Paytm on path to profitability; Oct loan disbursement up 387% YoY: CEO

Merchant subscriptions driving higher payment volumes, says Vijay Shekhar Sharma

Paytm is on the path to profitability and free cash flow as it scales up its lending business, said Vijay Shekhar Sharma, the digital payments firm’s chief executive officer, in a letter to shareholders.

"We are scaling the lending distribution which can bring financial inclusion to hundreds and millions of people in the country. Due to the huge demand for lending in our country, our low penetration and the compounding nature of the lending journey, we are extremely optimistic about the prospects of our lending business," he said.

The value of loans Paytm disbursed in October grew 387 per cent year-on-year (YoY) to Rs 3,056 crore. The company disbursed 3.4 million loans in October to clock YoY growth of 161 per cent.

Paytm’s lending business stood at an annualised run rate of Rs 37,000 crore in October. Total merchant subscription devices deployed increased to 5.1 million, bolstering the company’s offline payments business.

“Merchant subscriptions is an attractive profit pool for us, driving higher payment volumes, subscription revenues as well as merchant loan distribution,” said the company in its earnings release.

Paytm, in its recently announced Q2 FY23 financials, posted a 76 per cent YoY growth in revenue to Rs 1,914 crore. The company’s losses reduced by 11 per cent on a sequential basis, and its contribution profit surged 224 per cent YoY to Rs 843 crore.

Talking about the company’s growth in the last quarter, Sharma wrote, “After our recent quarterly reports which showed strong operating leverage and reduction in EBITDA losses, we are now excited about the next year of our journey, as we get close to EBITDA profitability and free cash flow generation.”

For October, the total merchant Gross Merchandise Value (GMV) processed through Paytm aggregated to Rs 1.18 trillion ($14 billion), marking a YoY growth of 42 per cent, partly due to the festive season. “In our payments business, we continue to focus on profitable revenue and hence continue to optimize for profitable GMV,” said the company in the release.

Paytm’s loss for the September quarter of FY23 came in at Rs 571.5 crore, up from Rs 473.5 crore in the same period last year.

The company’s user engagement was also at its highest in October, with average monthly transacting users at 84 million, registering a growth of 33 per cent YoY.