Paytm swings to ₹930 crore profit in Q2 on boost from one-time gain
Aided by an one-time exceptional gain of ₹ 1,345 crore from sale of entertainment ticketing business, One97 Communications Ltd (OCL), which owns the brand Paytm, on Tuesday reported a consolidated net profit of ₹930 crore for the second quarter ended September 30, 2024.
This is against a net loss of ₹292 crore recorded in the same quarter last fiscal. In the June 2024 quarter, Paytm had reported a net loss of ₹840 crore.
Revenue from operations for the quarter under review increased 11 percent sequentially to ₹ 1,660 crore as against ₹1,501 crore in the June 2024 quarter.
For the quarter under review, Paytm reported a negative EBITDA of ₹404 crore, marking an improvement of ₹388 crore compared to the previous quarter. The company also posted an EBITDA before ESOPs of negative ₹186 crore, reflecting a quarter-on-quarter improvement of ₹359 crore. Paytm stated, “We are committed to achieving EBITDA before ESOP profitability by Q4 FY25.”
The company is confident that its ongoing focus on payments and the distribution of financial services will fuel sustained, profitable growth. This optimism is reflected in its financial performance, with revenue from its payments business reaching ₹981 crore, a 9 per cent increase quarter-on-quarter, and revenue from financial services rising to ₹376 crore, up 34 per cent QoQ.
Over the next quarters, the company has said that its key focus will include being a compliance-first company, continuing merchant payment innovations and driving customer acquisition, increasing high margin financial services revenue by expanding financial services partners, and use of Artificial Intelligence to reduce costs.
DLG Model for Merchant Loans
Paytm has also announced that it will start with DLGs (Default Loss Guarantees) on distribution of merchant loans. “There is increased interest and comfort from existing as well as new lenders to expand the partnership due to better asset quality trends and higher demand from our merchants. Following the regulatory framework, and the emerging market practice, we see increased willingness from lenders to partner and allocate more capital in the Default Loss Guarantee (DLG) model. DLG model will help to increase disbursements with the existing partners and expand partnership with new lenders for the loan distribution,” said the company statement.
Paytm has taken an approval from its Board for a partner providing DLG of ₹225 Crore over a period of time.
Furthermore, the company has a cash balance of ₹9,999 crore as of quarter ended September 2024, as compared to ₹8,108 crore as of quarter ended June 2024.
On Tuesday, post the announcement of results, Paytm shares were down 5.3 percent at ₹687.40 in forenoon at the Bombay Stock Exchange.
Paytm Founder & CEO Vijay Shekhar Sharma had at recent AGM of the company said that it was changing tack to commit itself to focus on achieving Profit After Tax (PAT) profitability and moving away from its earlier focus of EBITDA before ESOP as a benchmark.
“My board members advised me to shift the focus from EBITDA before ESOP as a benchmark to PAT (Profit After Tax). We recognise that EBITDA before ESOP, due to its large ESOP charge, offers only a partial picture of our financial health. Our commitment is now to prioritise PAT, reflecting our drive towards true profitability,” Sharma said.
Sharma had said that the company will prioritise its core payments business and cross-sell financial services as it aims to achieve profitability in the near future.
“With commitment to the core payments business, we aim to deliver PAT profitability soon,” Sharma had then said.