Key points from Paytm’s conference call:
- Business Growth: Paytm’s business is heading in the right direction as per their vision. They see a significant technology potential and business opportunities in the coming years.
- Revenue Growth: Paytm has achieved a year-on-year revenue growth of 39%. The growth is primarily driven by the payment and financial services business, which is expanding significantly.
- Profit Margin Improvement: The company’s profit contribution margin has increased from 51% to 56%, mainly due to higher-margin payment and financial services.
- Free Cash Flow Positive: Paytm is on track to become free cash flow positive by the year-end, which means they can start generating free cash. Positive market conditions and revenue growth are supporting this outlook.
- Payments Business: The payments business is scaling up with improved profitability. Monthly transacting users have increased by 23% year-on-year, and merchant subscription business has more than doubled.
- Loan Distribution Business: Paytm’s loan distribution business has seen substantial growth, with loans distributed amounting to nearly INR 15,000 crores. They are focused on improving credit quality and have experienced positive trends.
- Commerce and Cloud Business: The commerce and cloud business has grown by 22% year-on-year, with co-branded credit cards and advertising driving growth. However, the commerce business growth has been slightly subdued due to factors like a decline in the movie industry.
- Growth Drivers: Paytm’s growth drivers include low penetration of mobile payments on the merchant side, technological innovations, UPI Lite, multi-bank and brands EMI aggregation, and new lending partnerships. They are also venturing into the retail bond investing business.
Overall, Paytm is optimistic about its growth prospects and believes it is well-positioned to take advantage of the opportunities in the market.
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