Paytm’s focus on financial services drives Q3 revenue growth and narrowing loss

Digital payments giant Paytm reported encouraging financial results for Q3FY24, showcasing a 38% surge in consolidated revenue to ₹2,850.5 crore, an increase from ₹2,062.2 crore in the same period last year. While Paytm continues to face losses, the consolidated net loss narrowed to ₹221 crore, compared to ₹392 crore in the previous financial year.

Earlier, in the second quarter of fiscal year 2023-24 (Q2FY24), Paytm recorded a consolidated revenue from operations of ₹2,519 crore, marking a 32% growth compared to ₹1,914 crore in the year-ago period. The company posted a consolidated net loss of ₹292 crore during Q2FY24, a 49% reduction from ₹572 crore reported in the corresponding period of FY23. Despite the losses, Paytm demonstrated a positive trajectory with a 122% year-on-year increase in loans disbursed, amounting to ₹16,211 crore.

The payment business emerged as a key contributor to Paytm’s revenue in Q3FY24, generating a noteworthy ₹1,730 crore, reflecting a 45% year-on-year growth. The surge was attributed to heightened gross merchandise value (GMV) and increased subscription revenue. The net payment margin witnessed a remarkable improvement, soaring by 63% to ₹748 crore in Q3FY24.

In terms of loans disbursed, Paytm reported a total of ₹15,535 crore for the quarter, demonstrating a slight dip from ₹16,211 crore in the preceding September quarter. The company’s focus on financial services, particularly in the loan segment, played an important role in contributing to the positive financial results.

Paytm’s initiative to buy back equity shares worth ₹850 crore, initiated in December 2022 and completed by February 2023, showed the company’s commitment to optimise its capital structure. The buyback, totaling ₹849.8 crore, resulted in a reduction of equity share capital and appropriate adjustments in securities premium accounts.

Despite facing losses since its public listing in November 2021, Paytm’s Q3FY24 results indicate a positive trajectory in revenue growth, showing successful efforts in both the payment business and financial services segment. Investors and industry analysts are closely monitoring Paytm’s journey, with expectations of achieving EBITDA breakeven in 2025 and a 20% EBITDA margin by FY28, as projected by international brokerage UBS.