Paytm’s revenue rose 41 percent to Rs 2,062 crore in the December quarter (Q3), compared to the year-ago period, while net loss narrowed to Rs 392 crore.
The digital payments and financial services company's loss in the corresponding period last year was Rs 778 crore, whereas that in the September quarter was Rs 572 crore, Paytm said in an exchange filing.
In a letter to shareholders, Paytm founder and CEO Vijay Shekhar Sharma said that the company had achieved operating profitability in Q3, which is three quarters ahead of the guidance which was for the September quarter.
"This has been made possible due to the relentlessly focused execution by our team. The team was asked to focus on growth with quality revenues that contribute to the bottom line. We have achieved this milestone without losing sight on growth opportunities and keeping all compliances as well as risk factors under a strict watch," he said.
Paytm said that its EBITDA before deducting employee stock option (ESOP) cost, a proxy metric that the new-age companies use to define operating profitability, came in at Rs 31 crore in Q3.
While the company's growth was driven by an uptick in merchant subscriptions to payment devices and loan disbursals, profitability improved as a result of declining marketing costs.
In Q3, the number of loans disbursed through the platform grew 137 percent to 10.5 million, while the value of loans disbursed rose 357 percent to Rs 9,958 crore.
In a first, the company also disclosed that it earns a commission 2.5 percent to 3.5 percent of loan value upfront on disbursals and 0.5-1.5 percent on collections.
The platform's gross merchandise value (GMV) grew by 38 percent to Rs 3.5 lakh crore. It revealed that payment processing margin this quarter was within the range of 7-9 basis points (bps) of GMV as indicated in December 2022. Since UPI is growing faster than other instruments, it expects payment processing margin to stabilise at 5-7 bps over the long term.
Promotional cashbacks and incentives were Rs 91 crore in Q3, compared to Rs 191 crore in Q2.
"As per earlier arrangements with lenders, we were incurring incentives related to Paytm Postpaid as a part of this cost. From Q3 onwards, we have new agreements with lenders (where we are incurring interchange costs) which is included in Payment Processing charges. As a result, costs were down significantly," the company said.
