Paytm revenue rises, loss widens: Key takeaways from Q2 earnings report

Digital payments and financial services company Paytm has unveiled its first earnings report since going public, presenting a mixed picture even as its stock has staged a smart recovery after plunging 41% from its IPO price.

Noida-based Paytm, operated by One 97 Communications Ltd, reported a 64% jump in revenue from operations to Rs 1,086.40 crore for the quarter ended September 30 from Rs 663.9 crore a year earlier.

Consolidated net loss of widened to Rs 473 crore from Rs 437 crore in the corresponding period a year earlier while expenses climbed to nearly Rs 1,600 crore from Rs 1,170 crore.

Paytm had mopped up Rs 18,300 crore earlier this month in India’s biggest initial public offering (IPO) till date. However, its stock plunged 27% on its trading debut and closed at Rs 1,564 apiece compared with the issue price of Rs 2,150 per share. On its second day of trading, the script fell another 18.7% to hit a low of Rs 1,271 apiece.

However, the stock has rallied 40% since then and was trading around Rs 1,770 on Monday morning in a flat Mumbai market.

Paytm competes with Google Pay and Flipkart-owned PhonePe in the digital payments market, especially UPI-based payments. It offers a range of products and services including merchant payments, insurance, gold sales, movie and flight ticketing, bank deposits and remittance.

Key takeaways from the earnings report

1) Q2 revenue was driven by 52% growth in non-UPI payment volumes and strong growth in some other businesses.

2) Revenue from payments and financial services rose 69% to Rs 842.6 crore.

3) Commerce and cloud services revenue climbed 47% to Rs 243.8 crore.

4) Gross Merchandise Value (GMV) for Q2 was Rs 1,95,600 crore, up 107% from a year earlier.

5) GMV in October jumped 131% year-on-year to Rs 83,200 crore.

6) The average monthly transacting users (MTU) in Q2 increased 33% year-on-year to 5.74 crore.

7) Average MTUs in October rose 35% to 6.3 crore from 4.7 crore in October 2020.

8) Adjusted EBITDA loss was little changed at Rs 425.5 crore versus Rs 426.7 crore a year earlier.

9) Paytm has pro forma cash, cash equivalent and investable balance of Rs 11,000 crore.

10) This comprised Rs 2,900 crore as of September 2021 and Rs 8,100 crore of net IPO proceeds.

Paytm management commentary

The company’s management said that growth of non-UPI GMV has driven payments revenue growth and that UPI-led payment volume growth is translating to a significant ramp up of its financial services offering.

“We have maintained the growth momentum in our payments services business, expanded our financial services business aggressively and are on our way to pre-COVID volumes for commerce and cloud services,” Paytm said.