 "Vijay Shekhar Sharma, Founder, Chairman & CEO - One97 Communications (Paytm), BFSI Summit")
One97 Communications, the parent company of fintech major Paytm, saw its net loss narrow down to Rs 221.7 crore on a consolidated basis in the third quarter of financial year 2024 (Q3FY24) from a loss of Rs 392 crore in the third quarter of FY23.
On a sequential basis too, the company trimmed its loss from Rs 291.7 crore in Q2 FY24.
The Noida-based fintech firm’s revenue from operations rose 38.2 per cent to Rs 2,859.5 crore year-on-year. On a quarter-on-quarter basis, revenue increased 13 per cent from Rs 2,518.6 crore in Q2.
Paytm earned Rs 1,730 crore in revenue from its payment service business in Q3FY24, up 13.5 per cent from Rs 1,524 crore in Q2FY24 on the back of an increase in the gross merchandise value (GMV) and a rise in subscription revenues. On a Y-o-Y basis, revenue from payment services increased 45 per cent from Rs 1,197 crore in Q3FY23. The company’s payments profitability rose 63 per cent Y-o-Y to Rs 748 crore.
Paytm's expenses have increased 9.5 per cent Q-o-Q to Rs 3,216.3 crore in Q3FY24 from Rs 2,936.7 crore in Q2FY24. On a Y-o-Y basis, expenses rose 27.5 per cent from Rs 2,522.3 crore.
The fintech company has seen its marketing and promotional expenses rise steadily in Q3FY24, after it cut down on such expenses in the previous quarter. It spent Rs 275.2 crore in Q3FY24, an eight per cent increase from Rs 252.8 crore in Q2FY24. It had earlier spent Rs 265.3 crore in Q1FY24 on these expenses.
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“We see operating leverage in marketing costs even as we continue to grow our users and merchants. We do expect marketing spends to vary across the quarters due to seasonal factors such as IPL, festive season etc. As a result of these measures, we expect our indirect cost to grow at a slower pace in the coming quarters,” it said in its earnings release.
Impact of RBI Mandate on Loan Distribution
Paytm has recorded a decline in the value and volume of loans that it disbursed Q-o-Q. In Q3FY24, the company disbursed loans amounting to Rs 15,535 crore, a four per cent decline from Rs 16,211 that it disbursed in Q2FY24.
On the volume front, it disbursed a total of 11.5 million loans, down from 13.2 million during the same period.
Meanwhile, in the quarter ended December, the company recorded a decline in the disbursal of its ‘buy now, pay later’ (BNPL) product called Paytm Postpaid.
The company disbursed postpaid loans amounting to Rs 7,496 crore in Q3FY24, 16.8 per cent decline from Rs 9,010 crore in Q2FY24. The number of such loans disbursed during the same time reduced from 12.8 million loans to 11 million during the same time.
Paytm had announced its decision to reduce the disbursement of small-ticket size loans, specifically those less than Rs 50,000, in the wake of the Reserve Bank of India (RBI) tightening norms for unsecured personal loans last month.
“Combination of this has resulted in 50-60% lower Postpaid Loan distribution for the month of December, which will be further calibrated in Q4 FY 2024 and beyond as we will continue to watch for macro uncertainty and regulatory guidance on loans less than Rs 50,000,” the company said.
The fintech major had previously said that it will shift its focus to disbursing higher-ticket personal and merchant loans to lower-risk and highly credit-worthy customers, in collaboration with large banks and non-banking financial companies (NBFCs).
That said, the company has seen steady growth in its merchant loans business. It disbursed merchant loans worth Rs 3,579 crore in Q3FY24, up 9.2 per cent from Rs 3,275 crore in Q2FY24. On a Y-o-Y basis, merchant loan disbursements have expanded 96 per cent, from Rs 1,825 crore in Q3FY23.
The number of merchant loans disbursed has remained constant at 0.18 million each for the past two quarters.
“Average ticket size has increased to Rs 200,000 from Rs 150,000 a year back with average tenure of 13 months versus 12 months a year back,” the company added.
The company expects to add around four lending partners by Q1FY25, up from its current two, to accelerate its high-ticket size loans’ business.
That said, Paytm deployed 1.4 million merchant devices which includes soundboxes, and point-of-sale (POS) devices in Q3FY24. The company has a base of 10.6 million merchant subscribers in Q3FY24, up from 0.92 million in the previous quarter. It earns in the range of Rs 100 to Rs 500 per month per device which it has deployed in the market.
