Paytm Annual Report FY23: Our CEO’s Letter to the shareholders and other key highlights

Our Annual Report for FY23 is here. It was a landmark year for us as we achieved operating profitability at the end of Q3FY23, three quarters ahead of the September 2023 guideline. The report highlights our accomplishments across our key businesses in FY23.

Read the full Annual Report here.

1. Message from our Founder and CEO: The Annual Report includes a letter to the shareholders from our Founder and CEO Vijay Shekhar Sharma highlighting that Paytm pioneered mobile payments in India, leading the mass adoption with innovations like QR Codes and Soundbox. He wrote, “In India, we can expect 500 million payment consumers and 100 million merchants not very far in future. This is made possible by Paytm leading from the front, our government’s agenda to drive Digital India and the regulator’s encouragement to build an open scalable payment system. We are not only beneficiaries but also the biggest champions of government and regulator driven Digital Public Infrastructure.” 

2. Building the next big thing – Artificial General Intelligence software stack: Our CEO expressed his belief of India becoming an exporter of payment technology with Paytm leading the way. He wrote, “Our R&D design and software capabilities are the best in the world, in which Paytm Labs is constantly building various AI and big data features that enhance payment trust, when consumers or merchants use Paytm.” Our CEO added that after India’s digital revolution, Paytm’s next contribution will be – small mobile credit with high credit quality and fully compliant with the regulators guidelines. He wrote, “Paytm is investing in AI with an eye on building Artificial General Intelligence software stack. We believe by building it in India we are not only making our country’s tech capability, also creating something that could be leveraged outside India.” 

3. Empowering merchants with technology: We remain the most preferred choice for India’s merchants and have strengthened our leadership in in-store payments. From devices like QR Codes, Soundbox and Card Machines to a robust payment gateway product for online and omnichannel merchants, we help our merchant partners grow their businesses by providing innovative solutions. As of March 2023, our merchant base has grown to 3.4 crore, with deployed payment devices increasing to 68 lakh from 29 lakh in FY22, thus accelerating our subscription revenues

4. On path to creating a long term profitable business: We achieved operating profitability (i.e EBITDA before ESOP) at the end of quarter ending December 2022 driven by (1) sustained growth in revenues on account of platform expansion and increased monetisation; (2) better profitability in the payments business as well as increased contribution of high growth, high margin businesses such as loan distribution, and (3) disciplined cost management and better operating leverage. In his letter, our CEO wrote that the company would see some worthy numbers in the next 3 years and results of hard work put in by the team. 

5. Multiple growth vectors in our ecosystem: Our core business model is to acquire customers and merchants through payments and extend financial services to them. This allows us to address large market opportunities. “Payments is a universal need for consumers and merchants, and provides us an attractive way of acquiring, retaining and monetising customers and merchants. It continues to give us very high engagement, and in addition, we believe we can make substantial revenues and profits in payments. Digital distribution of credit is a very large and scalable profit pool in India,” said our report.

6. Sustained advantage from our network effect: The value we provide to our customers and merchants through our comprehensive suite of payments and financial services will help us scale further. Our report said,“We believe that our brand, distribution, insights, technology skills, and the scope of our ecosystem give us an advantage to grow our business through, (i) cost-effective acquisition of consumers and merchants; (ii) reinforce our platform by building higher engagement and stickiness with consumers and merchants; and (iii) build high monetisation products at low cost of acquisition.”

7. Product and tech innovation in our DNA: As a product-focused company, we have built a technology stack from the grounds up and integrated it across the entire spectrum of our ecosystem. “We are the only payments company in India that, together with our affiliates, owns each layer of the payment stack. This allows us to integrate our payments offering seamlessly with other offerings. Similarly, for financial services, our technology infrastructure is built on a stack that is owned, controlled and written by us, our respective subsidiaries or associates,” the report said.

8. Strong revenue growth in FY23: Our total revenue has grown at a CAGR of 69% from ₹2,802 Cr in FY21 to ₹7,990 Cr in FY23 with payment accounting for 62%, and both financial services and commerce & cloud accounting for 19% each. In FY23, EBITDA before ESOP cost stood ₹(176) Cr, a significant improvement of ₹1,342 Cr. Revenue from payment services has grown 44% to ₹4,930 Cr in FY23 from ₹3,432 Cr in FY22. Our revenue from Financial Services & Others have increased 252% to ₹1,540 Cr in FY23 from ₹437 Cr in FY22, primarily driven by 364% YoY growth in the value of loans processed in FY23 to ₹35,378 Cr, from ₹7,623 Cr in FY22. Our revenue from the Commerce & Cloud segment grew 38% to ₹1,520 Cr in FY23 from ₹1,105 Cr in FY22. 

9. Driving revolution for financial inclusion: We are committed to our mission of bringing half a billion people into the mainstream economy by driving financial inclusion. By providing access to financial services, we have been instrumental in bringing more and more people into the formal banking system. “It is my belief that the true economic GDP growth benefit of reaching the last person in the financial system will be our success. We have set our mission to enable 500 million Indians to get benefits of mainstream economic growth. This begins by enabling them with mobile payments and helping extend various other financial services like loan, insurance etc. to them.,” our CEO wrote.

10. Committed to sustainability and ESG: Our Annual Report includes our first Business Responsibility and Sustainability Reporting (BRSR). This reflects our commitment to the principles of environmental, social and governance (ESG) principles that go beyond our business operations. Our sustainability efforts include reducing the carbon footprint, promoting financial inclusion, and supporting local communities. We actively engage in social and environmental initiatives to drive positive change and also support various social causes, including education, healthcare, and disaster relief. 

We are thankful for your patronage and continuous support, and remain committed to creating long-term value for stakeholders.