Vijay Shekhar Sharma, run by One 97 Communications, the parent company of Paytoday announced its financial results for the third quarter of fiscal 2025 (Q3FY25), reporting a notable increase in revenue and a smaller net loss compared to the previous quarter.
Although the company’s numbers show a year-over-year decline in revenue, Paytm remains optimistic about continued growth in its payment and financial services segments.
Turnover and profitability
Paytm recorded an operating revenue of Rs 1,828 crore for the October-December quarter of 2024, an increase of 10% over the previous quarter. However, it declined by 36% from Rs 2,850.5 crore in the same period of the previous fiscal.
The company’s net loss stood at Rs 208.3 crore, an improvement both quarter-on-quarter and from Rs 219.8 crore last year.
Paytm attributed the quarter-on-quarter revenue growth to an increase in gross merchandise value (GMV), healthy subscription revenues and higher revenues from financial services distribution.
The company’s profit after tax improved by Rs 208 crore from the previous quarter, signaling continued progress towards profitability.
Expansion of payment activities
Payment services contributed Rs 1,059 crore to revenue during the quarter, up 8% from the previous three months. This growth was propelled by a 13% increase in GMV to Rs 5 lakh crore. The merchant subscription base for Paytm devices expanded to 1.17 crore, with around 5 lakh additions during the quarter.
The company noted that the National Payments Corporation of India (NPCI) granted it permission to onboard new UPI users, helping monthly transacting users climb to 7.2 crore in December from 6.8 crores in September.
Paytm says it will continue to develop innovative products, along with disciplined brand and performance marketing, to drive the expansion of its consumer base.
Growth of financial services
Financial services revenue jumped 34% quarter-on-quarter to Rs 502 crore. The increase was driven by a higher share of merchant loans, better collection efficiency and strong revenue from Paytm’s default loss guarantee (DLG) portfolio.
“We continue to see increased interest from lenders in partnerships using the DLG model for commercial and personal lending, which will help increase disbursements with existing partners and expand partnership with new lenders,” Paytm said.
The company has also partnered with more financial institutions, which it says will further strengthen its lending and collection capabilities.
Paytm disbursed Rs 3,831 crore of loans to merchants during the quarter, compared to Rs 3,303 crore in the previous quarter. About half of these loans were granted to regular borrowers.
Personal loans totaling Rs 1,746 crore were also disbursed in a distribution-only model, although Paytm took over a distribution and collection model for a select group of new and loyal customers with a history of strong asset quality.
Profitability and future prospects
Paytm said its cash balance stood at Rs 12,850 crore as of December 2024, an increase of Rs 2,851 Cr QoQ, largely due to the conclusion of the deal. PayPay stake sale and improving working capital.
Indirect expenses (excluding ESOP costs) decreased 7% quarter-over-quarter and 23% year-over-year, reflecting the company’s continued cost management efforts.
Going forward, Paytm plans to introduce more innovative devices and solutions to meet the needs of various merchants, especially in Tier 2 and 3 cities where it sees strong potential for future growth.
“To further strengthen our market leadership, we are committed to launching innovative, first-of-its-kind payment devices and solutions tailored to the diverse needs of merchants. Our extensive distribution and service network positions us well to capitalize on this growing market. We believe that Tier 2 and 3 cities offer significant penetration opportunities and we will further expand our distribution network to onboard more merchants from these markets,” the company said.