Paytm reports Rs 930 crore profit in Q2FY25; revenue falls 34% to Rs 1,660 crore

Vijay Shekhar Sharma-led Paytm's parent company, One97 Communications, reported revenue of Rs 1,660 crore for the second quarter of FY25, an 11% increase from the previous quarter.

The fintech company's growth was driven by its payment services and financial offerings, alongside the one-time gain from selling its entertainment ticketing business.

Paytm achieved a consolidated profit after tax of Rs 930 crore, with a significant portion of this profit attributed to a Rs 1,345 crore exceptional gain from the sale to Deepinder Goyal-led Zomato.

Improved contribution margins and reduced losses

In Q2 FY25, Paytm's contribution margin increased to 54%, up from the previous quarter, signaling a significant improvement in its operational efficiency.

The company’s contribution profit stood at Rs 894 crore, an 18% rise quarter-on-quarter. This was largely driven by an improvement in payment processing margins, better device realization, and the growth of its financial services. Notably, the company's EBITDA before ESOP costs improved by Rs 359 crore, reducing the overall losses to Rs 186 crore.

Growth in payment and financial services

Revenue from payment services reached Rs 981 crore in Q2 FY25, accounting for 59% of the total operating revenue. This marks a 9% growth compared to the previous quarter, supported by a 5% increase in Gross Merchandise Value (GMV).

Additionally, Paytm’s financial services revenue surged by 34% to Rs 376 crore, thanks to an improved collection bonus and a higher share of merchant loans.

Merchant loan disbursals witnessed strong growth, with a value of Rs 3,303 crore in Q2 FY25, up from Rs 2,508 crore in Q1 FY25. However, personal loan disbursals saw a slight decline to Rs 1,977 crore due to tightening risk policies by lenders. 

Despite these fluctuations, Paytm's cross-selling of financial services continues to show potential for future revenue growth.

Cost control and liquidity

Paytm made strides in controlling costs, especially in employee benefits and marketing. The company reduced employee costs by 13%, bringing the total to Rs 709 crore for the quarter. This includes a notable Rs 225 crore in ESOP-related expenses. Marketing costs decreased to Rs 151 crore as the company scaled back on promotional activities.

Furthermore, the company has a cash balance of Rs 9,999 crore as of quarter ending September 2024, as compared to Rs 8,108 crore as of quarter ending June 2024.