Paytm's next target is profitability, says CEO Vijay Shekhar Sharma

After One97Communications, the parent company of fintech major Paytm, managed to narrow its losses in the fourth quarter of FY23, its chief executive officer (CEO) Vijay Shekhar Sharma said the company’s next objective is profitability.

“I am very happy to announce our second quarter of EBITDA (earnings before interest, taxes, depreciation, and amortisation) (before ESOP cost) profitability. Our next milestone is to make Paytm cash flow positive in the near future,” Sharma wrote in a letter to shareholders.

He added, “This has been possible by disciplined resource allocation and focusing on what has become our core revenue and growth driver — the payments and financial services distribution business.”

The fintech giant, in its Q4 results for FY23, managed to narrow its losses to Rs 168 crore. This compares to losses of Rs 392 crore a quarter ago and Rs 761 crore in the year-ago period.

Revenues of the firm also surged almost 52 per cent year-on-year (YoY) to Rs 2,335 crore in Q4, up from Rs 1,541 crore. This was largely driven by growth in the company’s payments and loan distribution business, coupled with a rise in gross merchandise value (GMV). Also, higher revenue from merchant subscriptions contributed to the growth.

Paytm continued to witness sustained growth in GMV during Q4 — its GMV stood at Rs 3.62 trillion, an increase of 40 per cent YoY. Its loan distribution business continued to scale as well, in partnership with the firm’s lending partners.

Average monthly transacting users (MTU) for Q4 grew 27 per cent YoY to 90 million. This comes as adoption of mobile payments by consumers and merchants continues.

Subscription services for payment devices, such as Soundbox and POS machine, also witnessed strong adoption.

Around 6.8 million merchants paid for subscriptions as of March 2023. This is more than double of 2.9 million merchants in March 2022.

Sharma emphasised that Paytm’s in-house technology for risk management and controls has become a significant competitive advantage for the payments major. The company will “continue to invest in this area as a key focus area.”

In Q4, across the company’s three product offerings — Paytm Postpaid, Personal Loans, and Merchant Loans — loans amounting to Rs 12,554 crore were distributed through the Paytm platform. As of March 2023, 9.5 million borrowers have taken loans through the platform.

“With low penetration rates currently for each of our loan distribution products, we see a long runway for growth in this business,” the company said.