Paytm Registers Incentive Worth Rs. 130 Crore From UPI Transactions in 3 Quarters

Digital financial services firm One97 Communications, which operates under the Paytm brand, expects to sustain operational profit growth, company's founder and CEO Vijay Shekhar Sharma said on Monday.

Paytm's EBITDA (earnings before interest, taxes, depreciation, and amortisation), an indicator of operational profit, before ESOP cost margin improved to Rs. 31 crore during the third quarter ended December 31, 2022.

The company has calculated an incentive of Rs. 130 crore from UPI transactions in three quarters but Sharma said that the incentive may technically make the fourth quarter a free cash flow positive quarter but Paytm will report as a one-time item.

"UPI incentive will be one-off and we will explicitly call out as one-off. Rs. 130 crore that we are quoting is for three quarters. The fourth quarter number will be topped on top of it. Because we are calling it one-time item, we are not calling it free cash flow generative. We would rather say free cash flow generative when we are consistently sure of it," Sharma said during the earnings call.

He said that the company will focus on increasing EBITDA profitability.

"We will continue to increase the EBITDA profitability. Could it go to two digits? In what timeline? I don't know. But it could go to two digits for sure. But like I said this is sustained EBITDA growth that we are seeking from here on," Sharma said.

Paytm achieved the target for operational profit, excluding ESOP cost in the December 2022 quarter itself which is three quarters ahead of the company's guidance.

Responding to a query on RBI's clearance for Paytm Payments Bank to onboard new customers, Sharma said he expects the approval to come soon based on the discussion that is going on with the banking regulator.

The Reserve Bank of India (RBI) has barred Paytm Payments Bank from onboarding new customers, citing “material supervisory concerns” observed at the bank since March 2022.

Paytm President and group chief financial officer Madhur Deora said that as of Friday the company has completed a share buyback worth Rs. 796 crore. The company's board has approved a share buyback worth Rs. 850 crore at Rs. 810 apiece.

Paytm narrowed its consolidated net loss to Rs. 392 crore in the third quarter that ended December 2022. The company had posted a net loss of Rs. 778.4 crore in the same period a year ago.

Its revenue from operations jumped about 42 percent to Rs. 2,062.2 crore during the quarter from Rs. 1,456.1 crore in the year-ago period. The contribution profit, which excludes taxes and marketing cost, more than doubled to Rs 1,048 crore during the reported quarter on YoY basis.

Paytm services revenue grew by 21 percent to Rs. 1,197 crore during the reported quarter from Rs. 992 crore in December 2021 quarter.

The value of loans facilitated through Paytm increased over four-fold to Rs. 9,958 crore in December 2022 quarter from Rs. 2,181 crore in the same period a year ago.

The average Monthly Transacting Users on Paytm grew to 8.5 crore in December 2022 from 6.4 crore in December 2021.

Shares of Paytm closed at Rs. 558, up by 6.31 per cent compared to the previous close, at BSE on Monday.