Paytm’s Q2 net loss widens to Rs 482 cr amid rising expenses

Financial technology firm Paytm’s parent One 97 Communications on Saturday reported that its non- Unified Payments Interface revenue volumes grew 52 per cent in the second quarter of FY22. This is the first time the company has reported earnings after listing earlier this month.

The company said its net loss widened 11 per cent to Rs 482 crore in the quarter ended September (Q2) on a year on year basis, and increased 28 per cent compared to the quarter ended June.

Revenue from operations grew 64 per cent Y-o-Y to Rs 1,090 crore in Q2FY22, while total expenses jumped to nearly Rs 1,600 crore from Rs 1,170 crore a year ago.

The growth of the business from UPI Payments was a major concern flagged by several analysts post listing. Paytm stock tumbled more than 35% over its first two days of trading.

Its commerce and cloud services revenue grew by 47 per cent Y-o-Y to Rs 244 crore. Revenues from payment andfinancial services went up by 69% y-o-y to Rs 843 crore, driven by 52 per cent growth in non-UPI payment volumes (GMV) and growth from financial services

Revenue from payment services to customers was up 54 per cent Y-o-Y to Rs 354 crore, driven by increase in non-UPI payment usage on our consumer platform. Revenue from payment services to merchants was up 64 per cent Y-o-Y to Rs 400 crore (run-rate of greater than $200 million) driven by non-UPI payment volume growth in payment gateway and growth in devices.

Its contribution profit grew to Rs 260 crore in Q2FY22, a Y-o-Y increase of 592 per cent. Meanwhile, contribution margin jumped to 24.0 per cent of revenue from 5.7 per cent the previous year.

Marketing and promotional expenses (excluding cashback and incentives) were at Rs 102 crore, unchanged at 9 per cent of revenues Y-o-Y, even as we have increased Average MTUs by 14.4 million from Q2FY2021 to Q2FY22.

Paytm’s employee cost (excluding ESOPs) was at Rs 367 crore in Q2, increasing 37 per cent year on year but reducing from 40 per cent of revenues in Q2FY21 to 34 per cent in Q2FY22.

The company said it improved adjusted EBITDA margin to 39 per cent of revenues in Q2 FY 2022 at Rs 426 crore, from 64 per cent of revenues Q2FY21 at Rs 427 crore, along with increased investments in technology and merchant base expansion

“Adjusted EBITDA loss for the Q2FY22 was Rs 426 crore as compared to Rs 427 crore in Q2FY21, as we continued investments in technology and merchant base expansion,” the company said.

“We are well funded with pro forma cash, cash equivalent and investable balance of Rs 11,000 crore (Rs 2,900 crore as of September 2021 and Rs 8100 crore of net IPO proceeds) and have a large cushion of ungranted ESOPs,” it added.

The number of loans disbursed grew 714 per cent Y-o-Y to over 2.8 million in Q2FY22. The lending business showed strong growth on a low base and as a result of the rapid scale-up of all of lending products, including Postpaid (Buy-Now-Pay-Later), consumer loans and merchant loans.

“Our financial institution partners disbursed around 1.3 million loans in October 2021, a 472 per cent increase in numbers of loans disbursed Y-o-Y and aggregating to a total disbursal of Rs 627 crore implying a 418 per cent increase in value of loans disbursed Y-o-Y,” the fintech major noted.