Friday, July 12, 2024

Paytm’s Payments Services revenue grew 80% Y-o-Y driven by merchant payments, financial services revenues surge 342% Y-o-Y

One97 Communications Limited (OCL) that owns the brand Paytm, India’s leading mobile payments and financial services company, has announced that it is on track to achieve its profitability target by the quarter ending September 2023. The company has achieved strong revenue growth of 77% in FY22 at ₹4,974 Cr through payment and financial services, and a 4x growth in contribution profit YoY, to ₹1,498 Cr in FY 2022.

The revenue of Paytm’s Payment Services (offered to both merchants and consumers) grew faster in Q4 FY22 at 80% Y-o-Y. This can be primarily attributed to the steady growth of user engagement and use cases on the Paytm app, substantial growth in MDR revenue and increase in device subscriptions. Paytm’s user engagement in Q4 FY22 grew 41% Y-o-Y to 70.9 million, while its merchant base jumped to nearly 26.7 million. The company continues to strengthen its offline payment leadership with over 3 million devices deployed across the country which is also boosting adoption of merchant lending, with more than 75% of merchant loans disbursed to merchants with a deployed Paytm device.

Paytm said, “The jump in user engagement has played a massive role in expanding the company’s monetization opportunities, regardless of the payment instruments that customers use on Paytm’s platform. We are also seeing growth across the entire base of merchant payment solutions: (i) QR for payments (typically free), (ii) sound boxes (which generate subscription revenues), (iii) card machines (which generate subscription and MDR revenues), and (iv) Payment Gateway for online merchants (which generates MDR revenues and platform fees). This reflects the strong ecosystem and business model Paytm has built.”

The revenue generated from financial services also surged of 342% Y-o-Y in Q4 FY22,
driven by strong growth in Paytm’s lending business. In FY22, lending through the
Paytm platform jumped to 15.2 million disbursements from 2.6 million in FY 2021,
marking a 478% Y-o-Y increase. In value terms, the total loan disbursements in FY22
amounted to ₹7,623 crore, registering an increase of 441% from ₹1,409 crore in FY21.

The lending business has further accelerated in April 2022 with an annualized disbursement run-rate of approximately Rs. 20,000 crores The company continues to improve its EBITDA (before ESOP cost) loss despite making investments in user growth, merchant device deployment and technology. As a result of increasing operating leverage in the business, the company expects to show accelerated reduction in EBITDA losses, towards its goal to achieve EBITDA (excl esops) profitability by September 23 quarter

Paytm said, “We have registered an impressive revenue growth in the last financial
year, driven by increased adoption of our services by both consumers and merchants. This coupled with acceleration in reduction of EBITDA losses (Before ESOPs) makes us confident about our profitability plans. We would also like to reiterate that our ESOPs are a non-cash item and don’t involve any actual cash outlay from the company.”

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