Indian Fin-Tech giant Paytm, which had been running on losses for a decade, reported a profit after tax (PAT) of ₹930 crore in Q2 FY24, marking a turnaround from a loss of ₹840 crore. 1 crore in the previous quarter. Not only that Paytm’s cash balance stood at ₹9,999 crore at the end of Q2 FY25. This profit increase was largely due to selling its movie ticketing and events businesses to Zomato for ₹2,048.4 crore, resulting in a net gain of ₹1,345.4 crore.
In terms of financial performance, revenue from operations rose by 10.51% to ₹1,659.5 crore, while total income decreased by 31.09% year-on-year to ₹1,834 crore. Payment processing charges slightly decreased to ₹516.8 crore, and total expenses fell by 9.34% to ₹2,244.8 crore.
here are the 5 things you need to know after this:
1. Total funds raised & their revenue status till now
Despite raising $4.93 Billion across 15 rounds Paytm has always been run on the losses, this is the first time they have clocked profits. From March 2021 to March 2023 Paytm has doubled its revenue each year. Paytm was making ₹ 2,802 crore in revenue by March 2021 but by March 2024 Paytm was making ₹ 9,977 crore. Paytm’s revenue has risen but they remain in losses. Bernstein report is expecting Paytm to achieve profitability by 2027 but they did it earlier and they also have ₹9,990 crores in cash showcasing strong liquidity. But how does it all happen?
2. Strategies that drive the revenue boost
One of the main strategies they used was reducing their 60% support staff cost by leveraging AI to improve the productivity of the tech team. According to founder and CEO Vijay Shekhar Sharma, they are happy to reduce 60% of manpower cost on support in the last 10 months. Apart from that they used their superpower Paytm Soundbox to run audio ads for Meesho, Coca-Cola, Mondelez, and Dabur on the PoS device. They also provided cross-selling financial services to payment customers (consumer and merchant) that helped them monetize their customers.
3. EBITDA is on the rise
Paytm’s EBITDA is improving and they are trying to reach EBITDA before ESOP profitability by Q4, FY25.
In Q2, FY24 Paytm’s EBITDA improved by ₹388 crore Quarter on quarter due to revenue growth, contribution margin improvement, and indirect cost reduction, but remained negative at ₹404 crore. The company has reported an EBITDA of ₹792 crore In the June quarter of the current financial year.
4. PLV & Indirect costs declines
Paytm’s indirect costs declined in this quarter by 17 percent QoQ to ₹1,080 crore largely due to reducing the cost of support staff that we discussed earlier (declined 13 percent only in this quarter) and marketing expenses.
The value of personal loans(PLV) distributed in Q2, FY25 declined to ₹1,977 crore versus ₹2,500 crore in Q1FY25 due to lenders’ tightening risk policies.
5. Profits are one-time gains
The sale of the entertainment ticketing business of Paytm gets them an exceptional gain of ₹1,345 crores. Paytm posted a consolidated profit of ₹930 crore while the company suffered a loss of ₹840.1 crore in the last quarter.
Paytm’s QoQ revenue dropped 34% year-on-year (YoY) to Rs 1,660 crore against Rs 2,519 crore in the corresponding quarter of the previous year.
Payment services revenue of ₹981 crore increased by 9 percent QoQ, while revenue from financial services and others was ₹376 crore, up 34 percent QoQ.
