Paytm founder announces operational profitability, says free cash flow generation is next

Paytm, a leading payments and financial services company, said Friday it has achieved operating profitability with EBITDA before ESOP cost Rs 31 crore, well beyond the September 2023 guideline.

Paytm’s revenue from operations rose to Rs 2,062 crore (No UPI incentive registered this quarter), a growth of 42 percent year-over-year and 8 percent quarter-over-quarter.

The growth was driven by increased consumer adoption and subscription services by trading partners, along with continued growth in loan distribution and commerce, the company said.

Paytm’s founder and CEO Vijay Shekhar Sharma wrote a letter to shareholders announcing the achievement.

“This was made possible thanks to the relentlessly focused execution by our team. The team was asked to focus on growth with quality earnings that contribute to the bottom line. We reached this milestone without losing sight of growth opportunities and all compliances such as and risk factors under close supervision,” he said.

Contribution profit was Rs 1,048 crore in the quarter, with margins consistently improving from 31 per cent in December 2021 to 51 per cent in December 2022 due to improved profitability of payments business and greater mix of high margin businesses such as loan distribution.

The net payments margin grew to Rs 459 crore (an increase of 120 percent year-on-year) on the back of improved profitability in the payments sector.

Paytm’s EBITDA before ESOP margin was 2 percent of revenue compared to (27 percent) a year ago, reflecting continued improvement in contribution earnings and strong operating leverage.

The company said it continued to see strong revenue momentum across its businesses.

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