Will expand product offerings; add users, merchants in FY24: MobiKwik COO

UPASANA TAKU, cofounder and chief operating officer, MobiKwik — a digital payments company which made an operating profit in the January-March period — says the financial technology company is expected to be fully profitable in 2023-24 (FY24) in an exclusive interaction with Manojit Saha. Edited excerpts:

How was 2022-23 (FY23) for the company as regards revenue, profitability, and user base?

FY23 has been a good year — both from the standpoint of growth and profitability. Notwithstanding testing market conditions, we have scaled up our businesses, and increased our user base to 140 million.

In terms of financials, we ended the year with Rs 560 crore of revenue (unaudited) — a growth of 39 per cent year-on-year. In the fourth quarter (January-March), we were profitable. 

This is the first quarter of profitability in FY23 when we reached substantial scale. On a quarterly level, we achieved that number in 2021-22 because of a one-time income. This time, it was fairly sustainable growth. On a quarterly level, we did Rs 160 crore in revenue and on that, we generated a 38 per cent contribution margin and a profitability of 2-3 per cent. This profitability was at an adjusted earnings before interest, tax, depreciation, and amortisation level where we adjusted for employee stock ownership plans. 

What are the growth plans for FY24? What will be the focus areas?

FY24 will be a big year for us. We want to be profitable in all quarters — and for the full financial year. We are projecting a top line revenue of Rs 1,000 crore in FY24. We would like to do a 4-5 per cent profitable margin — consequently, a Rs 40–50-crore profit on a Rs 1,000-crore top line.

One, we will continue to expand our product offerings. We have a large user and merchant base. We have barely scratched the surface.

In payments, we have 140 million users, but only 4 million in the credit business. Less than half a million are in the investment business. The idea is to cross-sell more financial products across users and merchants. The latter is fairly strong at 4 million. We will be focusing on lending to merchants and small and medium-sized enterprises.

Two, we want to increase our presence. We will add users and merchants in tier III/IV cities. We are clear that a lot of the growth in India from a digital perspective comes from small towns and villages.

What are the main revenue streams for the company?

We have done a lot of work in the digital credit business as well as on investment. We help customers to borrow money as well as invest to get higher yields. Today, 50 per cent of the revenue is from the distribution of financial products — either as credit or loan.

We have the distribution of financial products like mutual funds, deposits, etc. Fifty per cent of the revenue continues to come from the payments business of the company.

The principal revenue for MobiKwik has been the fee-based income we get from merchants. If you swipe a credit card, the merchant will pay a fee of 2 per cent. Similarly, when a user pays using a MobiKwik wallet, our 4 million merchants will pay us a fee of 1.6-1.7 per cent, which is still lower than a credit card.

MobiKwik is one of the few applications (apps) that facilitates payment made via RuPay credit on the Unified Payments Interface (UPI). Will it be a game changer?

Yes. Anyone with a UPI app and bank account can transact on it. But most bank accounts in India do not have much balance. To buy anything, you need access to credit. If there is no way to access credit with a UPI quick response code and one has to dip into savings, it will have limitations. The world over payments from credit products are much more. We have a full know-your-customer user base of more than 60 million. This will further the adoption of UPI or digital payments in a big way.

The idea is to make wallets interoperable. You can use digital wallets for proceeds from credit products, savings accounts, UPI, as well as loyalty points. It is a convenient product and also one way to safeguard your bank account. Why would you want to expose your bank account for a Rs 10 or Rs 100 transaction?