India’s leading mobile payments and financial services provider Paytm on Friday reported fourth quarter revenue that beat analysts’ estimates. Company’s consolidated revenue from operations grew by 51% 2,334 crore in Q4FY2023, compared to consensus estimates of Rs. 2,305 crores.
The company’s operating profit as measured by EBITDA before ESOP cost was 234 crore in Q4 beating analyst estimates 144 crores. For the full financial year, the company 7,990 crore, a growth of 61% YoY.
Paytm’s EBITDA before ESOP during Q4, excluding UPI incentives from previous quarters, was 101 crore as against ( 368) crore in Q4 FY2022.
Paytm’s payments revenue grew by 41% 1,467 crore in Q4FY23, a growth of 28% in payments revenue excluding UPI incentives from prior quarters. The company’s payment profitability improved and net payment margin increased to reach 158% in the fourth quarter of FY2023. 687 crores. In FY23, Net Pay Margin grew by an impressive 2.9X 1,970 crore, demonstrating the profitability of the payments business, despite a higher share of UPI.
Paytm achieved the operating profitability milestone in the third quarter ahead of its September 2024 guidance due to increased pace of monetization, better cost management and higher operating leverage. Paytm’s EBITDA before ESOP cost, excluding UPI incentives, grew in Q4 101 crore, a significant improvement from last year’s Q4 figure ( 368) cr.
Paytm’s contribution margin stood at 55%, driven by continued improvement in payments profitability and a growing mix of higher-margin businesses such as credit distribution. Contribution profit margin increased from 30% in FY22 to 49% in FY23 of revenue 3,900 crore, up 160% YoY. Excluding the UPI incentives of the previous quarters, the same margin increased to 52% from 35% in Q4FY22.
Paytm’s user engagement on the platform continues to grow, with the average monthly transaction user (MTU) growing by 27% YoY to 90 million for Q4FY23, indicating increased adoption of digital payments by consumers and merchants in India. The company’s Gross Merchandise Value (GMV) grew by 55% YoY to reach 13.2 lakh crore for FY23.
Paytm’s loan distribution business continues to grow in partnership with leading lenders, with total number of loans growing to 12 million in Q4 FY2023, up 82%, and total value of loans 12,554 crore, registering a growth of 253% YoY.
Paytm’s subscription revenue continues to grow, with 6.8 million merchants paying for device subscriptions, almost doubling its year-on-year growth from 3.9 million. The company’s focus on creating additional payment monetization is paying off, and it expects to continue the momentum of growth and profitability across its diversified businesses in the next fiscal year.
Paytm has made significant investments in improving sales, manpower and technology platforms, and it is paying off in the form of strong financial performance. The company’s efforts to improve payments profitability are bearing fruit, with net payment margins expanding by a substantial margin. The loan disbursement business is also doing well, with an increasing number of borrowers using Paytm’s platform to avail loans.
The company’s credit distribution business is showing strong growth, with higher-margin businesses contributing to the improvement in contribution margin. The company’s GMV is growing at a rapid pace, indicating the adoption of digital payments by consumers and merchants in India.
Paytm’s focus on creating additional payments monetization, along with improving sales, manpower and technology platform, bodes well for its future growth and profitability.
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