Paytm Reports Strong Q3 FY 2023 Results, Achieves Operating Profitability Milestone

Paytm's parent company, One97 Communications (OCL), reported their Q3 FY 2023 results on Friday, announcing that they have reached their goal of operating profitability ahead of schedule. The company's EBITDA before ESOP cost was reported at 31 crores, with a margin of 2% of revenue, compared to a margin of 27% the previous year.

Paytm's revenue from operations increased to 2,062 crores, a YoY growth of 42% and a QoQ growth of 8%, driven by increased adoption from consumers and subscription services from merchant partners, as well as sustained growth in loan distribution and commerce.

The revenue from financial services, mainly loan distribution, now accounts for 22% of total revenue, up from 9% in Q3 FY2022.

Paytm's founder and CEO, Vijay Shekhar Sharma, attributed the achievement to the hard work of the company's team and their focus on growth with quality revenue that contributes to the bottom line. Sharma stated that the next key milestone for Paytm is to become a free cash flow generating company.

The company's contribution profit was 1,048 crores in the quarter, with margins consistently improving from 31% in Dec-21 to 51% in December 2022 due to the improved profitability of the payments business and increased mix of high-margin businesses, such as loan distribution. Net payment margin grew to 459 crores, a YoY increase of 120%, on the back of improved profitability in the payments business.

Paytm's loan distribution business also saw significant growth, with 10.5 million loans amounting to 9,958 crores disbursed in the quarter, in partnership with lending partners. The number of unique borrowers who have taken a loan through the Paytm platform increased by 1.4 million in the quarter to 8.1 million as of December 2022, providing the company with potential upsell and lifecycle benefits.

The company's indirect expenses as a percentage of revenue decreased to 49% in Dec-22 from 58% in Dec-21, demonstrating the company's operating leverage. The company's net income stands at 392 crores, an improvement of 50% from 779 crores the previous year.

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