Paytm Aims for Profitability by June, Focuses on Merchant Services Globally
Global Expansion Strategy
Paytm, owned by One97 Communications, is prioritizing financial services for merchants as a key part of its global expansion strategy. The company has established subsidiaries in the UAE, Saudi Arabia, and Singapore to support this initiative. Vijay Shekhar, Paytm's founder and CEO, stated that addressing SME credit needs globally will be their primary focus.
Financial Performance in Q3 FY25
In the December quarter of FY25, Paytm reported a reduced consolidated loss of ₹208.5 crore, compared to ₹221.7 crore in the same quarter last year. This improvement was primarily due to decreased expenses, particularly in payment processing and employee costs. Revenue from operations fell by 35.8% to ₹1,827.8 crore compared to the previous year's December quarter. However, there was a 10% increase in revenue on a quarter-on-quarter basis.
Cost Management and Profitability Outlook
The company's operational loss before employee stock options (EBITDA) narrowed significantly to ₹41 crore from ₹186 crore in the previous quarter, mainly due to reduced non-sales employee costs. Paytm's CFO, Madhur Deora, is optimistic about achieving profitability soon, anticipating that the difference between EBITDA before ESOP and PAT will be nearly zero within two to three quarters. Deora emphasized that the ultimate goal is a double-digit EBITDA margin leading to substantial PAT.
Operational Efficiency and Strategic Moves
Paytm has achieved an 11% reduction in non-sales employee costs quarter-on-quarter and 36% year-on-year by using AI to improve productivity. Payment processing charges have also decreased by approximately 42% year-on-year to ₹570 crore. The company’s monthly transacting user base increased to 7.2 crore in December after hitting a low of 6.8 crore in September 2024 due to restrictions on Paytm Payments Bank. Their cash balance increased to ₹12,850 crore after a stake sale in Japanese payments firm PayPay to Softbank Group for ₹2,372 crore.
Contributing Profit and Leadership
The contributing profit improved by 7% quarter-on-quarter to ₹959 crore, calculated by excluding payment processing charges and promotional cashback from operational revenue. Paytm also appointed Bimal Julka, former information and broadcasting secretary, as a non-executive independent director, which aligns with the company's efforts to strengthen its governance framework as it continues its international expansion efforts.
Overall, Paytm is focused on increasing efficiency, using technology to drive growth, and maintaining a strong emphasis on providing financial services to merchants globally.
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