One 97 Communications Ltd, the parent company of Paytm, on Tuesday reported its fiscal second quarter earnings with profit at Rs 928.30 crore, in comparison to a loss of Rs 290.50 crore during the corresponding quarter of previous financial year. “With a one-time exceptional gain of Rs 1,345 crore, on account of sale of entertainment ticketing business, we achieved PAT of Rs 930 crore in Q2 FY 2025,” the company said in a regulatory filing. It posted revenue from operations at Rs 1659.50 crore, down 34.1 per cent as against Rs 2518.60 crore during the same period of FY24. 

The company EBITDA went down at Rs 404 crore, posting an improvement of Rs 388 crore QoQ, on account of growth in revenue, cost optimisation (direct as well as indirect cost) and reduction in ESOP costs on account of ESOP lapses at the time of employee separation during the quarter. 

In Q2, Paytm said that it has achieved 11 per cent QoQ revenue growth, due to 5 per cent QoQ increase in GMV, better realization from devices and 34 per cent QoQ increase in revenues from financial services. “Our net payment margin increased 21 per cent QoQ to Rs 465 crore, largely on account of improvement in payment processing margin, better device realization and growth in GMV,” it said.

Paytm’s performance across businesses

Payment Services

During the quarter in review, payments revenue stood at Rs 981 crore, up 9 per cent QoQ, led by increase in GMV, focus on monetisation and increase in merchant subscriptions. Net payment margin, it said, was higher by 21 per cent QoQ at Rs 465 crore. Net payment margin is comprised of:

Payment Processing Margin: In Q2FY25, GMV was Rs 4.5 lakh crore, up 5 per cent QoQ. In a statement, Paytm said, “In this quarter, in addition to focusing on growth of GMV, we were able to significantly improve payment processing margin. We continue to expect Payment processing margin (including UPI incentive) to be in the range of 5-6 bps for the year.”

Subscription revenues: As of September 2024, merchant subscriptions were 1.12 crore and the company’s subscription revenue growth was driven by a higher active subscriber base.

Financial Services

In Q2, revenue from financial services and others stood at Rs 376 crore, up 34 per cent QoQ. Strong revenue growth, it said, was because of increase in collection bonus in merchant loans and higher share of merchant loans which have higher take rate. In this quarter, 6.0 lakh customers availed financial services, which has a large headroom for growth, it added.

Loan Distribution

Following the regulatory framework, and the emerging market practice, Paytm has witnessed increased willingness from lenders to partner and allocate more capital in the Default Loss Guarantee (DLG) model. From August 2024, Paytm has started distributing merchant loans under the DLG model with one of our partners. The outstanding AUM amount for this portfolio as on 30th September 2024 is Rs 1,651 crore. 

The value of Merchant Loans distributed during the quarter was Rs 3,303 crore and about 50 per cent of loans distributed are to repeat borrowers. The value of Personal Loans distributed in Q2 was Rs 1,977 crore. The reduction is on account of tightening risk policies by lenders, which is consistent with industry-wide trends. 

Insurance Distribution

Paytm said that its focus remains on product innovation for seamless distribution and claims experience for its merchants and consumers. “On the health front, we are offering differentiated products that combine Health Insurance, Healthcare, and OPD benefits,” it said.

Marketing Services

Paytm’s marketing services business primarily includes advertising, travel ticketing, credit card distribution, and deals & gift vouchers. In Q2, Marketing Services revenue was Rs 302 crore, lower QoQ due to sale of entertainment ticketing business and lower MTU. During the quarter, Paytm sold its entertainment ticketing business to Zomato and the deal was consummated on August 27, 2024. 

Capex and Cash balance

Paytm recorded capex for H1FY25 at Rs 97 crore, versus Rs 477 crore in H1FY24 and Rs 336 crore in H2FY24. Lower capex, it said, is largely on account of reduction in cost of devices, use of refurbished devices for redeployment (cost of refurbished devices are included in other indirect costs) and lower deployments. 

Cash Balance, meanwhile, stood at Rs 9,999 crore as of quarter ending September 2024, as compared to Rs 8,108 cr as of quarter ending June 2024. 
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Paytm swings back to profit at Rs 928.30 crore on gains from ticketing business sale, revenue drops by 34.1% YoY