DigiSpice Tech.

DigiSpice Technologies reported a customer Gross Transaction Value (GTV) of ₹31,951 crores for Q3 FY25, marking a 16% quarter-on-quarter growth from ₹26,258 crores. Revenue increased by 7% QoQ and 2% YoY. Gross Margin saw a 3% QoQ increase, reaching ₹44 crores from ₹43 crores. The company achieved a positive PAT of ₹1 crore from its continued business this quarter, a significant improvement from ₹(-1.5) crores in the previous quarter, though overall PAT for Q3 was ₹0.1 crore and for 9M FY25 was ₹(-26.6) crores including notional losses.

The company is focused on digital financial inclusion, leveraging technology to penetrate formal financial services into deep India, particularly small towns. Operating under the Spice Money brand, DigiSpice has built a leading FinTech platform that enables small merchants to act as assisted digital payment points. This allows millions of consumers in rural India to access services like cash withdrawal, EMI deposits, bill payments, and new bank account openings, effectively digitizing cash at the last mile.

DigiSpice maintained its market leadership in the Aadhaar-enabled payment system (AePS) business with a market share of over 17%, showing an 11.5% QoQ growth in GTV. The collections business has emerged as a significant growth driver, experiencing an 80% YoY and 51% QoQ growth in GTV. It now contributes approximately 46-47% of the total transaction volumes, making it as substantial as the AePS and Micro ATM businesses. The company's merchant network has grown from 240,000 in FY20 to over 1.5 million by December 2024.

DigiSpice has launched Spice Pay, its new UPI offering, which is currently being piloted in Bihar and Madhya Pradesh. This product is designed for cash-first consumers, allowing them to open full KYC PPI wallets, load cash, and perform digital payments like sending/receiving money, bill payments, and scan-and-pay. Since its beta launch (October-January), over 13,000 wallets have been opened, with 10,000 actively used. The company aims to onboard an additional 300 million users onto the UPI platform from Bharat.

The company's banking business has seen substantial growth, with approximately 7.8 lakh savings accounts and 50,000 current accounts opened to date. This expansion has led to the generation of float income from a balance of almost ₹130 crores maintained in these accounts. The number of 'Adhikaris' (agents) who have opened 5+ accounts has reached approximately 27,000, indicating a growing base of repeat banking counters and a shift towards a bank branch-like network.

Credit is identified as a key future growth engine. DigiSpice is working towards formal credit penetration for its 1.5 million small merchants, many of whom lack traditional credit histories. The company is in the process of a strategic NBFC acquisition from within the group to create its own credit products. Currently, the secured loan business is generating approximately ₹20 crores a month in GTV, with a focus on expanding this segment through multiple partners and leveraging alternate data.

Despite strong GTV growth, the company's overall gross margin growth has been impacted by a shift in its product mix. The collections business, while growing significantly and contributing 46-47% of total volumes, is a lower-margin product compared to the traditional banking and AePS services. This change in product composition means that while individual product margins are growing, the blended gross margin is not increasing proportionally with the overall GTV growth.