Paytm Q2FY25: Revenue jumps to ₹1,660 Cr (up 11% QoQ) on Growth in Payments and Financial Services Distribution

We have announced the financial results for Q2FY25 today. We have reported an operating revenue of ₹1,660 Cr, up 11% QoQ and EBITDA of ₹(404) Cr, an improvement of ₹388 Cr QoQ. The company also reported EBITDA before ESOP of ₹(186) Cr, an improvement of ₹359 Cr QoQ.

“We remain committed to reach EBITDA before ESOP profitability by Q4 FY 2025,” said the company.

In this quarter, we also reported a Profit after Tax (PAT) of ₹930 Cr, including exceptional gain of ₹1,345 Cr on account of sale of entertainment ticketing business. Our contribution margin of 54%, up 356bps QoQ; contribution profit stood at ₹894 Cr, up 18% QoQ.

We believe that the continued focus on payments and distribution of financial services will drive sustained, profitable growth. The same is reflected in its growing revenue for payments business of ₹981 Cr, up 9% QoQ and revenue from financial services at ₹376 Cr, up 34% QoQ.

You can read the Q2FY25 results here:

The company’s indirect cost has come down by 17% QoQ to ₹1,080 Cr due to reduction in employee costs (down 13% QoQ), marketing expenses and absence of certain one-time expenses incurred in Q1 FY 2025.

For the company’s merchant subscription business, the company said that new subscription paying device merchant sign ups have exceeded January 2024 levels. Currently the total merchant subscriptions stand at 1.12 crore.

“Our plan is to pick up inactive devices and redeploy them after refurbishment, which helps us reduce capex. When we pick up inactive devices, our merchant count reduces. We plan to continue reactivating merchants and redeploying inactive devices to new merchants over the next 2-3 quarters. This will lead to higher active merchant base and higher revenue,” said the company.

Over the next quarters, the company has said that its key focus will include being a compliance-first company, continuing merchant payment innovations and driving customer acquisition, increasing high margin financial services revenue by expanding financial services partners, and use of Artificial Intelligence to reduce costs.

The company has also announced that it will start with DLGs (Default Loss Guarantees) on distribution of merchant loans.

“There is increased interest and comfort from existing as well as new lenders to expand the partnership due to better asset quality trends and higher demand from our merchants. Following the regulatory framework, and the emerging market practice, we see increased willingness from lenders to partner and allocate more capital in the Default Loss Guarantee (DLG) model. DLG model will help to increase disbursements with the existing partners and expand partnership with new lenders for the loan distribution,” said the company in its earnings release.

The company has taken an approval from its Board for a partner providing DLG of ₹225 Crore over a period of time.

Furthermore, the company has a cash balance of ₹9,999 Cr as of quarter ending September 2024, as compared to ₹8,108 Cr as of quarter ending June 2024.