Network People Services Technologies Ltd Q4 FY2025 Concall Summary

Key Takeaways

• Q3 disruption behind them, Q4 rebounds 24% QoQ: Revenue recovered sharply as the company re-established multi-bank payment flows, though management says Q4 would have been "much larger" without lingering customer re-acquisition drag.
• Diversification is now the core strategy: A three-pronged pivot to de-risk the UPI model, expand allied services (RegTech, BBPS, offline payments), and go global produced an Africa sovereign deal and three pre-launch AI engine orders.
• First global deal signed, revenue starts Q1: A multi-year African digital payment infrastructure contract (36+7 years) is a first-of-its-kind technology on the continent; milestone payments begin this quarter.
• Margins expanded meaningfully: EBITDA margin rose from 35% to 37% and net profit margin from 20% to 25%, aided by restructuring and a richer SaaS mix in new orders.
• What to watch next quarter: Whether the Africa deal and Central Bank of India onboarding convert to visible revenue, the pace of customer re-acquisition from the Q3 disruption, and the Q2 RegTech launch's early traction.

The Q3 Disruption & Recovery

• What broke: A regulatory challenge forced a transition from a single-bank to a multi-bank model for UPI payment flows. Approval came only around end-January, and the revamp started mid-February, so rebuilding the tech stack and re-establishing flows with multiple banks took time.
• Customer re-acquisition drag: Customers who shifted to other players during the disruption need time to return because re-establishing requires retesting and redoing integrations with banks. This is why Q4, while strong, was not as large as it could have been.
• Recovery trajectory: Management states Q3 was the worst quarter and is now behind them. No quarter except Q3 has had less than 10% minimum growth, and most were above that. The cumulative impact of restructuring efforts is expected to show soon.
• Peak revenue return: When asked if the peak revenue from last year should return this year, management agreed "absolutely," though they declined to commit to a specific number or timeline.

Deepak Chand Thakur: "So de-risking for that, it was required to first re-establish the payment flows and the overall tech stack with the multiple banks. Now see, it's a regulated segment, right? It cannot be overnight changed."

Diversification & De-risking Strategy

• Three-pronged pivot: After the Q3 event, management pursued (1) de-risking the existing model by re-establishing payment flows with multiple banks, (2) diversifying into allied services (offline payments, BBPS, ONDC, RegTech), and (3) going global for better margins and market expansion.
• New business P&L visibility: New businesses will start showing P&L numbers from the first half of FY26. Offline payments and the RIDP risk engine have already added revenue.
• Hosted model expansion: The company decided to offer a hosted solution to cater to more banks, extending beyond UPI to BBPS as well.
• Middleware for cooperative banks: Built IP to convert legacy ISO systems to XML/JSON for cooperative banks' core banking integrations, addressing a structural gap in that segment.
• Internet bank interoperability: Management is investing in this area after the RBI ex-governor flagged it as missing; they expect it to become a compliance requirement for banks.

Deepak Chand Thakur: "Our organization's entire focus is going to be derisking and diversification so that the fundamental core of the business is reestablished and we don't go back to the impact we had in Q3."

Global Expansion

• Africa sovereign deal: A multi-year contract (36 plus 7 years) to set up digital payment infrastructure in an African economy. The signed document was received the day before the call. Execution has already started this quarter, with revenue hitting from Q1 via milestone-based payments over a 7-8 month execution period. The country cannot be disclosed per agreements.
• First-of-its-kind advantage: Management believes this is the first such technology deployment in Africa, positioning NPST for expansion across the continent. Discussions are underway with multiple partners for similar projects.
• Channel partner model: Global expansion uses a partner/channel approach where NPST plays an OEM role to retain IPR and quality ownership. Entry is via a service-based model to adapt the platform (40-50% product fit initially), then NPST becomes the product owner with the local channel partner as the service provider.
• Middle East contract: A service-based technology services contract for regulated ecosystems. Work has already started. The plan is to build the product stack first, then transition to an IPR model. More details promised after one more quarter.
• Four new product launches planned for Q1, going globally.

Deepak Chand Thakur: "What is a bigger advantage for us is this is the first of its technology in Africa, which we believe will be a big jump for us in the entire African continent."

RegTech & AI Engine

• RIDP risk engine: An AI/ML solution that predicts beyond rule-based breaches, evaluating merchant information and transaction behavior. It can predict the liability amount a bank could face if issues are not addressed on time. Testing was completed in Q4 after 1.5-2 years of effort.
• Pre-launch orders: Three orders are already in hand even before the formal launch. A massive launch is planned in Q2, with revenue numbers expected from Q3 and Q4.
• Market share ambition: Because NPST is an early mover in RegTech (unlike UPI where it was a late entrant five years after competitors), management expects to capture a larger market share in this segment than the ~7% it holds in UPI processing.
• Scope clarity: The RegTech solution focuses on transaction frauds, not cybersecurity.

Deepak Chand Thakur: "We have further gone to a level wherein it can predict the liability amount a bank can sit on for a particular merchant, if at all, not addressed on time."

Order Book & Platform Wins

• Six new orders worth over ₹100-odd crores over the next 4-5 years, including the Central Bank of India deal (~₹70-odd crore over 5 years). Five of the six orders carry SaaS-based revenue.
• Central Bank of India: A completely new customer. The order was received at the end of Q4, and Phase 1 went live in under 30 days. SaaS-based revenue is expected from Q1 itself.
• Payment aggregator signings: Signed about 15 payment aggregators on the TPaaS platform, plus multiple banks. Management expects the GMV peak achieved last year to return in the first half of FY26.
• BBPS progress: Received two new orders and added a strong funnel. The B2B BBPS solution will be completed by June 30, targeting payment aggregators, cooperative banks, and CBS vendors. Revenue will be transaction-based.
• ONDC Financial Services: Picked up mutual fund, insurance, and personal loan segments, focusing on the buyer app side only. Aggressively going to market with a couple of banks plus NBFCs and fintechs as direct customers.

Revenue Model & Margin Dynamics

• Revenue composition: Q4 revenue was roughly 90% from the TSP domain. Transaction-based revenue realization is expected in Q1 due to policy restructuring. The company provides a tech stack to banks and payment aggregators and is paid for services, not MDR; UPI does not have MDR.
• Interchange income model: Banks pay NPST a share of interchange income for being the technology partner. NPST handles technology, acquisition cost, solution domain, and reconciliation.
• Per-transaction realization: Per-transaction realization may decrease, but management expects volume to increase massively due to market volume growth, offsetting the unit economics pressure.
• MDR tailwind: MDR will trend upward as instruments add value to the system. Credit card on UPI is ramping up with existing MDR, and new players doing virtual credit card-only models are increasing MDR potential.
• Margin expansion: EBITDA margin improved from 35% to 37% and net profit margin from 20% to 25%, aided by restructuring efforts following Q3 and a richer mix of SaaS-based orders. EPS jumped 68% from ₹13.85 to ₹23.27.
• Talent investment: A 20% talent pool addition last year, with an estimated ~30% incremental addition planned this year alongside AI implementation.

Deepak Chand Thakur: "I take a lot of positive from this. There is always a backup to such kind of decisions whenever happens in the sense, it's -- we need to understand that if India's digital growth has been due to this instrument, which contributes 82% as on today to the entire digital volume in the country, then this instrument will definitely have a backup if the mighty incentives have gone down."

Guidance & Commitments

Key Metrics