Profit ‘Karo’ On Paytm’s Mind. Here Are The Key Takeaways From The Fintech’s Q4 Results

Fintech juggernaut Paytm’s parent company, One97 Communications, released its annual and quarterly financial results for the fourth quarter (Q4) of the financial year 2022-23 (FY23) on Friday (May 5). 

Here are the key highlights:

Paytm’s Positive Q4 Numbers: The fintech major narrowed its Q4 FY23 net loss by more than three-fourths, or 78%, on a yearly basis, to INR 167.5 Cr. The cherry on the cake was the operating revenue, which soared 51% YoY to INR 2,334.5 Cr in Q4 FY23. 

The growth was largely driven by its digital payments vertical and lending business, which scaled up heavily during the quarter.

The only dampener seemed to be a total expenditure, which rose 10% YoY to INR 2,630.5 Cr in the quarter that ended March 2023, largely due to employee benefit expenses. 

FY23 Headline Numbers: Notwithstanding the strides made by Paytm in Q4, losses still seemed to be the glaring aspect of the fintech’s financials in FY23, which, settled at INR 1,776.5 Cr in the full fiscal year FY23. However, operating revenue zoomed 61% on a yearly basis to INR 7,990.3 Cr in FY23. 

The startup’s cash balance stood at INR 8,275 Cr at the end of March 2023, compared to INR 9,271 Cr a year ago.

Paytm Clocks Another ‘EBITDA Positive’ Quarter: For the second consecutive quarter, the fintech giant reported an EBITDA profit, before ESOP costs.

EBITDA, excluding ESOP costs, stood at INR 101 Cr in Q4 FY23, while employee stock options incurred an expenditure of INR 363 Cr in Q4. In FY23, however, the EBITDA loss, before ESOP costs, improved to INR 176 Cr, while ESOP expenses soared 80% YoY to INR 1,456 Cr in the year ended March 2023.

Still Under RBI’s Watch: The fintech major continues to await the issuance of payments aggregator licence by the Reserve Bank of India (RBI).

In its latest update, Paytm said that the central bank has allowed its Paytm Payments Services Limited (PPSL) to operate as a payment aggregator until it receives authorisation from the Union government on the past investment from One97 Communications into PPSL, as per the existent FDI norms.

Subsequently, PPSL will have fifteen days to submit its application for the PA licence on the receipt of approval from the Centre. In the event of an ‘adverse decision’, the government will inform its decision to the RBI.

In November last year, the RBI refused to grant a PA licence to a listed fintech unicorn and barred Paytm from onboarding new online merchants. While noting that this embargo had no material impact on its business and revenues, the Noida-based company said that it has been allowed to continue with its online payment aggregation business for existing partners.

In a separate case related to its payments bank licence, the fintech giant said that it has already completed a significant portion of various recommendations suggested by the RBI, as part of an IT review, and has already submitted a report for validation.

Operational Metrics See An Uptick: For Paytm, the numbers in Q4 FY23 were led by the digital payments vertical, which saw growth across all key operational metrics. Average monthly transacting users (MTU) grew 27% YoY to 9 Cr in Q4 FY23, while gross merchandise value (GMV) zoomed 40% yearly to INR 3.63 Lakh Cr during the same period.

Merchants Embrace Paytm: 68 Lakh merchants opted for subscriptions for payment devices, such as Soundbox and point of sale (POS), at the end of March 2023, up 134% YoY. The number of merchants registered on the platform rose sharply by 25% YoY to 3.35 Cr at the end of FY23, while the number of merchant transactions settled around the 685 Cr mark. 

Lending Business Scales Up: In Q4 FY23, Paytm disbursed 1.19 Cr loans worth INR 12,554 Cr on its platform. While the number of loans jumped 82% YoY, the value of loans saw a massive leap of 253% YoY in the quarter. 

In total, the platform added 49 Lakh unique borrowers in FY23, taking the total number of users, availing loans, to 95 Lakhs. 

Merchant loans worth INR 2,313 Cr were disbursed via Paytm in Q4 FY23 and personal loans totalling INR 3,447 Cr were distributed in the quarter under review. 

The average ticket size of personal loans stood at INR 1.3 Lakh, with an average tenure of 15 months, while the average ticket size of merchant loans hovered around the INR 1.7 Lakh mark, with an average tenure size of 13 months.

It also activated 1.4 Lakh new co-branded credit cards in the quarter that ended March 2023, taking the total tally to 5.9 Lakh activated cards.

UPI Incentives Trickle In: Months after the Centre announced an INR 2,600 Cr initiative to spur digital payments systems, the fintech giant received an incentive of INR 49 Cr for Q4. However, the total UPI incentive for FY23 stood at INR 182 Cr.

Share Buyback: In its quarterly financial report, Paytm said that it spent INR 850 Cr to buy back 1.56 Cr shares, at an average purchase price of INR 545 per share. The company also informed the bourses that it purchased 15 Lakh shares for INR 68 Cr in Q3 FY23 and followed it up by spending INR 782 Cr cash to buy 1.41 Cr shares. 

At the end of March 2022, the fintech juggernaut’s outstanding share count stood at 63.4 Cr, down from 64.9 Cr before the buy-back. 

“As we step into the new fiscal year of 2024, we are excited by the long-term potential for revenue growth and profitability across payment and lending businesses. The growth of UPI and other mobile payment methods present a wealth of untapped opportunities,” said the company in a statement.