Paytm’s GMV Jumps 63%, Losses Up 21% To INR 571 Cr — Key Takeaways From Q2 Results

One97 Communications, the parent company of fintech major Paytm, reported its financial results for the quarter ended September 2022 on Monday (November 7). Here are the key highlights:

Headline Numbers: Paytm’s net loss widened 21% year-on-year (YoY) to INR 571 Cr in Q2 of FY23. Revenue from operations surged 76% to INR 1,914 Cr from INR 1,086 Cr during the corresponding period last year.

Expenses surged 60.4% from INR 1,599.4 Cr in Q2 FY22 to INR 2,561.4 Cr during the quarter under review. Of this, employee benefits accounted for the biggest chunk at INR 944.1 Cr, while marketing expenses contributed INR 327.5 Cr to the total. 

RBI Lens On Paytm Payments Bank: In its quarterly financial report, the fintech major confirmed that it has received the report filed by RBI-mandated IT auditors. Prima facie, Paytm has said that the observations largely revolve around the ‘strengthening of IT outsourcing processes and operational risk management.’

Earlier this year, Paytm was barred from onboarding new customers after RBI flagged some gaps in its technology systems.

The bank plans to respond to the RBI and will engage the central bank to address all such issues. Meanwhile, it is yet to share any timeline on when it would be allowed to onboard customers again. 

ESOPs Weigh Down Numbers: Employee stock options cost the company INR 371 Cr in Q2 FY23, a staggering 1,823% increase from INR 19 Cr during the corresponding period last year. On a quarter-on-quarter (QoQ) basis, ESOP costs grew marginally (or 3%) from INR 359 Cr in Q1 FY23.

Operational Metrics: Paytm’s gross merchandise volume (GMV) during the quarter grew 63% YoY to INR 3.2 Lakh Cr. Alongside, average monthly transacting users (MTU) in Q2 FY23 rose to 79.7 Mn, while the registered merchant base also expanded to 29.5 Mn.

Paytm Enhances Merchant Reach: Paytm said that 4.8 Mn of its payment devices were deployed across the country in Q2 FY23 compared to 1.3 Mn during the corresponding quarter last fiscal year. Additionally, total transaction volume stood at 6.88 Bn in the quarter, up 108% YoY. Of this, merchant transactions at 5.75 Bn in Q2 FY23 accounted for a majority. 

Financial Services Give The Heft: In the quarter, Paytm disbursed 91.92 Lakh loans worth INR 7,313 Cr led largely by increased user adoption. The fintech major claims to have exited Q2 with disbursements in the loan distribution business at an annualised run-rate of about INR 34,000 Cr. 

Paytm Postpaid disbursements stood at INR 4,050 Cr in Q2 FY23, while personal loan disbursements amounted to INR 2,055 Cr during the same period. Driven by strong growth in Paytm’s devices business, merchant loans hovered around the INR 1,208 Cr mark during the quarter.

The average ticket size of personal loans stood at INR 1.1 Lakh, while the same metric for merchant loans stood at INR 1.5 Lakh. 

“Our Q2 FY 2023 results show momentum across our operating and financial metrics. We are pleased to show strong growth in revenues and contribution profit, combined with operating leverage, which has allowed us to show a sharp improvement in EBITDA before ESOP costs,” said Paytm.

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