Chasing Profitability: Here Are The Key Takeaways From Paytm’s Q1 FY24 Results

SUMMARY

The fintech giant’s losses were offset by rising revenues, which zoomed 39% YoY to INR 2,342 Cr in Q1 FY24

For the third consecutive ‘positive quarter’, Paytm’s EBITDA, excluding ESOP costs, stood at INR 84 Cr in Q1 FY24 against an EBITDA loss of INR 275 Cr in Q1 FY23

The fintech major disbursed 1.28 Cr loans worth INR 14,845 Cr in Q1 FY24, up 51% and 167% YoY, respectively

Fintech giant Paytm’s parent company, One97 Communications, released its quarterly financial results for the first quarter (Q1) of the financial year 2023-24 (FY24) on Friday (July 21).

Here are the major takeaways:

Paytm’s Mixed Q4 Numbers: The fintech major nearly halved its losses (44.5% to be precise) year-on-year (YoY) to INR 358.4 Cr in Q1 FY24. However, on a quarter-on-quarter basis, consolidated losses more than doubled by 113% from 167.5 Cr in the preceding quarter.

The losses were offset by rising revenues, which zoomed 39% YoY to INR 2,342 Cr in Q1 FY24, compared to INR 1,680 Cr in Q1 FY23. The uptick in the top line was largely led by continued growth momentum in gross merchandise volume (GMV), merchant subscription revenues, and loan disbursals.

Just like in the previous quarters, expenditure continued to weigh heavily. Total expenses rose nearly 16% YoY to INR 2,800.1 Cr in Q1 FY24, largely on the back of employee benefit expenses, sans ESOP costs, which grew 32% YoY to INR 730 Cr. The fintech major also spent heavily on annual appraisals and marketing costs on account of IPL.

The EBITDA-Positive Run Continues: The fintech giant reported a third consecutive EBITDA positive quarter but before the employee stock option (ESOP) cost.

EBITDA, sans ESOP costs, stood at INR 84 Cr during the quarter under review versus an EBITDA loss of INR 275 Cr in Q1 FY23.

It’s Raining ESOPs At Paytm: In its financials for Q1 FY24, the fintech major also highlighted that its ESOP costs grew nearly 5% YoY to INR 377 Cr. In contrast, ESOP costs stood at INR 359 Cr in Q1 FY23. A similar trend continued on a quarterly basis as ESOP expenses rose nearly 4% from INR 363 Cr in Q4 FY23.

Even as ESOPs continue to be a major pain point for the company, it has not shied away from dishing out stock options. Just hours before its result, the company announced that it would grant an additional 1.7 Mn ESOPs to its workforce.

Under RBI’s Watchful Gaze: The fintech major is yet to receive approval from the Reserve Bank of India (RBI) for the issuance of a payments aggregator licence.

In its latest update to the shareholders, the Vijay Shekhar Sharma-led company said that it continued to seek ‘requisite approval’ from the centre during the quarter for past investments from One97 Communications into Paytm Payments Services Limited (PPSL).

In another case pertaining to payments bank licence, involving its subsidiary Paytm Payments Bank Limited (PPBL), the fintech major said that it has already implemented various recommendations sought by the RBI as part of the IT review undertaken in the previous fiscal year. The matter is still under consideration by the RBI.

Operational Metrics On An Upward Spiral: Paytm’s payments vertical continued to power the fintech giant. In the quarter that ended June 2023, the gross merchandise volume (GMV) processed by the startup soared 37% YoY to INR 4.05 Lakh Cr. Total transactions on the platform surpassed the 963 Cr mark during the quarter, up 57% YoY.

Paytm’s monthly transacting users (MTUs) jumped 23% YoY to 9.2 Cr in Q1 FY24. Revenue from the payments business further rose 31% YoY to INR 1,414 Cr during the quarter under review.

Paytm Woos Merchants: The number of merchants registered on the platform grew 25% to 3.56 Cr in the quarter that ended June 2023, compared to 2.83 Cr a year ago.

Merchant transactions on the fintech major’s payment platform zoomed 55%, yearly, to 796 Cr in Q1 FY24 against 512 Cr in Q1 FY23. At the end of June 2023, the number of payment devices deployed at shop counters stood at 79 Lakhs, more than double compared to 38 Lakhs in June 2022.

Paytm’s Lending Boost: The fintech major disbursed 1.28 Cr loans worth INR 14,845 Cr in Q1 FY24, up 51% and 167% YoY, respectively. In contrast, Paytm processed 85 Lakh loans worth INR 5,554 Cr in Q1 FY23.

The company claimed that the number of unique borrowers onboarded on Paytm stood around 1.06 Cr at the end of June 2023. Overall, the financial services segment contributed INR 522 Cr in revenues to the total revenues garnered by the fintech giant.