Inside Paytm’s Q2 Financials: Net Loss Halves As Operational Efficiency Skyrockets

Fintech giant Paytm’s parent company, One97 Communications, released its quarterly financial results for the second quarter (Q2) of the financial year 2023-24 (FY24) on Friday (October 20). 

Here are the major highlights from its Q2 performance: 

Paytm’s Cheerful Q2: For the second consecutive quarter, the fintech juggernaut nearly halved year-on-year (YoY) consolidated net loss. Paytm reported a net loss of INR 291.7 Cr in Q2 FY24, a decline of 49% from INR 571.5 Cr in Q2 FY23. 

On a quarter-on-quarter (QoQ) basis, net loss declined over 18% from INR 358.4 Cr. 

Meanwhile, the top line continued the growth momentum from the preceding quarter. Revenue from operations zoomed more than 32% YoY to INR 2,519 Cr. On a QoQ basis, it jumped 7.5% from INR 2,342 Cr. 

The company attributed the surge in operating revenue to the increase in gross merchandise volume (GMV), merchant subscription revenue, and disbursal of loans during the quarter. 

Total expenditures rose 14.6% YoY to INR 2,936.7 Cr. 

Paytm Marches Towards Actual Profitability: For the fourth consecutive quarter, the fintech giant reported a positive EBITDA (earnings before interest, taxes, depreciation, and amortisation) before ESOP costs. 

On the back of ‘platform leverage’, Paytm’s adjusted EBITDA zoomed to INR 153 Cr in Q2 FY24 from an adjusted EBITDA loss of INR 166 Cr during the corresponding period last year. 

ESOP Costs Rise Marginally: In Q2 FY24, Paytm’s share-based payments grew 4% YoY to INR 385 Cr from INR 371 Cr. On a quarter-on-quarter basis, ESOP costs rose 2% from INR 377 Cr. 

Paytm Payments Bank Continues To Be In RBI’s Crosshairs: In its quarterly report, Paytm said its payments bank, Payments Bank Limited (PPBL), continues to be engaged with the Reserve Bank of India (RBI) with respect to the restrictions imposed by it on PPBL on onboarding new customers.

Back in March 2022, the central bank banned the payments bank from entertaining any new customers over ‘certain material supervisory concerns’. 

Earlier this month, the central bank also levied a fine of INR 5.39 Cr on PBBL after the bank  submitted the compliance report with respect to the remedial actions recommended by the RBI. 

Just a day ago, the payments bank also temporarily halted international transactions on its debit cards till further notice without specifying any reason.

The company also noted that it continues to pursue FDI approvals from authorities over the past investments from parent One97 Communications into Paytm Payments Services Limited (PPSL). Meanwhile, it is still awaiting online payment aggregator licence even as RBI has barred PPSL onboarding new online merchants.

It’s Raining Loans: The fintech major disbursed 1.32 Cr loans worth INR 16,211 Cr during the quarter ended September 2023, a jump of 44% and 122% YoY, respectively. 

The number of unique borrowers on the platform nearly doubled YoY to 1.18 Cr in Q2 FY24, an addition of 51 Lakh users in the past one year. Overall, the financial services segment contributed INR 571 Cr to the company’s revenue in Q2 FY24, up 64% YoY.

A breakdown of the data revealed that the platform disbursed 1.28 Cr postpaid loans worth INR 9,010 Cr in Q2 FY24, up 44% and 122% YoY, respectively. 

Paytm also processed 2.4 Lakh personal loans worth INR 3,927 Cr during the quarter, with the average ticket size hovering around the INR 1.65 Lakh mark and average tenure at 16 months. 

Paytm Sings The Merchant Song: Merchants appeared to be the centre of Paytm’s universe as the fintech major left no stone unturned to woo small retailers. The number of merchants registered with the fintech major jumped 27% YoY to 3.75 Cr. 

These merchants processed 912 Cr transactions in the quarter ended September 2023, up 59% YoY from 575 Cr in Q2 FY23. At the end of the quarter under review, the number of Paytm payment devices deployed at shop counters stood at 92 Lakh, up from 48 Lakh in Q2 FY23. 

Meanwhile, Paytm disbursed 1.8 Lakh loans to merchants worth INR 3,275 Cr in Q2 FY24, representing a jump of 130% and 171% YoY, respectively. The company said that the average ticket size of merchant loans stood at INR 1.8 Lakh with an average tenure of around 13 months. 

The fintech major also claimed that the repeat rate of merchant loans (proportion of loans by value to merchants who have taken a loan before) soared to 50% during the quarter.

Operational Metrics Continue To See Growth: Paytm’s payments vertical continued to be the growth engine of the fintech major as gross merchandise volume (GMV) zoomed 41% YoY to INR 4.5 Lakh Cr in Q2 FY24. Alongside, total number of transactions on Paytm also saw hefty growth during the quarter, zooming 58% YoY to 1,090 Cr. 

Meanwhile, average monthly transacting users (MTUs) stood at 9.5 Cr in Q2 FY24 as against 8 Cr during the corresponding period last year. 

Overall, revenue from payments business shot up 28% YoY to INR 1,524 Cr in Q2 FY24 compared to INR 1,188 Cr in Q2 FY23. 

What stood out during the quarter ended September 2023 was the improvement in the profitability of payments vertical as net payment margin expanded 60% YoY to INR 707 Cr. The company attributed this to improvements in payment processing margin and the increase in GMV of non-UPI instruments such as EMIs and cards.

“We remain focused on expanding (the) mobile payment acceptance network by enabling merchants with best-in-class product and technology. Paytm offers (the) most comprehensive solution to address (the) needs of (a) wide variety of merchants…,” Paytm said in its earnings release.