One 97 Communications (Paytm) rallied 4.68% to Rs 549.45 after the company reported a consolidated net loss of Rs 392 crore as against a net loss of Rs 778.4 crore posted in Q3 FY22.
Revenue from operations surged 41.62% to Rs 2062.2 crore in the quarter ended 31 December 2022 from Rs 1456.1 crore recorded in the same period last year.
The growth in the revenue was driven by increase in merchant subscription revenues, growth in loan distribution and momentum in commerce business. YoY growth comparison was impacted by timing of festive season and UPI incentive recorded in Q3 FY 2022 (for three quarters) versus nil recorded in this quarter.
In Q3 FY 2023, EBITDA before ESOP cost was at 31 crore as compared with negative Rs 393 crore in Q3 FY 2022 and negative Rs 166 Cr reported in Q2 FY 2023. EBITDA before ESOP cost margin improved to 2% of revenues in Q3 FY23 from negative 27% of revenues in Q3 FY22 and negative 9% of revenues in Q2 FY23.
The increase in the margin was mainly driven by consistent improvement in contribution margins to 51% in December 2022 from 21% in March 2021. Improved operating leverage with indirect expenses (as a % of revenues) decreasing to 49% in December 2022 from 73% in March 2021.
The company's contribution profit for the quarter stood at Rs 1,048 crore, an increase of 131% YoY and 24% QoQ. The contribution margin increased to 51% in the quarter ended 31 December 2022 from 31% recorded in Q3 FY22. The rise in the contribution profit was led by improvement in payments profitability, and growth of high margin businesses, such as loan distribution.
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Contribution profit, a non-GAAP financial measure, is defined as revenue from operations less payment processing charges, promotional cashback & incentives expenses, connectivity & content fees, contest, ticketing & FASTag expenses & logistic, deployment & collection cost of businesses.
In Q3 FY 2023, The company's payments services revenue grew 21% YoY to Rs 1,197 crore. On a like-for-like basis for UPI incentive, revenue growth would have been 34% YoY. Given the timing of accrual of UPI incentive, there was no UPI incentive recorded in this quarter.
Revenue in the financial services and others business was Rs 446 crore, up 257% YoY, and accounts for 22% of total revenues, up from 9% in Q3 FY22. This has also helped in expansion of contribution profit, given the higher margin nature of this business. The growth in revenue was primarily driven by 357% YoY growth in the value of loans disbursed.
Total loans disbursed, in partnership with lending partners were 10.5 million in the quarter, registering a growth of 137% YoY and 14% QoQ. The value of loans disbursed grew to Rs 9,958 crore, a growth of 357% YoY and 36% QoQ.
Average monthly transacting users (MTU) continued to grow and were 85 million for the quarter, increasing 32% YoY driven by customer acquisition through UPI and multiple use cases on our platform.
The gross merchandise value grew 38% YoY to Rs 3.5 lakh crore. The payment processing margin in the last quarter was within the range of 7-9 basis points. Since UPI is growing faster than other instruments, the company expects payment processing margin to stabilise at 5-7 bps over the long term.
Merchant subscriptions increased to 5.8 million compared to 3.8 million a year ago. We see sustained traction and earn more than Rs 100 per month per device, Paytm stated.
Commerce & cloud revenues grew 24% YoY to Rs 450 crore. Revenue in the Cloud business grew by 15% YoY to Rs 235 crore, with advertising and credit card distribution scaling well. Revenues declined 7% QoQ as Q2 FY23 was a strong quarter for PAI cloud.
Cost of expanding the platform, which is defined as marketing costs and sales employee cost, stood at Rs 313 crore, increasing 1% QoQ and 6.1 YoY. The company said that it continue to invest in areas with future growth and monetization potential. It will improve profitability despite investing for future growth. In Q3 FY 2023, the company's marketing costs tumbled 18.56% to Rs 136 crore while sales employee cost jumped 39.06% to Rs 178 crore during the period under review.
Software, Cloud, and Data Center costs were at Rs 171 crore, up 31% YoY and flat QoQ. These costs should decrease as % of revenue over time, the firm said.
The company's net cash, cash equivalent and investable balance of Rs 8,957 crore as of December 2022.
Paytm is India's payment Super App offering consumers and merchants most comprehensive payment services. Pioneer of the mobile QR payments revolution in India, Paytm's mission is to bring half a billion Indians into the mainstream economy through technology-led financial services. Paytm enables commerce for small merchants and distributes various financial services offerings to its consumers and merchants in partnership with financial institutions.
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