Zaggle Q2 Profit Falls 30% to ₹24.5 Crore Despite 34% Revenue Growth

Zaggle Prepaid Ocean Services reported a 30.1% year-on-year decline in consolidated net profit to ₹24.5 crore for the second quarter of financial year 2026-27, despite recording strong revenue growth. The Hyderabad-based fintech and SaaS company posted revenue from operations of ₹579.9 crore in the July–September quarter, up 34.2% from ₹432.2 crore in the corresponding period last year. Higher operating expenses, acquisition-related costs, marketing expenditure and technology investments weighed on profitability.

The company’s adjusted EBITDA also declined 4.2% year-on-year to ₹44.6 crore, while its adjusted EBITDA margin contracted to 7.7% from 10.8% a year earlier. However, the September quarter showed sequential improvement, with net profit increasing approximately 39.6% from ₹17.5 crore in Q1 FY27. Zaggle also reported positive operating cash flow at both standalone and consolidated levels during the quarter, which management described as an important step towards building a more sustainable operating model.

Zaggle Q2 FY27 Financial Results

Zaggle’s consolidated financial results for the quarter ended September 30, 2026, reflected a combination of strong revenue expansion and pressure on earnings.

Net profit attributable to the company’s owners declined to ₹24.47 crore from ₹34.98 crore in Q2 FY26. Profit before tax fell 31.1% to ₹32.4 crore, compared with ₹47 crore in the year-ago quarter.

Total income, including other income, increased 32.8% to ₹586.2 crore from ₹441.4 crore.

Financial indicator	Q2 FY27	Q2 FY26	YoY change
Revenue from operations	₹579.9 crore	₹432.2 crore	+34.2%
Total income	₹586.2 crore	₹441.4 crore	+32.8%
Adjusted EBITDA	₹44.6 crore	₹46.5 crore	-4.2%
Adjusted EBITDA margin	7.7%	10.8%	-310 bps
Profit before tax	₹32.4 crore	₹47 crore	-31.1%
Net profit	₹24.5 crore	₹35 crore	-30.1%

The results show that revenue growth did not translate into higher profitability. While the company expanded its business, the increase in expenses and lower adjusted EBITDA margins affected its bottom line.

Revenue Grows 34.2% as SaaS Business Expands

Revenue from operations increased to ₹579.9 crore in Q2 FY27, compared with ₹432.2 crore in the corresponding quarter last year.

On a sequential basis, revenue increased 37% from ₹423.3 crore in Q1 FY27.

One of the major contributors was the company’s software-as-a-service (SaaS) business, which recorded its highest-ever quarterly performance. Zaggle attributed the improvement largely to revenue recognition from novated customer contracts following its acquisition of Dice Enterprises.

The acquisition has expanded Zaggle’s enterprise customer network and strengthened its technology-led revenue streams.

The company’s loyalty and rewards business also recorded strong activity during the festive season. Its Propelpoints business benefited from higher seasonal demand, contributing to revenue growth across Zaggle and its subsidiary Greenedge.

The performance indicates that the company’s growth is being supported by multiple business segments, including corporate spend management, SaaS solutions, loyalty programmes and rewards services.

Higher Expenses Weigh on Profitability

Zaggle’s total expenses increased 39.9% year-on-year to ₹555.7 crore in Q2 FY27 from ₹397.1 crore in the corresponding period last year.

The increase was higher than the company’s 34.2% revenue growth, contributing to pressure on operating profitability.

Other expenses more than doubled to approximately ₹41.1 crore from ₹20.5 crore. The company attributed the increase primarily to marketing expenditure associated with the Global Fintech Fest (GFF) and other events, customer acquisition costs for its Zagg.Money platform, and higher technology and artificial intelligence-related expenses.

Employee benefit expenses increased approximately 9.7% to ₹18 crore from ₹16.4 crore. The addition of employees from the Dice acquisition contributed to the increase.

These expenses reflect the company’s investment in expanding its technology platform, acquiring customers and integrating acquired businesses.

However, the higher spending also affected margins during the quarter.

Adjusted EBITDA Margin Contracts to 7.7%

Zaggle’s adjusted EBITDA declined 4.2% year-on-year to ₹44.6 crore from ₹46.5 crore.

Its adjusted EBITDA margin contracted by 310 basis points to 7.7%, compared with 10.8% in Q2 FY26.

The decline indicates that the company retained a smaller proportion of revenue as adjusted operating earnings, despite generating substantially higher sales.

Management’s focus on customer acquisition, technology development and integration of acquired businesses has increased operating expenditure.

The company also reported that cashback as a percentage of revenue stood at 66.2%. This represented a marginal improvement compared with the previous quarter, as Zaggle continued working on its cashback economics.

Improving this metric will be important because cashback represents a significant component of the company’s business model and influences its operating margins.

Dice Acquisition Adds New Enterprise Customers

The acquisition of Dice Enterprises has started contributing to Zaggle’s SaaS revenue and expanding its corporate customer base.

The company reported that approximately 70% of Dice’s customer contracts had been novated by the time of its Q2 FY27 results announcement. The remaining contracts were expected to be completed during Q3 FY27.

The acquisition has brought additional enterprise relationships into Zaggle’s network, including Hindalco, Trident, Bajel, Aakash Educational Services and IDFC First Bank.

Contract novation involves transferring existing contractual rights and obligations from one entity to another with the required consent. Completing the process is important for integrating Dice’s customers into Zaggle’s business and recognising the associated revenue under the new arrangement.

The acquisition is expected to strengthen the company’s SaaS offering and increase opportunities to cross-sell its spend management and financial technology products to enterprise customers.

Zaggle Turns Operating Cash Flow Positive

One of the important developments highlighted by management was the improvement in operating cash flow.

Founder and Executive Chairman Raj P Narayanam said the company’s efforts to improve operating cash flows had enabled it to turn cash flow positive during Q2 FY27 at both standalone and consolidated levels.

This is significant because revenue and accounting profit do not always translate into cash available to the business. Companies operating in payments, rewards and corporate spend management often need to manage settlement cycles, customer payments and cashback-related working capital.

Positive operating cash flow can help reduce dependence on external funding and provide greater flexibility for business expansion.

Zaggle said it would continue focusing on improving cash generation, managing working-capital requirements and strengthening the financial sustainability of its operating model.

Zaggle Expands International Presence Through Abu Dhabi Subsidiary

Zaggle has also taken steps to expand its international presence.

The company incorporated a wholly owned subsidiary, Zaggle Holdings Limited, in Abu Dhabi Global Market (ADGM), Abu Dhabi, United Arab Emirates.

The new entity is intended to provide a platform for the company’s expansion in the Middle East and create opportunities for growth over the medium to long term.

The move is part of Zaggle’s broader strategy to expand beyond its domestic market and explore opportunities in international spend management and financial technology services.

The company has also acquired a 19.92% stake in Unobanc Private Limited during the quarter, adding another strategic investment to its business portfolio.

H1 FY27 Revenue Rises 31.3%, Profit Declines

For the first half of FY27, Zaggle reported consolidated revenue from operations of ₹1,003.1 crore, representing a 31.3% increase from ₹764.2 crore in H1 FY26.

However, net profit declined 31.3% to ₹42 crore from ₹61.1 crore in the corresponding period last year.

Adjusted EBITDA for the six-month period stood at ₹79.3 crore, compared with ₹79.9 crore a year earlier.

The H1 performance indicates that the company’s revenue expansion has continued, but profitability remains under pressure as it invests in acquisitions, technology and customer growth.

The Bigger Picture

Zaggle’s Q2 results highlight the challenges faced by fintech and SaaS companies trying to balance rapid expansion with sustainable profitability. The company’s acquisition-led growth strategy is increasing its enterprise customer base and strengthening its technology offerings, but integration costs, marketing expenditure and customer acquisition spending are affecting margins.

The positive operating cash flow reported during the quarter is an important development because it suggests progress in managing the cash requirements of the business. However, sustained improvement will depend on controlling cashback costs, improving collection cycles and generating stronger operating earnings.

The Dice acquisition also creates an opportunity for Zaggle to expand its SaaS business and deepen relationships with enterprise customers. Its success will depend on completing contract transfers, integrating customers and generating additional revenue from the expanded network.

Looking Ahead

Zaggle’s immediate priorities include completing the Dice integration, improving operating cash flow, strengthening its core spend management business and expanding its technology-led revenue streams. The company also plans to scale artificial intelligence across its platforms and use its growing enterprise network to increase adoption of co-branded credit cards and UPI offerings. Its Abu Dhabi subsidiary provides another potential avenue for international expansion.

Investors will be watching whether revenue growth can translate into improved margins over the coming quarters. The company’s ability to manage customer acquisition costs, cashback expenses and technology investments will be important to restoring profitability. With revenue growing strongly but net profit declining, sustainable earnings growth and consistent cash generation will remain key measures of Zaggle’s financial performance in the second half of FY27.