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Paytm achieves operating profitability three quarters ahead of guidance; Vijay Shekhar Sharma writes to shareholders, says free cash flow is next milestone

* Reports EBITDA before ESOP cost profitability of ?31 crore

* Revenue jumps to ?2,062 Cr, up 42% YoY (no UPI incentives recorded in this quarter); share of financial services revenue at 22%, up from 9% a year ago

* Contribution profit of ?1,048 Cr (up 131% YoY) with margin improving to 51% vs 31% YoY; driven by growth in payment profitability and high margin loan distribution business

* Improvement in payment profitability with net payment margin at ?459 Cr (up 120% YoY)

One97 Communications Limited (OCL) that owns the brand Paytm, India’s leading payments and financial services company and the pioneer of QR and mobile payments, has announced Q3 FY 2023 results. The company has achieved its operating profitability milestone with EBITDA before ESOP cost at ?31 Crore, significantly ahead of its guided timeline of September 2023. EBITDA before ESOP margin stood at 2% of revenues as compared to (27%) a year ago.

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

“This has been made possible due to the relentlessly focused execution by our team. The team was asked to focus on growth with quality revenues that contribute to the bottom line. We have achieved this milestone without losing sight on growth opportunities and keeping all compliances as well as risk factors under a strict watch,” said Vijay Shekhar Sharma.

Sharma added that the next key milestone for Paytm is free cash flow generation. “With our focus on growth and keeping a tight vigil on operational risk and compliances, I am very confident that we will soon achieve our next milestone of becoming a free cash flow generating company,” he added.

Sustained revenue growth with better profitability — Paytm reports a strong Q3FY23

The company continued to witness strong revenue momentum across its businesses. Paytm’s revenue from operations increased to ?2,062 crore (no UPI incentive recorded this quarter), a growth of 42% YoY and 8% QoQ, driven by increased adoption by consumers and subscription services by merchant partners along with sustained growth seen in loan distribution and commerce business. Revenue from financial services, which is majorly loan distribution, now accounts for 22% of total revenues, up from 9% in Q3 FY2022.