Our Q3FY24 quarter earnings have continued the growth momentum which is driven by sustained GMV growth, higher device addition, and expansion of the financial services business. This was partly boosted by the timing of the festive seasons (online sales for the festive season were in Q3, whereas in the previous financial year, it was largely in Q2). In Q3FY24, Our revenue from operations saw a growth of 38% YoY to ₹2,850 Cr, and EBITDA before ESOP has increased to ₹219 Cr as compared to ₹153 Cr in Q2FY24 (excluding UPI incentives). Our PAT improved by ₹170 Cr YoY to (₹222 Cr).
Addressing the analysts at the Earnings call about our growth and achievements in the last quarter, our Founder, CEO & MD Vijay Shekhar Sharma said: “In the last two quarters, the technology world has seen a dramatic revolution to the power of AI. We have seen our company using AI in different use cases. I use the word dramatic to see an acceleration of deployment and own LLM models. Our financial services will leverage the power of AI, marketing and customer relations will also be accelerated with this.”
AI-powered automation also helps us to drive efficiency, by automating several tasks. So far AI has delivered more than what we expected, and we expect our AI-first approach will allow us to drive operating leverage across various functions, including business and operations.
Here is our Earnings Presentation for the quarter ending December 2023 and you can also read the full Q3FY24 financial results report here:
Giving an overview of our growth and achievements in the last quarter, President and Group CFO Madhur Deora said: “I am pleased to report our Q3FY24 earnings, our revenue is up 38% YoY which is fantastic, accelerated from the previous quarter, also due to the festive season. Our EBITDA has improved considerably. We expect strong momentum across several businesses and our next quarter will be even better.”
He also mentioned that in our payments business, our net payment margin was Rs 748 Cr, grown 63%. We must highlight that there was no UPI incentive this quarter, and even then we were in the 7 to 9 bps range. We have also seen strong GMV growth. Adding further Madhur said: “In our merchant payments business, we saw 14 lakh merchant subscriptions added this quarter. We make a minimum of Rs 100 per merchant per sub.”
Talking about our financial services, he mentioned: “The value of loans disbursed is Rs 15k crore, 56% growth YoY. Paytm postpaid declined from the base through a conscious decision, we calibrated that and might see the impact in the next quarter. Our portfolio quality is quite stable and healthy. Merchant loans and personal loans continue to grow very well and we are excited about the business,” shared Madhur
As communicated earlier about our focus on high-ticket loans, Madhur added: “High-ticket loans have shown significant growth in the last month and a half, we now have 2 crore white-list users from our partners. The business has disbursed Rs 490 crore worth of loans already, and given that it is a recent business, it is a tremendous number.”
On expanding our financial services distribution business, he said: “I did want to highlight the good momentum in our insurance distribution and embedded insurance. We will scale this up. This is where we see great opportunities. We have Paytm Money for equity broking and are seeing a huge scaling potential and profitability.” Adding that “Marketing services (erstwhile cloud and commerce) has grown 22% YoY, the first time this business has crossed Rs 500 cr of revenue. We have also seen a huge ramp-up in deals and gift vouchers. We have also crossed 10 lakh paytm consumers for credit card distribution,” Madhur said.
On scaling embedded insurance and merchant insurance offerings and cross-selling equity trading to our consumer base, Vijay added: “As far as insurance is concerned, we are bundling it in our core offerings, and the results are very encouraging. Better than what we imagined. Equity trading and offering of stock broking are ways of offering better cross-selling opportunities.”
Adding that “I wanted to reinforce our forward-looking guidance because of efficiency, and you have seen that this quarter is better than the previous quarter,” said Vijay. “Our average MTU has crossed 100 million, done very prudently, with our focus on acquiring high-quality customers,” he mentioned.
Talking about postpaid and personal loans, President and COO Bhavesh Gupta said: “Our partners were seeing higher stress. It was better to be ultra-conservative. We continue to go in that direction. Our portfolio is strong. We are cutting down on PL, the last two quarters have been flat to negative on personal loans. Further, growth will come from high-ticket loans. The bounce rate coming down is a very good sign. In the next 2 quarters, the impact on expected credit loss will be seen.” Elaborating about the decline in the postpaid numbers, he said that postpaid had very low contribution and minimum impact towards the bottomline and they had got various products to fill the gap of postpaid reduction.
Under financial services, we are expanding high-ticket loans by focusing on adding new lending partners. We are also scaling embedded insurance and merchant insurance offerings and cross-selling equity trading to our consumer base. Bhavesh mentioned: “Two things we are confident about, the whitelist will increase, the funnel will perform better, high ticket will perform better. The scale of this contingent. This business can become materially large for us.”
Speaking about the popularity of our Soundbox, Bhavesh said: “The features and nuances have become detailed. The shopkeepers feel our Soundbox works better than others as we provide them early settlements, our product is superior, and somebody offering free Soundbox is not material to them.” He added, “We keep growing in terms of prices and features. There are 19 players in the industry giving similar products. Our manufacture in India will always give us a significant differentiator in the market.”
We are a leader in merchant payments in India, with over 10 million devices deployed across the country. In fact, we deployed 14 lakh merchants in a single quarter subscribing to our devices. And as our CEO Vijay Shekhar Sharma said, “We want to be known as the “Payment Merchant Network.”
With over 100 million monthly transacting users (MTU) on the app, we are spearheading the digital transformation across India. Sharing insights on how we achieved the same, our founder said, “We have been able to do it very prudently and our focus is on acquiring strictly monetizable incremental users. There are products like UPI Credit, UPI AutoPay, which are actually going through the roof. We believe that will generate even higher quality of customers on our platform, and we will continue to acquire customers with that insight.”
