Paytm Q2 revenue up 76%, loss expands to Rs 571.5 crore

Its revenue from operations jumped 76% in the September-quarter to Rs 1,914 crore, mainly on account of a surge in growth of loan disbursals. The growth in operative revenue was largely driven by ‘increase in merchant subscription revenues, growth in bill payments due to growing MTU (monthly transacting users) and growth in disbursements of loans through our platform,” the Noida-based company said in a stock exchange filing late on Monday night.

Paytm, which listed nearly a year ago, is still trading 70% below its IPO (initial public offering) issue price of Rs 2,150 on the bourses. Its one-year lock-in period for ore-IPO investors is also near its deadline along with new-age peers like PB Fintech, parent of Policybazaar, Nykaa. On Monday, the company’s stock ended trading at Rs 651.95, up 0.27% from its previous close.

In its filing, Paytm also said it doesn’t have a firm timeline on when it expects the banking regulator to allow it from opening new payments bank accounts. “The bank management is in the process of responding back to the RBI and will wait for further discussions / directions from the regulator,” it said in the earnings presentation. “The bank management continues to accord highest focus and sustained prioritization of its resources towards solving all concerns, and ensuring that it is fully compliant in letter and spirit.” Paytm added that the RBI ban doesn’t have any material impact on the company’s overall business.

It also noted in the stock exchange filing that subsequent to the half yearly review period, Paytm Payments Bank has received the IT audit report from RBI on October 25. “The (Paytm Payments) Bank is in the process of evaluating the impact of this report to respond to the Reserve Bank of India which is due on November 15, 2022. However, management is reasonably certain that there will not be any material financial impact of such report on the financial results of the bank for the quarter and half year ended September 30, 2022.”

The company said that its net payment margin, which is payments revenues and other operating revenues minus payment processing cost, stood at Rs 443 crore for the September-quarter, more than five-fold high from last year. This, the company said, was driven by “improved monetization and continued focus on reduction in payment processing charges”.

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Paytm’s lending vertical saw revenue from the financial services business grow 293% year-on-year to Rs 349 crore, with the business now accounting for 18% of the total revenue, compared to 8% in September-quarter of FY22, driven by sourcing and collection revenues. In Q2 of FY23, Paytm disbursed 9.2 million loans, up 224% YoY, amounting to Rs 7,313 crore, marking an increase of 482% YoY.

In addition to the topline growth, the company also saw its EBITDA (Before ESOP) cost reduce to Rs 166 crore, an improvement of Rs 109 crore compared to the previous quarter. As a result, the company’s contribution profit grew 224% YoY to Rs 843 crore, leading to an increase in contribution margin to 44% of revenues. The company reiterated that its on track to achieve EBITDA (before ESOP) cost profitability by quarter ending September 2023.