Paytm Q1FY25 results: Revenue from payment services plunges to Rs 900 crore, monthly transacting users in June dip to 7.8 crore

One97 Communications, Paytm's parent company reported its Q1FY25 results earlier today. While its operating revenue for the quarter was Rs 1,502 crore, its earnings before interest, tax, depreciation, and amortization (EBITDA) for the quarter was in negative, at Rs 792 crore. The net device subscriber base (for Paytm sound box) inched up to 1.09 crore during June 2024, up from 79 lakh in June 2023.

On the payment services front, the quarterly revenue stood at Rs 900 crore, which was largely dented due to closure of PPBL (Paytm Payment Bank Limited) accounts, owing to RBI directives. The same stood at Rs 2,342 crore during the year-ago period.

For Q1FY25,the company registered a gross merchandise value (GMV) of Rs 4.3 lakh crore, and a net payment margin of Rs 383 crore. The company expects the annual payment processing margin (including UPI incentives, which gets paid in Q4 of every financial year) to be in the range of 5-6 bps.

On the financial and marketing services front, the revenue for April-June 2024 was Rs 280 crore and Rs 321 crore, respectively. The revenue from marketing services, which includes advertising, and ticketing for travel, movies and events, was down largely due to seasonality of this business.

Overall, Paytm's net loss the quarter stood at Rs 840 crore, significantly up from Rs 357 crore in the year ago period.

Low Sounds from Sound Box, UPI

The company highlighted that its per device subscription revenue had tanked, and expects it to rise in the coming days, as it pushed for new merchant signups and redeployment from inactive merchants. Additionally, the company is awaiting permission to begin onboarding new UPI customers, which would help it drive up the number of its monthly transacting users. As of June 30, 2024 the company's monthly transacting users (MTU) stood at 7.8 crore, down from 8.9 crore in March 2024 and about 10.4 crore in January this year.

Rise in loan disbursal

In its release, the company noted that it is "expanding its loan cross-selling by integrating more types of loans from our partners, including secured credit like loan against property and gold loans". The value of merchant loans it disbursed during the quarter was Rs 2,508 crore, and about 50% of these were availed by repeat borrowers. The average ticket size in this category also jumped up from Rs 2,25,000 to Rs 1,90,000, with an average tenure of 13 months.

As for personal loans, the company disbursed loans worth Rs 2,500 crore during the quarter. Here, the average ticket size and tenure remained stable at Rs 1,35,000 and 16 months, respectively. About 1.1% of the monthly transacting users on Paytm avail such loans. The company also reported a rise in number of credit cards activated in June 2024, which stood at 12.8 lakh, as compared to 7.5 lakh last year. At present, the company has 6 active partners for credit card distribution.

Compliance first approach

The company saw in uptick in its indirect costs from Rs 1,220 crore in June 2023 to Rs 1,301 crore as of June 2024, which it attributed to higher marketing costs to create awareness regarding new partnerships in the payments business as TPAP (third party application provider), Its software, cloud and data centre expenses increased QoQ (from Rs 162 crore in March 2024 to Rs 182 crore in June 2024) due to one-time charges relating to the migration to the TPAP model. However, the company expects this cost to come down in upcoming quarters.

Going ahead, Paytm will largely focus on reactivating existing dormant UPI customers. "Once we are allowed new UPI user onboarding, we will acquire new monetizable customers with discipline on acquisition costs", the release said. Apart from this, it also aims on enhancing credit distribution, expanding secured lending products , allocating more resources to insurance distribution and mutual fund distribution, "which offer large monetization opportunities" and maintaining a stringent focus on compliance first approach across their businesses.

During trade today, Paytm's stock was trading at Rs 450, up by 1.06%.

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