Paytm grows GMV to Rs. 3.46 trillion in December Quarter Results

The rather interesting top line story of Paytm continues for the December 2022 quarter. Once again, their top line growth and the growth in business is fantastic. They are clearly making the best of the massive 30 crore customer franchise that they have created. However, the impact on the bottom line continues to be elusive. For the quarter ended December 2022, which is also the Q3FY23, One97 Communications (Paytm) saw robust growth in its Gross Merchandise Value (GMV) to Rs. 346,000 crore. That is not too surprising with its strong hold over the offline payments market with close to 5.8 million merchants now paying subscriptions for payment devices directly to Paytm.

One of the important parameters for a digital new age company to evaluated is the average monthly transacting users (MTU). This shows the average number of customers who actually transact and pay on the Paytm website / app For the third quarter ended December 2022, the average monthly transacting users (MTU) stood at 85 million. That is a very healthy growth of 32% over the corresponding period last year. One of the big advantages that Paytm has in the digital space is its phenomenal acceptance and adoption by consumers and merchants. For now, the redoubtable Vijay Shekhar Sharma continues to remain confident that the company is very closer to turning around to profits.

During the quarter, there was a new milestone for Paytm as they added close to 3.8 million devices on a yoy basis. Devices are the small sound boxes that you get to see at various stores and outlets for collecting money. This was an area where Paytm had faced tremendous pressure from PhonePe, but the company appears to have recouped the advantage at this point of time. Till date, the focus has been on monetizing the MDR, but not it is looking to monetization beyond the MDR but enrolling more customers for its various subscription services. To the benefit of Paytm, this subscription service has continued to growth and expand at a very rapid pace.

One of the big challenges for Paytm was always to leverage the massive customer franchise and access to point of sale (POS) merchants to hawk other products. Towards this end, Paytm has undertaken a major growth plan for its loan distribution business, in partnership with top lenders. Paytm does not lend, but it has tied up with banks and NBFCs to leverage its massive customer franchise and its rather simplified digital cum app platform. For the quarter, loan disbursements grew 330 per cent on a yoy basis, albeit on a very small loan base. Hence the growth numbers, per se, are not too reflective. However, this is the business that Paytm is substantially betting on for the next few years of growth.

Let us look at some loan numbers. For the month of December alone, Paytm disbursed loans to the tune of Rs. 3,665 crore. For the month of December, the number of loans grew 117% to 3.7 million while the cumulative growth for the December 2022 quarter was 137% to 10.5 million cumulative loans. The December 2022 quarter also saw impressive growth in total disbursements by a whopping 357% to Rs. 9,958 crore. More than customer loans, Paytm expects the merchant loans to be a big driver. Now merchants can directly avail loan from the Paytm platform and the disbursal is very quick considering that most of the transaction audit trail is already available with Paytm. It also gravitates more transactions on Paytm.

The total gross merchandise value (GMV) processed through the platform for Q3FY23 aggregated to Rs. 3.46 trillion or $42 billion approximately. That is 38% higher on a yoy basis. Payment volumes continue to be the major profit driver for Paytm. This comes from the payment margins and also from the upsell opportunities that it generates for the company. For the previous quarter, Paytm had reported revenues of Rs. 1,914 crore. EBITDA (earnings before interest, taxes, depreciation and amortization) loss for the previous quarter had come in at Rs. 166 crore, but this is before providing for ESOP costs. It is only the post ESOP EBITDA loss that would give a clearer picture.

One thing Paytm needs to get out of is the series of controversies that it finds itself in. From the 75% depletion in value post the IPO to the proposed buyback of shares using share premium to the rather controversial decision to offer ESOPs to Vijay Shekhar Sharma via accounting jugglery, it is time for Paytm to be more transparent to be credible.

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