Paytm Q2 Results: Fintech posts Rs 928 cr PAT on one-time gain; revenue slides 34% YoY

One 97 Communications, a fintech firm running the payment platform Paytm, disclosed a consolidated net profit of Rs 928.3 crore for the quarter ending in September 2024. This marks a significant turnaround from the Rs 290.5 crore loss reported in the same period of the prior financial year, attributed to a one-off gain.

In the same quarter of the previous year, Paytm’s revenue witnessed a 34% decline year-on-year, falling to Rs 1,660 crore from Rs 2,519 crore.

The profit at Paytm was credited to a unique gain of Rs 1,345 crore resulting from the sale of its entertainment ticketing business to Zomato earlier this year.

Paytm experienced an 11% growth in revenue sequentially, driven by a 5% quarter-on-quarter surge in GMV, improved device realization, and a 34% increase in financial services revenue during the same period.

In a filing, Paytm reported a 21% QoQ surge in the net payment margin to Rs 465 crore. This significant increase primarily stemmed from enhancements in the payment processing margin, improved device realization, and the growth in GMV. Additionally, the company disclosed that Financial Services revenue experienced a substantial 34% QoQ rise to Rs 376 crore. This boost was attributed to the escalation in collection bonus in merchant loans driven by improved asset quality trends, along with an increased share of merchant loans.

Paytm has managed to reduce its indirect expenses by 17% quarter-over-quarter to Rs 1,080 crore. This drop is attributed to lower employee costs, which decreased by 13% QoQ, savings in marketing expenditures, and the lack of specific one-time costs that were incurred in the first quarter of fiscal year 2025.

Payments revenue increased by 9% quarter-over-quarter to reach Rs 981 crore in Q2, driven by a rise in GMV, emphasis on monetization strategies, and growth in merchant subscriptions.

Paytm announced that in the second quarter of the fiscal year 2025, the Gross Merchandise Value (GMV) reached Rs 4.5 lakh crore, marking a 5% increase from the previous quarter. Along with emphasizing GMV growth, the company managed to enhance the payment processing margin significantly during this period. Paytm projected that the payment processing margin, including UPI incentives, would remain within the 5-6 basis points range for the entire year.

In the last quarter, there was a 34% increase in revenue from financial services and other sectors, reaching Rs 376 crore. This growth can be attributed to the rise in collection incentives for merchant loans and a greater proportion of merchant loans, which typically yield higher take rates.

Moving ahead, Paytm emphasized that maintaining cost discipline will remain a primary area of focus.

The company reported a 13% decrease in employee expenses compared to the previous quarter, surpassing the projected decline of 5-7%. Marketing expenditures decreased from the previous quarter, attributed to increased spending in Q1 FY 2025 to promote awareness of new partnerships in the payments business under TPAP. The company emphasized ongoing cautiousness in marketing expenditures but hinted at potential increases upon acquiring new UPI customers in the future.