MobiKwik contribution margin hit 48% as direct costs fell 13%

MobiKwik reported a contribution margin of 47.5%, presented as 48%, in Q2 FY27, up from 34.4% in Q2 FY26. Total income rose 8% to Rs 302.8 crore while direct costs declined 13% to Rs 158.8 crore, raising contribution profit 50% to Rs 143.9 crore and supporting a fourth consecutive profitable quarter.

How did MobiKwik reach a 48% contribution margin?

MobiKwik reached a 47.5% contribution margin in Q2 FY27 because contribution profit rose faster than total income. Contribution profit increased to Rs 143.9 crore from Rs 96.1 crore in Q2 FY26, a 50% year-on-year increase, while total income rose 8% to Rs 302.8 crore. Direct costs declined to Rs 158.8 crore from Rs 183.2 crore over the same period.

The quarterly trend also improved. Contribution profit was Rs 128.6 crore in Q1 FY27 and Rs 143.9 crore in Q2 FY27, up 12%, while the contribution margin moved from 44% to 48%. Direct costs fell from Rs 160.6 crore in Q1 FY27 to Rs 158.8 crore, despite the increase in income.

Which direct costs declined at MobiKwik?

MobiKwik reduced both payment-related and lending-related expenses in Q2 FY27. Payment-related expenses were Rs 129.01 crore, down 13% year on year from Rs 147.57 crore and down 1% from Rs 130.48 crore in Q1 FY27. Management attributed the reduction to a change in product mix.

Lending-related expenses were Rs 29.83 crore, down 16% from Rs 35.67 crore in Q2 FY26 and 1% from Rs 30.09 crore in Q1 FY27. Management attributed the decline to lower credit costs from improved underwriting and collection performance. These two expense categories made up the Rs 158.8 crore direct-cost total reported for Q2 FY27.

How did Payments and Financial Services margins compare?

MobiKwik’s Financial Services business reported the higher gross margin at 65.7% in Q2 FY27, compared with 38.2% for Payments. Financial Services revenue rose 42% to Rs 86.9 crore and gross profit increased 123% to Rs 57.1 crore, while its direct cost declined 16% to Rs 29.8 crore. The presentation said disbursals rose 34% year on year.

Payments remained the larger revenue business, generating Rs 208.8 crore of revenue and Rs 79.8 crore of gross profit in Q2 FY27. Payments gross margin rose 884 basis points to 38.2% from 29.4% in Q2 FY26, even though revenue was flat because of a lower take-rate mix. Payments gross merchandise value, or GMV, increased 35% to Rs 59,700 crore, led by a 76% increase in Merchant Payments GMV.

The reported Payments GMV includes both standalone MobiKwik and Zaakpay, the payment gateway. Financial Services GMV was Rs 1,080 crore in Q2 FY27, up from Rs 810 crore in Q2 FY26. Management said Payments revenue is expected to improve with proposed Unified Payments Interface merchant discount rate, or UPI MDR, although the presentation did not provide timing or an outcome for the proposal.

Did higher fixed costs offset MobiKwik’s contribution gains?

MobiKwik’s fixed costs increased, but not by as much as contribution profit. Total fixed cost was Rs 121.2 crore in Q2 FY27, up 18% year on year from Rs 102.5 crore and 7% quarter on quarter from Rs 112.8 crore. Fixed cost represented 40.0% of total income, compared with 36.7% in Q2 FY26 and 39.0% in Q1 FY27.

Employee benefit expenses rose to Rs 56.19 crore, up 59% year on year and 5% sequentially, while other fixed costs were Rs 65.05 crore. Management described the 40.0% fixed-cost ratio as reflecting a build phase, with people costs supporting merchant-business scale-up and expansion in new business segments. Contribution profit increased by Rs 47.8 crore year on year, compared with a Rs 18.7 crore rise in fixed costs.

What did the margin gains mean for EBITDA and profit after tax?

MobiKwik reported earnings before interest, tax, depreciation and amortisation, or EBITDA, of Rs 22.7 crore in Q2 FY27, compared with a Rs 6.4 crore loss in Q2 FY26 and Rs 15.8 crore in Q1 FY27. EBITDA margin was 7.5%, versus negative 2.3% a year earlier and 5.5% in the preceding quarter. The presentation reported a Rs 29.1 crore year-on-year EBITDA swing.

Profit after tax, or PAT, was Rs 11.8 crore, up 55% quarter on quarter from Rs 7.6 crore and compared with a Rs 28.6 crore loss in Q2 FY26. PAT margin rose to 3.9% from negative 10.2% a year earlier. Q2 FY27 was MobiKwik’s fourth consecutive profitable quarter, following PAT of Rs 4 crore in Q3 FY26, Rs 4.4 crore in Q4 FY26 and Rs 7.6 crore in Q1 FY27.

Finance and depreciation costs totalled Rs 10.8 crore in Q2 FY27, compared with Rs 8.1 crore in Q1 FY27. Finance cost increased to Rs 6.5 crore from Rs 4.54 crore because of higher working-capital usage associated with a one-time increase in trade receivables from the LSP Slump Sale, according to management. Depreciation rose to Rs 4.31 crore from Rs 3.59 crore, mainly due to increased device deployments in merchant payments.

Conclusion

MobiKwik’s Q2 FY27 profitability reflected lower direct costs alongside higher income. A 13% reduction in direct costs and an 8% rise in total income lifted contribution profit 50% to Rs 143.9 crore, while the contribution margin expanded to 47.5%. The resulting gain exceeded the increase in fixed costs, producing EBITDA of Rs 22.7 crore and PAT of Rs 11.8 crore.

The next results will show whether Payments revenue changes with the proposed UPI MDR and whether product mix continues to reduce payment-related expenses. Management expects finance cost, which rose to Rs 6.5 crore in Q2 FY27, to decline by 15% to 20% in coming quarters as the working-capital effect from the one-time receivables increase moderates.