Zaggle Prepaid Aims $1-Billion Revenue In Five–Seven Years

Zaggle Prepaid Ocean Services Ltd. is on track to achieve a revenue of $1 billion within five to seven years, with competitive edge, low customer churn and ongoing efforts to improve cash flow being the key pillars, according to Chief Executive Officer Avinash Godkhindi.

The IT-enabled services firm had given guidance of 58–63% growth for the last financial year and has crossed the 63% mark, he said during a conversation with NDTV Profit on Thursday.

"We are aiming in the next five to seven years to reach a billion-dollar revenue. That's our goal," Godkhindi said. "Assuming that the dollar-rupee ratio stays in a reasonable range, we are on track to do that."

On the possible competition in the business expenses management space, Godkhindi emphasised that Zaggle had three major verticals that were tough to replicate — software solutions, bank partnerships and corporate relationships.

These create a high-entry barrier for aspiring competitors. All three are important for setting up a successful spend management business in India, according to the CEO. "Stitching these three pillars together today would be incredibly hard."

"It takes a lot of time and you can't buy your way into bank partnerships or even enterprise contracts. We probably started this business a little before time, around 13 years ago," he said.

At that time, getting bank partnerships was far easier. It was an "innocent phase" of the fintech industry in 2011–12, Godkhindi added.

With an annual churn rate below 1.5%, customer retention is one of the company's major strengths. Godkhindi attributed this to Zaggle's high-quality solutions, deep integrations with enterprise systems like enterprise resource planning, human resource management system and customer relationship management, along with competitive pricing.

The platform reduces fraud, enhances compliance and leverages AI to automate mundane tasks, freeing up resources for other priorities, he said. "The whole ecosystem is a well-oiled machine. Why would you want to move away?"

Despite strong profit-before-tax growth, cash flow from operations has lagged, primarily due to receivables from large banks and enterprise clients. Godkhindi acknowledged this as a focus area and expects improvements in full-year numbers.

He explained that a certain lag existed between revenue and Ebitda growth, and its conversion into cash flow. It has been compounded by the payout cycles of large partner banks and corporate clients.

Godkhindi pointed out that following the company's capital raise in September 2023, the strategy involved deploying capital for rapid growth. It naturally impacted short-term cash flow but would generate profit. "Eventually, the cash comes back to the business."