Paytm Q2 Results: Loss Narrows To Rs 292 Crore, Revenue Zooms 32% Led By Merchant Subscriptions, GMV

Fintech giant Paytm has reported its Q2 results and has been broadly strong with net loss narrowing to nearly half, and double-digit growth across verticals. While merchant subscriptions revenue and GMV have scaled up sharply, and loan distribution rose 122% YoY. In Q2FY24, Paytm's net loss narrowed to Rs 292 crore as against a loss of Rs 571 crore in Q2FY23.

In the previous quarter, Paytm's net loss stood at Rs 358 crore.

Meanwhile, in Q2FY24, the company's revenue from operations climbed by 32% YoY to Rs 2,519 crore driven by increase in merchant subscription revenues, an increase in GMV and growth in disbursements of loans through our platform.

Also, contribution profit zoomed by 69% YoY to Rs 1,426 crore in Q2FY24, while contribution margin increased to 57%, an expansion of 13 per cent point YoY, due to an increase in net payment margin and growth in loan distribution business.

EBITDA before ESOP witnessed a robust upside as well and stood at Rs 153 crore. Margin improved to 6%, an expansion of 15 per cent points YoY, on account of an increase in contribution margin and operating leverage.

As of September 30, 2023, the company's merchant subscriptions including devices stood at 92 lakh, up by a whopping 91% YoY. Paytm continued to maintain leadership in payment monetization, and it also added 44 Lakh and 14 Lakh new subscriptions in the last year and quarter, respectively.

Paytm said, "For Q2 FY 2024, we continued our momentum with 32% YoY revenue growth, despite some of the revenues getting pushed to Q3 FY 2024. In this financial year, online sales for the festive season will be captured in Q3, whereas in the previous financial year, it was largely in Q2. Revenue growth was led by an increase in GMV, merchant subscription revenues, and growth of loans distributed through our platform. There are no UPI incentives booked during the quarter."

It added net payment margin has gone up 60% YoY to ₹707 crore due to an increase in payment processing margin and an increase in merchant subscription revenues. The payment Processing Margin is at the higher end of the 7-9bps range
due to a) increase in GMV of non-UPI instruments, like Postpaid, EMI and cards, and b) improvements in payment processing margin on these non-UPI instruments.

Further, by the end of Q2FY24, the company's lending partners have distributed loans through its platform to 1.18 crore unique Paytm consumers and merchants. Paytm's active user base continues to present significant upsell opportunities. In the quarter, the loan distributions climbed by a massive 122% YoY to Rs 16,211 crore.

The number of Personal Loans distributed grew 27% YoY, while the value of Personal Loans grew 91% YoY to Rs 3,927 crore. Average ticket size is Rs 165,000 with average tenure of ~16 months.

Additionally, Paytm highlighted that its payment business continues to scale led by an increase in GMV and higher subscription revenue. In Q2 FY 2024, payments revenue grew by 28% YoY to ₹1,524 crore, despite some of the revenues getting pushed to Q3 FY 2024. In this financial year, online sales for the festive season will be captured in Q3, whereas in the previous financial year, it was largely in Q2.

Also, in Q2FY24, under the financial services and other businesses, Paytm's revenue in the segment grew 64% YoY to ₹571 crore. It said, "As communicated earlier, in view of economic uncertainties, we have worked with our partners for more stringent credit criteria, which is resulting in better portfolio outcome. While Postpaid ECL came down in the previous 2 quarters, Merchant Loan ECL has come down in this quarter. Improved portfolio performance should drive increase in take rate."

While the number of Postpaid Loans distributed grew 44% YoY, while the value of Postpaid Loans grew 122% YoY. Its large Postpaid customer base also provides cross-sell opportunities for Personal Loans and Credit Cards.