65% at the start of FY24, while the TSP vertical dropped to ~30% from 35-40%. This reflects faster scaling in the payment aggregator and merchant-facing rails business.
• Non-linear model at work: EBITDA margin improved from 30% to 33.5% and net profit grew faster than revenue (160% YoY in Q4), attributed to an IPR-led platform where adding scale does not require proportional cost increases.
• Infrastructure headroom: The system has already scaled to handle ~100 crore transactions and manage a ~2 crore customer base, giving the platform capacity to absorb the next leg of growth without a step-change in infrastructure spend.
• Existing client expansion: Consistent add-on services to existing clients brought additional revenue, suggesting the land-and-expand motion is working alongside new logo acquisition.
• Competitive positioning: The company's technical decline rate is below the NTCI-required threshold, and when split between switch and core banking layers, the number goes even lower, a performance edge management is using to help its bank customers compete with players like Razorpay.

Thakur: "Now that opens up opportunity for us, whether we have much stronger performing engine, and can I bring such kind of engine where they can now compete with Razorpay. Now that opens up gate for us to create more value-added services, a platform where I can make my customers more competitive."

Product Pipeline & New Bets

• Two products launched, orders in hand: Bharat Bill Payment (BBPS) and Online Dispute Resolution (ODR) were launched during the year, with four orders received, though management noted they were small in size and have not scaled yet.
• Offline payments gaining ground: Qynx, the offline payment product, acquired four banks in the merchant acquiring space and onboarded ~20,000 additional merchants for offline payments.
• Payer-side solution in POC: A remitter/payer solution is in proof-of-concept stage, with the pilot expected to complete very soon.
• TimePay pilot live: The GFF was launched and the pilot phase opened in the first week of February, reaching ~250,000 customers and ~100,000 transactions per day.
• SBM Bank go-live imminent: SBM Bank is expected to go live on the platform in Q1 FY25, giving merchants a choice between Cosmos Bank and SBM with different account management and service options.
• CBDC on the roadmap: CBDC is a top priority; the company is completing its switch and plans to venture into CBDC post-pilot when other banks enter the fray.
• BBPS and Cash-on-UPI exploration: The company is exploring making BBPS part of the Evoke ecosystem with bill aggregation and customer-side APIs, and developing Cash-on-UPI to bring an ATM-like experience at the merchant level.

Competitive Landscape & Market Structure

• Not competing with payment aggregators: Management clarified that Razorpay, BillDesk, and Cashfree were never customers or target audiences. NPST sits between banks and payment aggregators, providing the technology layer that helps banks acquire merchants and bridge UPI with the FinTech ecosystem.
• Large-bank sales cycle is long: Penetrating the existing product stack of the top 5-10 banks requires a sales cycle that is "way too high," so the company focuses on newer product stacks as entry opportunities rather than displacing incumbents in core systems.
• Evoke diversification away from gaming: The Evoke business has diversified into offline payments (adding ~10,000 merchants), payout APIs, and Cash-on-UPI, reducing reliance on the gaming segment. The exact gaming revenue split was not available and management said they need to identify it.
• UPI ecosystem tailwind: Management anticipates monthly UPI transactions growing from 1,200-1,300 crore to 3,000 crore and beyond, driven by merchant transaction growth, credit cards on UPI, credit lining, and new products.

Thakur: "Razorpay, BillDesk, Cashfree, the large entities were never our customers, nor they were ever our target audience. So, yes, we did work across with few of the large players, but then the aspiration around building switch is different. Their model is completely different."

Margins, Costs & Investment Cycle

• Margin trajectory explained: EBITDA margins jumped from 20% in FY22 to 30% in FY23 (a 50% increase) because the company had only one business line (TSP) in September 2022 and then added the Evoke (API) business. The increase from FY23 to FY24 was a much smaller 3.5 percentage points.
• IPR ownership drives margin structure: The company invested heavily over 8 years building its own IPR around technology. Owning the IPR allowed it to go to banks with a platform to help acquire merchants and bridge UPI with the FinTech ecosystem, built entirely on proprietary technology, which started yielding higher margins.
• Cost ratios will rise: Management explicitly stated that cost ratios this year will differ from last year and will increase, driven by investments in second-line and third-line leadership, marketing, and product build-out.
• Margin outlook is steady-to-slightly-up: Management will either maintain the current margin or deliver slightly more, but declined to give a specific number, asking to be allowed to work quarter-on-quarter.
• No R&D capitalization yet: No R&D cost has been capitalized to date. If a product is built this year, the company will consider capitalization; otherwise, it treats development as an expense. Intangibles decreased from ~₹11 crore last year to ~₹3.8-4 crore this year because they were majorly depreciated, not sold.
• Cash deployment priorities: Two areas will see quick decisions: (1) hiring the right people and leaders to drive the organization, and (2) potentially acquiring product roadmap items to compress build time from 9 months to 3 months. Deployment decisions will otherwise be slower because the company already has a lot in hand.

Thakur: "I cannot give you the exact number. Allow us to work Q-o-Q. Allow us to do our best. If it is not slightly, if it is much more, I will declare that also."

People, Leadership & Organization Building

• Senior leadership added: The company added senior leadership in marketing and HR, plus an executive director at the board level with domestic and global business acumen. Mr. Ram Rastogi, a FinTech veteran, also joined the board.
• Second-line build-out is the FY25 HR priority: The core KRA for the new HR leader is to bring in second-line and third-line leadership across the organization. A very senior VP-level HR resource and a VP-level marketing resource were added last quarter.
• Marketing and IR visibility ramp: An entire team is being structured within the marketing department, including a team around investor relations and financial analysts. These are open profiles, and management acknowledged that visibility is a journey that will build quarter-on-quarter.
• ESOP policy details: The total ESOP budget is 2% of equity, with utilization not even at 30-40% so far, leaving significant headroom for future grants.
• AI investment is early-stage: The company has ventured into AI and ML, focused on solving payment industry problems like fraud prediction and risk reduction. Management cautioned it may not show potential this year but will give returns in 2-3 years.

Guidance & Commitments

Key Metrics