According to a report by Dutch payments consultancy Flagship Advisory Partners, India’s QR and mobile payments pioneer Paytm is one of the few fintech companies globally to report the highest growth in gross profit while also reining in expenses.
The report pointed out that Paytm’s gross profit saw an impressive growth of over 200% between 2021 and 2022, while its operating expenses grew by only 60%.
Paytm was one of the few global companies to report gross profit growth outpacing operating expense growth. This demonstrates Paytm’s ability to rapidly scale its business while optimizing resources.
Paytm founder and CEO Vijay Shekhar Sharma also reacted to the report. He recently said in the company’s Q3 earnings call that the focus on monetization over the last two years has allowed Paytm to continue investing in growth while improving profitability, adding that the trend of generating consistent profit continues. Will remain
The company had said it would continue to invest in areas where it sees attractive growth and monetization opportunities. This includes investing in marketing for user acquisition and investing in sales teams to grow the merchant base and subscription services.
Paytm’s indirect expenses (excluding ESOP cost) have remained stable for the last three quarters and were 1,016 crore in the quarter, growing 20% YoY. Indirect expenses as a percentage of revenue decreased to 49% in the third quarter compared to 59% of revenue a year ago.
Meanwhile, the company’s revenue increased by 42% in Q3 2,062 crore despite no UPI incentive being recorded during the quarter.
As Paytm maintains its focus on achieving growth with quality revenue contributing to profitability, it reported operating profit for the first time in the third quarter that was three quarters ahead of guidance. Paytm’s EBITDA before ESOP cost was 31 crore, improvement of 424 crores year-on-year.
Sharma had said that this milestone was achieved without missing out on growth opportunities and keeping all compliances as well as risk factors under strict vigil.
According to Paytm’s operating performance update for Q4 FY23, its average monthly transacting users (MTU) grew by 27% to 90 million during the quarter. It consolidated its leadership in offline payments with 6.8 million devices deployed, an increase of 1.0 million in the quarter.
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