Paytm’s Robust Growth Momentum Continues, EBITDA Before ESOP Improves To ₹153 Cr

• Loss reduces 49% YoY with net income was (₹292 Cr), an improvement of ₹280 Cr YoY
• Revenue from Payments up 28% YoY to ₹1,524 Cr, net payment margin increases 60% YoY to ₹707 Cr
• Merchant base grows to 3.8 Cr, strengthens leadership in in-store payments with 92 Lakh devices deployed
• Financial services and others revenue has grown 64% YoY to ₹571 Cr, Commerce & Cloud revenue increased by 12% YoY to ₹423 Cr

Pioneer of mobile payments Paytm announced its Q2FY24 results reporting a 32% YoY growth in its revenue to ₹2,519 Cr. Driven by robust revenue growth, increasing contribution margin and operating leverage, the company continues to witness consistent improvement in profitability for the fourth straight quarter with EBITDA before ESOP improving to ₹153 Cr as compared to (₹166 Cr) in Q2FY23. With a robust performance across all key businesses, Paytm’s loss reduced 49% YoY to ₹292 Cr from ₹571 Cr.

The fintech giant’s revenue growth was mainly due to increase in GMV, merchant subscription revenues, and an increase of loans distributed through its platform. Paytm’s revenue from its core payments business increased 28% YoY to ₹1,524 Cr with net payment margin having gone up 60% YoY to ₹707 Cr due to increase in payment processing margin and merchant subscription revenues. Paytm’s Payment Processing Margin is at the higher end of 7-9 bps range due to increase in GMV of non-UPI instruments like Postpaid, EMI and cards, and improvements in payment processing margin on various non-UPI instruments.

As the adoption of mobile payments continues to grow, Paytm app remains a preferred choice for customers with its offering to pay for various use cases through comprehensive payment instruments, such as UPI, Wallet, Postpaid, Cards, etc. In Q2FY24, the company’s Average Monthly Transacting Users (MTU) grew by 19% YoY to 9.5 Cr and its GMV grew 41% YoY to ₹4.5 Lakh Cr in Q2FY24. Paytm in its earnings release said, “With 33% YoY growth in Paytm App GMV and 32% YoY growth in Paytm App transaction volume, consumer engagement on the Paytm app continues to remain strong.”

The tech innovator has built a strong merchant network of 3.8 Cr out of which 92 Lakh merchants pay subscription for its devices, an increase of 44 Lakh YoY. Paytm launched three new Soundbox devices to address the varied needs of merchants who require different sets of technologies – Paytm Card Soundbox, Paytm Pocket Soundbox and Paytm Music Soundbox. “These launches will help in increasing TAM, merchant engagement and card acceptance,” the company said in its earnings release.

Paytm’s revenue from financial services and others has grown 64% YoY to ₹571 Cr, reflecting a strong adoption for digital credit. Total number of loans distributed grew to 1.32 Cr, an increase of 44% YoY while the value of loans distributed surged to ₹16,211 Cr, up 122% YoY. The number of unique borrowers who have taken a loan from Paytm platform increased by 51 Lakh in the last one year to 1.18 Cr. Paytm distributes loans in partnership with marquee financial institutions and after onboarding Tata Capital, its total number of bank and NBFC partners has grown to nine across all products including credit cards.

Led by growth in net payments margin and loan distribution business, the company’s contribution profit increased 69% YoY to ₹1,426 and its contribution margin improved to 57% from 44% a year ago. Due to an increase in investments in marketing and employees, the company’s Indirect Expenses (excluding ESOP cost) have increased 26% YoY to ₹1,273 Cr while its Indirect expenses (as a % of revenues) has declined to 51% from 53% in Q2FY23.

Paytm’s Commerce & Cloud revenue grew by 12% YoY to ₹423 Cr. Its Commerce business includes travel, movie, entertainment ticketing, deals and gift vouchers. The company’s Commerce GMV grew 39% YoY to ₹2,893 Cr. Paytm’s Cloud business includes advertising, co-branded credit cards, marketing cloud, and loyalty business. Its revenue increased by 31% YoY to ₹163 Cr. Paytm’s Cloud business grew by 3% YoY to ₹261 Cr. The company has activated 8.7 Lakh credit cards as of September 2023 as compared to 3 Lakh last year.