The digital payments platform’s revenue, however, shot up 88.5 per cent in Q1 to Rs 1,679.6 crore on a YoY basis.
said the revenue growth was driven by strong monetization in payments, device subscriptions and accelerated adoption of high-margin businesses such as lending.
In addition to 89% YoY revenue growth to Rs 1,680 crore, the company also saw EBITDA (Before ESOP) reduce to Rs 275 crore, an improvement of Rs 93 crore QoQ. As a result, the company’s contribution profit grew 197 per cent YoY to Rs 726 crore, leading to an increase in contribution margin to 43 per cent of revenues in comparison to 35 per cent in Q4FY22.
In a BSE filing, Paytm said it is now firmly on the path towards achieving operating profitability on the back of better cost leverage.
“Net payments margin for the quarter (defined as payments revenue less payment processing cost) has increased to 35 per cent of payments revenue, compared to 17 per cent in Q1FY22 driven by (a) continued growth in device subscription revenues, (b) improved margins in online merchants business, and (c) better negotiations with existing partners leading to reduction in payment processing charges,” it said.
Paytm is confident of achieving operating profitability by September 2023 quarter. Loan disbursals through Paytm saw a 779 per cent YoY growth to Rs 5,554 crore.
Paytm said the revenue in the financial services business was up nearly 4x YoY (increased 61 per cent QoQ) and now accounts for 16 per cent of total revenue (6 per cent in Q1FY22), driven by sourcing and collection revenues in our loan distribution business.
The company’s average monthly transacting user (MTU) stood at 74.8 million for the quarter, growing 49 per cent YoY and 6 per cent QoQ. “Our merchant base has increased to 28.3 million merchants, leveraging our innovative product offerings such as Soundboxes to help in their businesses. We think expansion of our devices business, which has reached a deployed base of 3.8 mn in Q1, will continue to drive higher payment volumes, subscription revenues and merchant loan distribution,” it said in the BSE filing.
On a QoQ basis, Paytm’s revenues grew 9 per cent, driven by new device subscriptions, utility bill payments, ticketing, and loan disbursements.
“We undertook account level rationalization among online merchants to focus on profitable GMV (revenue impact of Rs 29 crore),” it said, adding that payment services are at the core of its business model and support acquisition and retention of customers and merchants in a cost-efficient manner.
Paytm’s commerce and cloud revenues grew 64 per cent YoY, with significant growth in commerce revenues (168 per cent YoY) due to higher ticketing sales on the platform on account of resurgent demand and a seasonally strong quarter (driven by big movie releases) for our entertainment merchants.
The Vijay Shekhar Sharma-led fintech said it is committed to building a profitable company and create shareholder value while driving digitization and inclusive financial access. “Earlier this year, we had shared that we would achieve operating profitability (i.e. EBITDA before ESOP cost) by September 2023, driven by better monetization as well as moderating growth in costs. Q1FY23 results exhibit our strategy is well-in-place, with focused improvement on unit economics, better expense management and increasing mix of higher margin businesses (such as financial services and commerce) steering us on the path to profitability,” it said.
Paytm shares closed the week at Rs 783.65, down 3.20 per cent on Friday.