Noida-based payments and financial services distribution major, One 97 Communications, announced a significant expansion in its credit distribution business in its Q1 FY25 earnings release. Credit card distribution continues to scale, with 12.8 Lakh activated credit cards as of June 2024, compared to 7.5 Lakh last year. Despite the cautious stance of issuers and slower industry growth, Paytm has added three new partners in the last two quarters, bringing the total to six live partners for credit card distribution.
“Our quarterly performance has been in line with our expectations, demonstrating the resilience and capability of Paytm’s products and services,” said Paytm founder and chief executive, Vijay Shekhar Sharma, addressing analysts on Friday evening. “This is just the beginning of the end of the tough times, and this quarter reflects the full impact of the challenges we faced. As a team, we are committed to navigating through these times with a focus on compliance. My team and I are committed to ensuring we return to profitable quarters,” Sharma emphasized.
In the June quarter, Paytm’s operating revenue reached ₹1,502 crore, driven by a focus on merchant additions and cost optimizations.
For One 97, profitability is driven by its ability to sell more financial services to customers. Further, it continues to enable merchants to do more commerce activities which are consolidated under its marketing services.
The fintech giant’s revenue from financial services amounted to ₹280 crore, while revenue from marketing services was ₹321 crore. The company’s contribution profit for the quarter stood at ₹755 crore, with a 50% margin. EBITDA (Earnings before Interest, Tax, Depreciation, and Amortisation) loss for the quarter was ₹792 crore, with a net loss of ₹840 crore. The company maintained a strong control over expenses, with a cash balance of ₹8,108 crore as of June 2024 (excluding ₹449 crore funds from Paytm Money Ltd).
Looking ahead, Paytm expects revenue growth and profitability to improve, driven by growth in operating metrics such as GMV, an expanding merchant base, recovery in the loan distribution business, and continued focus on cost optimization.
The company also reported that new merchant signups are reaching January 2024 levels, with a marginal increase in its merchant subscriber base to 1.09 crore. Daily merchant payment GMV (excluding disrupted products) has shown consistent improvement during the quarter and is nearly back to January 2024 levels. Monthly transacting users (MTUs) have stabilized to approximately 7.8 crore at the end of June, with GMV increasing month-on-month.
Earlier this year, Paytm received approval from the National Payments Corporation of India (NPCI) to participate in UPI as a Third-Party Application Provider (TPAP) under a multi-bank model. Axis Bank, HDFC Bank, State Bank of India, and YES Bank act as PSP (Payment System Provider) banks, ensuring Paytm’s existing users and merchants continue to perform UPI transactions and AutoPay mandates seamlessly and without interruption.
“We are fortunate to have a resilient customer base. Moving forward, we need to focus on cross-selling various financial services to our customers, both consumers and merchants. Our Average Revenue Per User (ARPU) remains stable, and we expect it to increase in the coming quarters,” Sharma added.