ZAGGLE Q3 FY26 earnings call.
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Revenue
₹526 Cr
verified against source
Revenue YoY
47.9%
reported change
EBITDA
₹51 Cr
latest reported figure
Source
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record provenance
Actual signal trajectory
Where this quarter sits.
Quarter read
What the record says.
Zaggle delivered its best-ever quarterly performance in Q3 FY26 with INR 498 crore revenue (+48% YoY) and INR 51 crore adjusted EBITDA (+63% YoY), crossing the INR 50 crore EBITDA milestone for the first time. PAT surged to INR 36 crore (+78% YoY) with 7.2% PAT margin. The 9-month revenue of INR 1,260 crore (+41% YoY) already exceeds FY25 full-year profitability, with cash PAT at INR 121 crore (+68% YoY). Key drivers include strong program fee growth, Propel platform revenue expansion, and successful acquisition integration (Greenedge, Zag.money). AI-driven development cycle reduction from 75+ days to under 30 days is enhancing speed-to-market. Management reiterated 40-45% organic growth guidance for FY26 domestically, targeting $1 billion revenue with 14-15% EBITDA margins in 5-7 years. Operating cash flow break-even expected by FY26-end with OCF turning positive in FY27. Risks include elevated incentive costs at 67% of program fees (management sees this declining to ~50% steady-state), persistent negative OCF during hypergrowth phase, and competitive AI disruption in SaaS space.
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Guidance to track
- Management reaffirmed FY26 guidance of 40-45% revenue growth, specifying this is purely organic and domestic, excluding contributions from acquisitions like Greenedge.
- Company expects OCF to break even by end of FY26 and turn operating cash flow positive in FY27, with EBITDA-to-OCF conversion target exceeding 50% in future.
- Long-term guidance for $1 billion revenue with 14-15% adjusted EBITDA margin over 5-7 years, along with substantial improvement in ROE, ROC, and operating cash flow metrics.
- Management targets incentive costs to decline from current 67% of program fees to approximately 50% over the next five years as the business matures and scales.
Risks flagged
- Despite strong EBITDA growth (63% YoY), the company continues to burn cash due to rapid expansion. An analyst directly challenged management on this, noting 445 crores raised is being used for operations rather than acquisitions.
- Incentive costs remain at 67% of program fees versus 50% steady-state target 5 years away. Q-on-Q PAT grew only 9-10% despite 15% revenue QoQ growth due to sharp uptick in cash back and incentive spends.
- When asked for customer win pipeline values or revenue contribution from new contracts, management deflected citing inability to provide rupee/dollar numbers due to dynamic SaaS usage nature, limiting investor visibility into growth sustainability.
- An analyst raised concerns about 'SaaS apocalypse' from AI models potentially replacing SaaS workflows. Management responded that while AI will transform development (agentic AI), application logic and customer relationships remain defensible—though this remains a forward risk.
Key quotes
- This quarter marks our best ever quarterly and 9 months performance with a very strong performance across all key matrices... the company reported revenues at around 1260 crores... Our cash pad has already surpassed full year FY25 cash pad with a strong 68.3% growth.
- The guidance that we gave of 40 to 45% growth for this year is all organic all domestic this doesn't include the growth that we are seeing in our acquisitions... but I wouldn't hazard a guess whether the next year growth would be the same higher lower right now our guidance stands for this year.
- We are acutely aware of the need to deploy that capital in a very effective manner and we are at it... these are metrics that we internally focus on whether it's operating cash flow or the ROE.
- The good part about UPI payments is that overall there's a realization in the ecosystem that UPI cannot be subsidized by the government forever... as UPI becomes more and more ubiquitous we are only going to see take rates go up across board.
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