10 highlights from Paytm’s Q2FY23 results — Fintech giant shows signs of profitability with stronger monetisation

Fintech giant Paytm recently announced its Q2FY23 results and posted revenue growth of 76% with strong momentum in payments and financial services. From a sharp improvement in reported EBITDA before ESOP costs of 15% QoQ and a reduction in the net loss by 11%, the company has seen a growth in revenues and contribution profit, combined with operating leverage.

Here’s all you need to know about Paytm’s latest financial results:

1. Revenue surges by 76% — The company’s total revenue in Q2 FY 2023 was ₹1,914 up by 76% YoY with strong growth in lending, surging device merchant portfolio driven by accelerated deployments, and momentum in commerce and cloud with growth in advertising and resumption of travel and ticketing volumes.

2. Sharp improvement in EBITDA (before ESOP costs) by 61% YoY — As a result of continued focus on improving monetization capabilities, widening contribution margin as well as significant operating leverage, EBITDA before ESOP cost stood at (₹166) Cr, improving 61% YoY.

3. Payments Business reports 56% YoY revenue growth and net payments margin grows over 400% — Payments is a core business for Paytm and its revenue from payment services to Consumers was ₹549 Cr, increasing 55% YoY. Meanwhile, revenue from payment services to merchants was ₹624 Cr, increasing 56% YoY. “Driven by improved monetization and continued focus on reduction in payment processing charges, our net payments margin stood at ₹443 Cr, increasing 15% QoQ and was up 428% YoY,” said the company in its earnings release.

4. Rapidly growing financial services now account for 18% of total revenue — One of the most talked about businesses of Paytm is its fast-growing loan distribution business. Revenue from the Financial Services business was ₹349 Cr, up 293% YoY (increased 29% QoQ), and now accounts for 18% of total revenue (versus 8% in Q2 FY 2022), driven by sourcing and collection revenues in our loan distribution business.

5. Commerce & Cloud revenues grew 55% YoY — In its commerce and cloud services, revenue was up by 55% YoY and 14% QoQ to ₹377 Cr. While commerce revenue grew 49% YoY due to higher ticketing sales. Cloud revenues were up 58% YoY. Advertising revenues are recovering healthily while Credit card revenues continue to rapidly scale as well.

6. Contribution profit for the quarter stood at ₹843 Cr, an increase of 224% YoY and 16% QoQ — The company, which has sharpened its focus on profitability, said that this resulted in the expansion of contribution margins to 44% (as % of revenue) from 24% in Q2 FY 2022, on account of (a) Incremental revenue growth coming at higher incremental

margins; (b) improvement in contribution profit across businesses; (c) increasing mix of high-margin businesses such as Financial Services.

7. Postpaid Loans disbursed grew 220% YoY in Q2 FY 2023 — Additionally, the value of Postpaid Loans grew 449% YoY to ₹4,050 Cr. The signed-up user base for Paytm Postpaid has crossed 6 mn as of Q2 FY 2023, with acceptance across more than 15 mn online and offline merchants. The company said that Postpaid continues to have significant cross-sell opportunities in Personal Loans and Credit cards.

8. Personal Loans disbursed grew 555% YoY in Q2 FY 2023, while the value of Personal Loans grew 736% YoY to ₹2,055 Cr — The company also said that average ticket size increased by 7% QoQ and is currently at approximately ₹110,000 with an average tenure of 14 months. Cross-sell from Postpaid continues to see traction with over 40% of personal loans disbursed in Q2 FY 2023 being to existing Paytm Postpaid users.

9. Merchant Loans disbursed grew 254% YoY in Q2 FY 2023, while the value of Merchant Loans grew 342% YoY to ₹1,208 Cr — Even for merchant loans, average ticket size continues to remain at approximately ₹150,000 with an average tenure of 12 months. Repeat loans continue to see a healthy take up with 50% of merchants have taken a loan more than once. More than 85% of the value disbursed this quarter was to merchants with a deployed Paytm payment device.

10. Indirect Expenses remained flat — The company said that indirect expenses (excluding ESOP cost) reduced from 63% of revenues in Q2 FY 2022 to 53% of revenues in Q2 FY 2023 and in absolute terms have remained flat QoQ at 1,010 Cr, despite continued investments to support the growth of our platform and businesses.

 

 

 

 

(Consumer connect initiative)