Zaggle Prepaid Ocean Services Q1FY24 earnings disappoint; shares slump 6%

Zaggle share price slumped nearly 6% on Thursday's trade after the SaaS fintech player reported dismal Q1FY24 earnings. Zaggle Prepaid Ocean Services reported its earnings for the quarter ended June on Wednesday. Zaggle Prepaid share price opened at ₹205.10 apiece on BSE on Thursday. At 10:54 IST, Zaggle share price recovered but was down over 2% at ₹209.30 per share.

According to the company's exchange filing, profit after tax (PAT) for the quarter ended June, slumped 67.4% year-on- year to ₹2.06 crore from ₹6.3 crore in Q1FY23. The revenue from operations for the quarter ended June, jumped 33.7% on year to ₹118.5 crore.

In its filing, the company stated that the expansion of its client base, the introduction of a new product—Zoyer—and the growth of its corporate credit card business were the main drivers of its topline growth.

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“During Q1FY24, we delivered an operational revenue of ₹118.5 crore with a strong 34% YoY growth. This increase is attributed to our recent endeavors, notably the introduction of corporate credit cards and launch of our vendor management platform – Zoyer. Further, this growth was fueled by customer base expansion and cross-selling initiatives,” said Raj P Narayanam, Founder and Executive Chairman, Zaggle Prepaid Ocean Services Ltd.

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The company's reported earnings before interest, taxes, depreciation, and amortisation (EBITDA) for the quater ended June, fell 26.5%, as per the exchange filing. 

Furthermore, Zaagle Prepaid stated in its filing that a shift in the product mix was the main cause of the decline in gross margin. Conversely, the percentage of total sales attributed to incentive and pay back expenses has been declining over the quarters, with a 7% decrease from Q1FY23. This mitigated the effect of the decline in gross margin.

“Adjusted EBITDA (before ESOP expenses) grew by 27% to ₹13.8 crore with 11.7% margin. Over the years, the proportion of our Q1 revenues in relation to the total annual revenues is close to 16% and Q2 is around 24%. Accordingly, with operating leverage coming into play historically our margin profiles see an improvement in H2 v/s H1. Going forward, we expect similar trend to continue,” added Narayanam.

Zaggle Prepaid has lowered its borrowings since its IPO and anticipates much lower financing expenses starting in Q3FY24 as a result of its improved balance sheet position.

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Some of Zaggle Prepaid's recently noteworthy developments include our contract with BOB Financial Solutions Limited for Implementing Commercial card Onboarding & value-added services platform and launch of the Zaggle Yes Bank Corporate Credit Card, powered by Zaggle Zatix – a spend analytics platform that allows corporates to streamline business and employee expenses, budget better and negotiate favorable supplier terms, according to exchange filing.

On September 22, Zaggle Prepaid shares were listed at ₹162 apiece on the BSE, a discount of 1.22% to the issue price of ₹164 per share.

Zaggle Prepaid IPO received strong response from investors during IPO subscription period from September 14 to September 18.

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Zaggle IPO comprised a fresh issue of shares worth ₹392 crore and an offer-for-sale (OFS) of 1.04 crore shares worth ₹171.38 crore by selling shareholders, including promoters.

Zaggle Prepaid Ocean Services provides financial technology products and services to manage corporate business expenses through automated and innovative workflows.

Also Read: Zaggle Prepaid share price lists with 1.22% discount at ₹162 apiece on the BSE