Paytm Q3: Loss Narrows 43% YoY To INR 222 Cr, Revenue Jumps 38%

Fintech major Paytm’s net loss narrowed over 43% to INR 222 Cr in the December quarter (Q3) of the financial year 2023-24 (FY24) from INR 392 Cr reported in the year-ago period. 

Largely helped by a sharp jump in revenue from payment services to merchants, Paytm’s operating revenue surged 38% to INR 2,850 Cr in the reported quarter from INR 2,062 in Q3 FY23.

On a quarter-on-quarter basis, Paytm’s loss narrowed almost 24% from INR 291.7 Cr reported in the prior quarter – Q2 FY24. Sales revenue increased 13% from INR 2,518.6 Cr posted in the preceding September quarter.

Paytm said its revenue growth was driven by acceleration in gross merchandise value (GMV) growth, higher device addition, and growth in financial services business. This was partly boosted by the timing of the festive seasons as online sales for the festive season were in Q3 this year, said the company.

Paytm’s adjusted EBITDA, or EBITDA before ESOP costs, improved by INR 188 Cr year-on-year (YoY) to INR 219 Cr in the quarter under review. In the corresponding period of the last fiscal, Paytm had turned EBITDA positive sans the ESOP cost.

Paytm Q3 Growth Story

Payments and financial services continued to contribute the biggest portion to the fintech giant’s overall sales revenue. Revenue from the segment jumped 43% to INR 2,285 Cr in Q3 FY23 from INR 1,599 in the corresponding period of last fiscal.

In that, payment services to merchants surged 69% YoY to INR 1,081 Cr while payment services to consumers only saw a 17% increase YoY to INR 598 Cr.

Paytm’s revenue from financial services and others grew 36% YoY to INR 607 Cr but it was a mere 6% growth QoQ. 

Paytm said that the financial services business take rate has improved QoQ due to higher proportion of merchant loans and personal loans distribution and increasing revenue from insurance distribution business. 

 Meanwhile, Paytm’s loan business also continued to witness growth on a YoY basis. The startup disbursed loans amounting to INR 15,535 Cr during the quarter, up 56% YoY. However, it declined over 4% on a QoQ basis, largely because of the company’s decision to scale down its postpaid loans business.

Last month, Paytm announced that it was scaling down its small-ticket loans business, that is loans of less than INR 50K. These loans predominantly comprised the postpaid loan business. Paytwhile said it would compensate for this by expanding high-ticket personal and merchant loans disbursals.

As a result of this decision, the value of postpaid loans disbursed by Paytm fell 17% QoQ to INR 7,496 Cr. The company said it witnessed 50-60% lower postpaid loan distribution in the month of December, which would be further calibrated in Q4 FY24 and beyond.

Meanwhile, the value of disbursed merchant loans grew 9.3% QoQ to INR 3,579 Cr while for that of personal loans increased 13.6% QoQ.

Paytm’s loan growth has remained robust over the last one year across the three categories it operates in, led by merchant loans.

Paytm’s Spending In Q3

The fintech major’s total expenses increased 27.5% to INR 3,216.3 Cr in Q3 FY24 from INR 2,522.3 Cr a year ago. Sequentially, the company’s total spending saw a 9.5% increase from INR 2,936.7 Cr. 

Interestingly, Paytm’s employee benefit expenses declined marginally QoQ to INR 1,187.2 Cr. 

Paytm, which laid off hundreds of employees last month, said in its Q3 FY24 earnings statement that it expects significant operating leverage from employee costs going ahead with AI delivering significant efficiencies by automating a large spectrum of workflows.

However, Paytm’s employee costs jumped 25.5% YoY during the quarter under review. The company attributed this increase to the rise in sales employee cost, which surged 50% YoY.

Paytm also slashed its marketing cost by 33% to INR 169 Cr in Q3 FY24 from INR 252.8 Cr in the previous quarter. 

For Q3 FY24, indirect expenses (excluding ESOP cost) increased 28% YoY to INR 1,301 Cr, said Paytm. Its indirect expenses as a percentage of revenues declined to 46% in the reported quarter from 51% in Q2 FY24. 

“While there can be quarterly volatility, we expect indirect expenses as a percent of revenues to continue declining over time, despite investment for growth,” the company said.

Paytm’s cash balance increased to INR 8,901 Cr at the end of December 2023 from INR 8,754 Cr at the end of September 2023. 

The fintech major also said that it would incorporate new wholly owned subsidiaries in GIFT City and build an AI-driven cross border remittance and payments technology system, which will deliver cost-effective solutions at a global scale. 

Ahead of its Q3 earnings, shares of Paytm ended Friday’s (January 19) close 2.5% lower at INR 773.9 on the BSE.

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