DiGiSPICE Technologies Limited (DIGISPICE) Earnings Call Transcript & Summary

Good afternoon, everyone, and a very warm welcome to the Earning Zoom Webinar of DiGiSPICE [ Technology ] (sic) [Technologies ] Limited for Q1 and FY '27. We have with us Mr. Dilip Modi, Chairman of DiGiSPICE Technology Limited; Mr. Sunil Kapoor, Whole-Time Director and Chief Financial Officer of Spice Money Limited; and Mrs. Aastha Garg, Head of Investor Relations, Spice Money Limited. Before we begin, I would like to state that some of the statements made in today's discussion may be forward-looking in nature. The actual results may vary as they are dependent on several external factors. A statement in this regard has also been included in the results presentation sent to you earlier. We will commence the call with the management taking you through the operational and the financial performance for the period under review. following which we will have an interactive Q&A session. I would now like to invite Mr. Dilip Modi to commence the presentation. Over to you, sir. Thank you.

Thank you, Hashika. Good afternoon, everyone. Thank you for taking out the time to join us this afternoon. Every quarter, for the last 5 years, we've been having these calls to introduce what we do at DiGiSPICE Technologies to the market. As you are aware, DiGiSPICE Technologies itself is a holding company under which we are building a business called Spice Money. This is the only business sitting under DiGiSPICE Technologies, and we have been going through a process with NCLT to merge this business into DiGiSPICE Technologies. So we'll give you an update on that. So really, the way we would encourage you to think about DiGiSPICE Technologies is effectively look at what we are building under the brand Spice Money. So let me start my presentation by sharing with you what's been the vision behind which we are building at Spice Money, and then we'll specifically dive into quarter 1 in terms of what has been our achievements for the quarter. If you really look at what we are building at Spice Money, we are effectively building a digital stack for banking in Bharat. All of us know about UPI and what it has done for our digital payments ecosystem. But what we are also seeing an opportunity going forward is for a digital banking ecosystem to evolve in India. A lot of banks have their apps and onboard customers directly on the apps. But there are lots of customers, who today are not either using a banking app actively or a UPI app. And effectively, that's a cash-first economy. A lot of this economy is sitting in Tier 3, Tier 4 and Tier 5 India that is also looking to transact with their bank account. We at Spice Money have built a stack for these consumers. There are nearly 0.5 billion of these consumers living in Tier 3, Tier 4 and Tier 5 India. What we have started with is building an app, which is used by small merchants in Tier 3, Tier 4, Tier 5 India, who use our app to function as a banking agent in their community. To date, we've onboarded over 16 lakh agents on our platform. I would ask you to -- we correct the typo is 1.68 million Adhikaris on our platform. We refer to them as Adhikaris, covering around 2.5 lakh towns -- and on a monthly basis, we are catering to 27 million customers, which on an annual basis is about 170 million. What these customers do, they come to these merchant points, which function as our banking agents using our app to withdraw cash, deposit cash to also open an account, to take a loan, to take an insurance policy. So effectively, we've created a lot of these touch points, where people can transact with their bank accounts. This has allowed us to gather a lot of data around these consumers. And now our goal is to move them from being a cash-first consumer to a digital-first consumer. And that is where now we are looking to build our own consumer app, where effectively, our goal is to digitize their cash payments using UPI. We, as a company, have a PPI wallet license from the regulator, which now has become UPI interoperable. So effectively, it can function like a UPI account. So what we are looking at is the 170 million customers on an annual basis who today are cash-first customers, basically depositing cash in their account, bank account withdrawing cash and then spending in cash to open a simple, easy-to-use UPI account and use our agent network to deposit cash into that account and then spend using a very simple easy-to-use app that we give to the consumer. So effectively, the 2 apps that we are looking to build is an app for the banking agent and an app for the banking consumer. On top of this, we are also building out a credit business, where effectively we have seen that in Tier 3, Tier 4, Tier 5 India, there are a lot of small merchants, a lot of independent workers, self-employed, who are not given access to formal credit because of lack of enough data, collateral or just pure access that there isn't a bank branch or an NBFC branch close to where they live. Majority of these customers are living around our agents. And therefore, through our agents, we can access them for data as well as profile them and be able to provide them loans. We already, as we show you in the data, have started offering loans of third-party capital to our agents. And going forward, we are looking to offer loans to merchants and consumers around the agents. So effectively, at Spice Money, we are a fintech business with 1.7 million consumers using our mobile app or our digital platform to offer digital payment, basic banking and financial services to over 170 million customers across 2.6 lakh small towns. What is the journey that we are on in terms of products on the next slide. Our goal is to drive -- if we move to the next slide, please. Our goal is to drive digital-led financial inclusion in Bharat. And effectively, these are the 5 pillars that we are focusing on. So the first thing, if you think of ATM as a banking product, today, there are about 200,000-plus ATM machines in the country, the ones we are used to seeing in big cities and towns. What we've created is nearly a 17 lakh against the 2 lakh human-assisted ATM points, where consumers looking to withdraw and deposit cash from their bank account can visit our merchant point and withdraw and deposit cash into any bank account using that point. We, at the last global fintech festival in partnership with the regulator and BCI also launched a product called UPI Cash Point. So in addition to using Aadhaar as an authentication mechanism to withdraw and deposit cash, with the growing adoption of UPI, we are also enabling our agent points to have a QR, UPI QR, where specifically customers can come with any UPI app, Google Pay, Phone Pay or any of the popular apps and scan it at our agent point and take cash. Today, UPI QRs have become popular in the country to -- for the merchants to accept cash. We, at Spice Money are now going to drive a UPI QR through our agent point, where people can come and also withdraw cash. A lot of this may be happening informally. We are looking to formalize that by creating a dedicated network of UPI cash points. Collections continues to be a big area when it comes to lending. We at Spice Money are looking to build Bharat's largest rural cash collection network. We've tied up with over 80 NBFCs and MFIs who are using our banking agent points to make sure that they can deposit their EMIs, whether the agents are coming and depositing it or customers are coming and depositing it. And the whole idea is to digitize cash faster. So basically, if an MFI agent is going to a village to collect cash, once he collects the cash, he can also come to our Spice Money banking point in the village itself to deposit the cash and we move it digitally to the enterprise account. We are also a BBPS operating unit license holder with the Reserve Bank of India, which allows us to bring more and more recurring payment and collection use cases onto our platform. The third big building block that we are looking at is around financial services, where a lot of our customers who are living in Tier 3, Tier 4, Tier 5 India, who don't have access to ability to get formal credit, insurance or saving products or even getting a basic banking account or a second account in the family, we are using our banking agent network to also start functioning like a mini branch in the village and be able to enable customers in that community to be able to open accounts, get loans as well as other banking products. So effectively, our banking agent network starting as an ATM point to becoming a collections and payments point to also becoming a mini branch. So this is the platform that we've built. We continue to partner with banks, NBFCs, MFIs, insurance companies, mutual funds on one end and consumers on the other. And as we scale up our agent network, we end up bringing more products to more consumers. Two of our own products that we are looking to build on the back of this platform is our own Spice UPI, which is going to be positioned as Bharat own UPI account. Today, we are -- we see a lot of popular UPI apps, but what we are looking at is to build a very easy-to-use, safe UPI account, which is front-ended by a very simple, easy-to-use UPI app. Who are we building this for? We're building this for cash first consumers, who are either new to UPI or are existing to UPI, but use it very minimal. So we want to make sure a lot of our studies have shown that the next generation of power users in UPI will come based on their confidence in the platform. So what was meant for convenience has to now move to trust. Our banking agents in Tier 3, Tier 4, Tier 5 India are points where consumers can start trusting digital platforms like UPI. And we want to help them through our agents to be able to cross this bridge from the lack of trust to deeply trusted because if their transaction gets stuck, there's somewhere they can go to solve for it. So having access to 25 million transacting customers a month, 170 million a year, we have a captive consumer base into whom we can seed Bharat's own UPI accounts. And then finally, our lending stack, where we are looking to look at data that we are collecting to be able to start offering. Like I said, we've started offering loans to our own agents, but going forward to merchants and consumers around the agents. So our goal is to drive the reach of financial services across Bharat by deepening our presence of our agent base and the products on the platform. as well as bringing new to UPI or existing to UPI, but low users as well as new to credit users into the formal financial services fold. So this is what we are building. And as we go forward, all of this starts translating into metrics that we can share -- we share with you quarter-on-quarter. And we hope that at the Annual General Meeting, some of you who are shareholders will also get an opportunity to see things through the annual report in more detail. Moving on to quarter 1. I'll give basic highlights on the next page on what the quarter 1 highlights have been for this new financial year. So to begin with DiGiSPICE Technologies, like I said, it's like an investment company. It had other businesses in it, which have been discontinued. So now Spice Money is the only continuing business in DiGiSPICE Technologies For the first quarter of this financial year, the company has delivered a INR 9 crores PAT for the continuing business. So that is one key highlight. The second one is that the 2 new engines we are building, which is credit and UPI, we've already seen a breakeven in our credit business. So the team and the other costs that are associated with building that business, we've already started earning enough gross margin to cover the cost of our new engine. So all of this starts flowing into profitability. So those are the 2 financial key highlights. On the merger, happy to report that we are now at a situation where we moved to the second motion with NCLT as of the second half of July. And therefore, as we look at DiGiSPICE Technologies, we are hoping that by March 2027, which is by the close of this financial year, we'll effectively DiGiSPICE technologies will convert into Spice Money as a pure-play listed fintech on both those -- on the main exchange. On product and partnerships, we continue to bring in new products and new partners on our platform. Like I explained as a platform, we have an opportunity to give product companies the opportunity to reach millions of consumers and merchants living in Tier 3, Tier 4, Tier 5 India. Insurance is one big area that we are doubling down on, and we continue to bring more products. As you can see, we continue to add partners. FD-backed credit card, now credit card is a new trend compared to debit cards. And what we are looking at is to use a secured credit card as a way for people to improve their bureau as well as for them to be start getting exposed to a new credit line. And moving forward, they can become -- move from secured towards unsecured. So this is again building a bridge and making sure lots of consumers in Tier 3, Tier 4, Tier 5 India got exposed to the concept of a bureau, and we want to work with them to improve their bureau. Savings continues to be a big focus area for us. We've already launched FD, RD products on our UPI app, which is at a beta stage, and we are trying to see how to scale this. And going forward, we are looking at investments. So the idea is to mobilize a lot of the savings and investments, which are informal in small town India into formal savings and insurance. So we continue to strengthen the foundation of the platform through innovation and making sure that we focus on end consumer needs and be able to bring in products to serve those needs. And then let me close with some of the key highlights again for quarter 1, both at the operating and financial and product side. So if you look at the key metrics on the top are the number of registered agents, which is about 16.8 lakhs. These are our users who use our app to deliver financial services. I already spoke about the number of towns and the customers we serve. In terms of just the product metrics, AEPS, which is our Aadhaar-enabled payment system, this is our biggest product. We closed this quarter at about INR 13,300 crores. We've seen a dip quarter-on-quarter, which Aastha will talk about later. But this is a segment where we are a clear market leader. We are close to an 18% market share in the accounted market, and we are looking to strengthen this share. In terms of collections, we continue to onboard more enterprises on our platform. Here, our goal is to drive BBPS, which is a Bharat-based payment system platform, where we are close to INR 1,500 crores for this quarter, and we'll see how to keep scaling this up. In terms of savings accounts, to date, we've opened nearly 1.8 million saving accounts in our ecosystem. And the important part is that in these accounts, we are seeing balances grow, which means more and more accounts are becoming active, and that's our goal. And we've seen a 45% growth in the float balances over the last 1 year, and we also earned from these balances. Credit disbursement continues to be a big area because there's a big ask. So finding relevant credit products for our consumers and merchants in our ecosystem, we continue to focus on, came in close to INR 200 crores in this quarter, which is a 64% up year-on-year. In terms of financial numbers, the revenues have been pretty flattish because we've seen a change in our product mix. And again, Aastha will talk about that. Similar on gross margin. But on EBIT and PAT through cost measures, we've been able to drive our profitability faster than our top line growth. And then we are an asset-light business, a zero debt play, and therefore, it reflects in our metrics around ROCE and ROI. And we continue to strive to stay as asset-light as possible to be able to drive better return economics. Our goal going forward is to look at these customers that are using our platform, collect more data around them and make sure that we can bring in products around banking and financial services that work for them and can help them grow and invest their money in a more productive way. So with that, I'll hand over to Sunil, our CFO, who can walk us through the financials. Sunil, over to you.

Thank you, Dilip. Can we blow up the slide please. Good afternoon participants. This is -- the sheet contains about the financial highlights. It contains about the last 2 years performance also just for a reference how we are performing year-to-year and what is in this quarter, what we have performed. If we see that we have a soft volumes in this quarter even that has also not reduced our gross margin because we are -- gross margin mix is changing because we are working on the new products, primarily financial products, distribution and UPI Cash Point is also bringing up the numbers from this quarter onwards. And if we see that on the cost side, indirect cost, we have continued operating efficiency in the cost side. And of course, the gross margin has not grown much. But on the cost side, we are working regularly to be more efficient and effective. And from that perspective, the EBITDA has INR 8.6 crores, which is kind of almost 6.5x in comparison to the previous quarter. And resultant EBIT is also have an 87% growth from the previous quarter. And if we see that in the last quarter, some onetime items were there, if we compare it from the last year same quarter, even then there is a 25% growth in the EBIT. And consequently, the PAT has also grown in comparison to the previous year's same quarter. So we are focusing on the operating efficiency and side by side also working on the new products as Dilip has called out. And hopefully, that gross margin standpoint of view, we will be able to post the growth in the coming quarters from the new products, and that will flow to the -- our EBIT and PAT. And if you see on the overall basis, the PAT is INR 6.6 crores. That has also grown from the last quarter -- last quarter, which was INR 2.8 crores. So that's all from the financial highlights. I can -- Aastha you can take it over.

Thank you, Sunil. Good afternoon, everyone. So building on the strategic and financial highlights that Dilip and Sunil have already given, I will talk about the operational momentum that our business is seeing and the expanding power of our distribution grid. So I'll start with the geographic footprint where you see our agent base has already reached 16.85 lakh agents across India by end of Q1, and it's been growing at a CAGR of almost 12.9% over the last 5 years. If you see in these numbers, our core strength lies deeply rooted in the Tier 4, 5, 6 small towns, where our 13.3 lakh Adhikaris are located. But what in our true strategy is evolving, in this quarter is our deliberate push towards the adjacent or adjoining micro urban clusters as well. So as Dilip has already mentioned that now we are working on growing our financial product distribution, which is typically the savings, investments and insurance products including lending, these markets are a huge demand center for these products. So what we are trying to do here is basically, we are bridging our deep rural coverage with these adjusted micro urban pocket so that we can build and maximize the transaction frequency as well as the cross-sell yields across India. In line with the geographic strategy, if you move to the next slide, what you will see happening in the GTVs and gross margins is the evolving product mix. Looking at the CICO numbers, we can see there has been a seasonal drip -- dip here, but on our -- we can see a recalibration that is happening between our high volume, low-margin collections business, which now is moving towards the growth that we can see in the other segment, which is basically the financial product distribution involving CASA, credit and insurance products. If you see on the other segment, we posted a GTV growth of almost 16.3% quarter-on-quarter, which has led to a margin expansion of almost 50.7% quarter-on-quarter. So that's a huge growth in the margin that is coming from this segment in a quarter, which has helped us at landing the overall gross margin at INR 48.1 crores for this quarter. So you can see that what is emerging is that these new verticals are helping in cushioning the impact that our CICO business continues to see due to seasonality as well as regulatory changes that happen in this industry. Now let's move into our products and what is happening across each product line, starting with the payments business here. If you see on our AEPS cash withdrawal business, we've seen a slight dip in our market share this quarter moving it to 17.93%. And like we last quarter also mentioned, we've been seeing some industry, so industry proportion changes and on how the withdrawals are happening across this industry and some lower withdrawals have happened in our stronger regions, which is leading to this market share dip, but we have shown strong resilience in this business. And in the month of July, we've been able to bring our market share to 18.3%. What is more important in this slide is to see that the key growth levers, which is the subscription packs, one of which is subscription pack. We can see that the agents who are subscribed to these subscription packs are growing quarter-on-quarter, as well as the overall GTVs that I think agent contribute to our AEPS GTVs is also growing. So if you see in quarter 1, almost 47% of our GTV of AEPS have come in from these agents, who have subscribed to our subscription packs, so which is a signal that these agents are sticky with us and giving us a recurring revenue. On the two other buckets, growth buckets that we talk about, which is the AEPS cash deposit space as well as the UPI Cash Point, which Dilip and Sunil also mentioned, these are the growing buckets in this payments space. And if you see we have expanded -- we are expanding on our GTVs on both products this quarter and these continue to be one of the major growth drivers that will be tracking growth in the next quarters as well. Let's move to the next slide [indiscernible]. Now coming to the collection business, in the collection business, which is basically a traditional corporate CMS space, we have talked about that there have been high commoditization in this space as well as this market has become highly price sensitive. So to drive growth in this segment, what we have been focusing on is the high margin BBPS led collections. So if you see on the BBPS front, this shows almost a 14.2% growth year-on-year and the BBPS contribution for overall GTV is also rising from a 9% overall GTV contribution in the quarter 1 of last financial year to 15% contribution in the quarter 1 of this financial year. What is the other focus in this area is to expand on the client funnel that we are working with across both the products, whether its CMS or the BBPS. So we have added, if you see 3 clients on the BBPS front and what will remain as a key growth driver here is that we will be working and driving the BBPS led digital adoption in this space through the partners and billers, who are already live and as more and more billers go live on this platform. So with that, let's move to the financial product distribution business, which is a high margin growth engine for us and that we've been talking about in the presentation also that this is a space, where we are leveraging our physical footprint to cross-sell the financial products. So the products that we're cross-selling here is, one of them is CASA, where we have already sold 17.8 lakhs account till date and here we built a float balance of approximately INR 320 crores till date, which is helping us drive a predictable recurring float income in our P&L and that balance is continuing to growth every quarter. If you see on the graph loan disbursals also, we posted almost INR 167.7 crores of disbursals this quarter, which is a 1.7x growth as compared to the last year same quarter, which is basically anchored by the 7 lending partners that we are working with in this space. In the newer product categories, we have also expanded into five new secured type categories in the last quarter, as well as rolled out our two-wheeler insurance product in the Q1 in the month of July in the insurance pipeline. Now what remains is the next introduction -- as next road map in the financial product distribution space is the introduction of savings and investment products as we do. Now let's move to the next slide. So talking about the credit business, which is the largest, I can say, growth engine in this quarter for us. You can see that we disbursed close to INR 30.8 crores of loans in this quarter, which is a 55% growth quarter-on-quarter and a 2.8x growth year-on-year. This is a business, where I mentioned earlier as well, we are leveraging the real-time transaction data for our Adhikaris to drive higher approval rates as well as maintaining tight risk control. So this is the business that we are drive -- trying to drive 2 things. in this segment, the MSME product that we launched last year, which is the Vyapar loan product, if you see the GTVs are growing in that product as well, which is helping us to expand our addressable market into the small merchant category also. So with that, I would say that our overall focus will be to maximize our network yield, leveraging the rural mode that we've built across India and the micro urban expansion that we are trying to see to accelerate the financial product distribution that we're doing, build float balances and in the end, drive credit. So that's the update that we would like to give you. With that, I would thank you all for joining in today. And I would now hand back over to Dilip sir for the closing remarks.

Thank you, Aastha. I think we have a final slide, which shows the partnerships and the licenses that we have. So let me close with that slide. Can you just put that up, please? A, do we have that slide now. Yes. So like we said, we do have licenses from the regulator. But as a platform business, as you've been seeing through this presentation, our focus is to bring in more and more partners across product lines. And our goal is to drive more products with them. And our focus generally is to co-create products for our ecosystem. So we are not only enabling reach, but also enabling the right product for the right consumer. And I think in that context, we see ourselves as a value-added distribution partner. And wherever we feel that there are gaps in the market, we will end up manufacturing our own products, whether it's the credit saving or investment space. So thank you once again for listening to us. We would love to answer any questions that you may have. Also, I would like to introduce you to 2 of our colleagues, so if we can get to the Q&A. I have 2 of my colleagues who've joined on this call. Akash, who's actually leading our credit business; and Rohit, who's leading our platform business. So effectively, all the areas that you see around payments, collections, financial product distribution is being driven by Rohit and Akash is building the credit business. So they're joining me as well for the first time to interact with you. More than happy to answer any questions at this point or even later, you can write to us through our website or through our partners. So over to you, Hashika.

[Operator Instructions] So we have one question from Mr. Raj Vyas. Looking 3 years ahead, what would success look like for DiGiSPICE? Will it be defined by transaction volumes, profitability, customer ownership, lending sale or the contribution from higher-margin financial products?

Yes. Thank you, Raj, for the question. Actually, the way we think of ourselves, the first thing is driving transactions. I think fundamentally, that's the bedrock of what we are building because on the back of driving transaction volumes, we get access to data. And through that data, we can build new products. Having built a scale of nearly 17 lakh agents who are using our platform, we already have some critical mass of agents on board. So we are hoping that our future investments to build more agents or to drive more products are going to be incremental. So we are hoping that a lot of what we build in terms of new partnerships, we are able to drive in terms of operating leverage and finally, profitability. Our challenges are generally that we are in an ecosystem where it is regulated. And especially when it comes to cash withdrawal, cash deposit, we are also dependent on third-party banks and their rules in terms of conditions that they keep putting on controls that they keep having, which obviously we are on an off us rail compared to an on us rail of the bank. So to that extent, there are certain things beyond our control. But our goal is that we keep trying to grow the transaction part of the business by having more agents and more transactions per agent. And that's the real goal to drive a very profitable high-impact business. And our moat continues to be the strong banking agent network that we are uniquely placed to leverage going forward.

I hope that answers your question. We have a follow-up question from Raj Vyas. Are we planning any fundraising?

So Raj, as of now, we don't have any formal fundraising plans. As you can see, we are a profitable entity, touch wood. So we hope that we can continue to drive healthy bottom line growth. But yes, as we go forward, if there's a need for us, whether it's for investing in new engines, customer acquisition, if we see any gaps in capital requirements, we will come back to the market. But as of now, we are growing through our internal accruals and generating more cash for us to be able to keep at a war chest for the future.

We'll take the next question from [indiscernible].

My question was regarding this Spice Money [Technical Difficulty].

Samruthi, we lost you there. [Technical Difficulty] I think she has left the chat. We'll take the next question from [ Prisha Shah ].

So sir, I have a couple of questions. Firstly, regarding the insurance policy sales. So we saw that this quarter, they moderated despite the new product launches we had. So I just wanted to understand what drove this decline? And how are you planning to accelerate the insurance policy growth from year on given the decline this quarter?

Yes. Rohit, do you want to just talk through the way we are thinking around building the insurance product?

Sure. Thank you, Prisha, for your question. So first of all, Prisha, the current insurance business is structured around our own Adhikaris. We are selling them a shopkeeper insurance. And therefore, it is being served on a captive audience base. And that's how you could see that we could saturate that base very quickly. And it is only now that we are seeing certain softer growth in that product. And therefore, we are expanding into more products in that space. Also owing to the fact that we are changing the construct of our insurance distribution business today, we are trying to work around in a large portfolio with the Insurtech, where we can bring in more products directionally. So I think the portfolio expansion, which we are planning for this coming quarter, along with our change of construct of operating model will allow us to kind of overcome the current degrowth.

Prisha, did you have any other question?

Yes, sir, I have 2 more questions, and that answered my question. So going forward is my another question. So considering the current macro environment, are you seeing any early signs in the credit repayments or the transaction volume given this credit uncertainty which we have. So any word on that?

Akash, do you want to just comment on that?

Yes. So Prisha, we have been lending to our agent network at this point in time, where basically we have a visibility on the cash flow of the agents because they're transacting into our platform. And so far, we have not seen any stress. Our portfolio performance has been in line with the expectation. And apart from that, even in the open market, which we started learning very recently, we have been very cautious and careful when underwriting this customer in terms of their business vintage, their business model, assessment of the business model, business vintage and thereafter, we are ready. So right now, as such, we have not seen any stress in our lending business or risk at this point in time.

Okay, sir. I understood that question. So if I may, just one last question, if I can squeeze in. First of all, I wanted to understand that in over next 2 to 3 years, let's say, so how are you seeing the revenue mix to evolve across your AEPs, UPI Cash Point, the financial distribution segment, also credit? And given that, which business would you expect to become the largest profit contributor from here on, if you could provide some color on that?

So Prisha, basically, what we are seeing now is that we've achieved a good critical mass of banking agents. While there is still opportunity to grow more deeper in South and West markets, which we'll continue to do. But the next phase of growth, Prisha is around financial products, formal financial products. So I think that's going to be the big driver for us going forward because we have access to customers who are basically using our banking agent points more to withdraw deposit cash. And now they are beginning to use these points to open a second and third account in the household as well as -- as we bring more relevant products to be able to access loans at lower cost or get exposed to formal saving investment and insurance. So those clearly are going to be our drivers for the next several years because there's a huge unserved market, whether it's MSME credit, whether it's insurance, we know the numbers, right? The more you move from metro to Tier 5, the penetration of [ formal ] financial services drops from double digit to even very, very small single digits, if not less than 1%. So there's a huge untapped market when it comes to formal penetration of financial products. So that's something as a fee-based model, we'll continue to scale. On the credit side, we definitely see an opportunity to build new products using data that we are capturing where we will work with partners. We try and stay as asset light as possible. So obviously, with third-party capital, maybe on a first loss model, wherever we are confident of our data to be able to work with them and give them the confidence to start lending. And as they get more confident, they can end up doing more, right? And then I think the big ones that we are ready to -- run a lot of experiments around is on our UPI account. This one, Prisha, is a big one for us because we believe -- truly believe that India is now close to 0.5 billion UPI users. Where will the next 0.5 billion come from? And that's going to be from Tier 3, Tier 4, Tier 5. But it's not going to be just by having a UPI app or a bank account. In our mind, it's a 3-pronged strategy where we will give them both a UPI account, a UPI app as well as UPI assistance on the ground through our agent network. So we believe that going forward, UPI users are going to grow on the back of more trust and convenience. And we believe that we are well positioned in our network to gain confidence on the investors to come on to UPI and start using a very simple to use app. So I think that's the big call out for us as we go forward. And of course, as we start bringing in more users at a lower CAC, we can then also start capturing their data and giving them more products. So essentially, the goal is to get there over the next few years. And our whole idea is to basically build a very strong digital financial ecosystem in Tier 3, Tier 4, Tier 5 India.

Very well answered, sir. That sets the direction of growth for each of the segments. Just a follow-up. What would be the quantitative range-bound revenue mix, if you could provide among these segments?

So if I look at our gross margin mix, Prisha, you will see that majority of that is coming through transaction, a significant part. I think going forward, I would imagine that the mix would get more and more skewed towards financial products and credit, right? I think UPI account is something that we're still going to figure out the monetization model as we go forward. The whole country is debating on how to monetize UPI. So let's see how that debate closes. Just to share with you on the wallet side, of course, we've been talking about MDR for some time. But now we are beginning to talk about MDR even on UPI for large merchants. But Aastha, do you want to just touch on the mix of revenue broadly 5 years out, how we think? Aastha, you're on mute.

Yes. So if I just talk about the revenue mix and how it looks today, if you see almost 60% of our revenue comes from the cash in, cash out segment, which is the payments business that we were talking about, a 10% to 12% comes from collections and the rest is coming from the newer business lines together, which is approximately close to 20%, 25%. So that's the mix right now. What we could say is that though on overall numbers, we are saying that we will grow on all segments including transactions because the UPI space we are talking about there in UPI Cash Point and all. So overall we will be trying to grow in the transaction segment as well as the collections segment, but what will drive major growth like Dilip mentioned, it will be the financial product distribution and credit segment. And what we hope from 5 years down the line to see is that 50% or more of our margin will be coming from these 2 segments, if we are able to target the growth, as we are planning internally in the company.

We'll take the next question from [ Bhavya Agarwal ].