Paytm Q2 FY22 Results: Revenue Up By 64% YoY, But Increasing Losses A Worrisome Sign

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Paytm Q2 financial results are out! The fintech company announced its quarterly results for the 3-month period that ended 30 September 2021 on the weekend. Largely known for digital payments, Paytm losses increased to Rs 473.5 crore in the second quarter of FY’22. This is an increase of 24 percent QoQ and 8.4 percent YoY, due to increased expenses.

Paytm revenue from operations in Q2 FY’22 soared 63.6 percent YoY to Rs. 1,086.4 crore. It’s 22% QoQ growth in the total revenue of Rs. 890.8 crore that was reported in the previous quarter.

The company’s contribution margins also dipped, albeit marginal, to 23.9 percent in the last fiscal quarter, which is down from 27.4 percent during the Q1 FY’22. Surprisingly, the contribution profit increased to an astonishing 592% YoY in fiscal Q2 2022, to Rs. 260.7 crore. That’s mainly due to the monetization of its large distribution base using high-margin offerings like lending ads, commerce offerings, Paytm stated in a regulatory filing. In the previous June quarter, Paytm reported Rs. 244.5 crore contribution profit in the prior quarter.

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The company’s EBITDA (earnings before interest, taxes, depreciation, and amortization) loss remained 452.4 crores, up from Rs. 445.6 crore (YoY) as well as Rs. 371 crores (QoQ).

Paytm’s first earning report for a quarter of FY’22 has come just 3 weeks after the listing of its parent company One97 Communications Limited in the stock market. Despite all the hype and craze, it was unable to make a strong debut in stock markets that started trading on 18 November 2021.

In a statement on the report, Paytm said, “Revenues from Payment and Financial Services went up by 69 percent y-o-y to Rs 8,426 million, driven by 52 percent growth in non-UPI payment volumes (GMV) and growth from Financial Services and Other revenues by more than 3 times.”

Paytm revenue from the digital payment services to customers was up 54 percent YoY to Rs 353.6 crore in the September quarter. While the revenue from payment services to merchants increased 64 percent YoY, amounting to Rs. 400 crore.

When it comes to expenses, Paytm spent nearly Rs 102.3 crore in its marketing activities during the second quarter of fiscal 2022, a 64% YoY increase. The company’s employee cost (Excluding ESOPs) also increased 37% YoY to Rs. 367.2 crore. The company has increased its “Software, cloud and data center” expenses during the September quarter, from just Rs 72.1 crore in Q2 FY’21 to Rs 112.9 crore in Q2 FY’22.

In a bid to seize the falling stock price, Paytm revealed a number of important metrics this week that show its Gross Merchandise Valuation (GMV) during October month was at 83,200 crore, up 131 percent YoY. Paytm GMV for Q2 FY’22 stood at Rs. 195,600 crore, clocking an impressive 107 percent YoY growth.

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Paytm’s total transactions in Q2 FY’22 were 3,316 million, an increase of a whopping 110% YoY. The company also reported a 33% YoY increase in its average Monthly Transacting Users (MTU), totaling 57.4 million during the quarter. This trend continued in October 2021, when 63 million MTUs were reported, up 35% year over year.

Paytm’s lending business which includes Postpaid (Buy-Now-Pay-Later), consumer loans, and merchant loans, has skyrocketed. In Q2 FY 2022, the number of loans disbursed increased an astonishing 714% YoY to over 2.8 million. This growth trend continued in October 2021 as well. The company’s financial institution partners disbursed around 1.3 million loans in October month, representing a mind-boggling 472% YoY increase. That’s aggregating to a total disbursal of Rs 6,270 million, representing a 418% YoY increase in the value of loans disbursed.

The company stated that the rise of non-UPI GMV has driven steady growth in payments revenue and its UPI-driven payments volume growth is translating into significant growth in its financial services offerings.

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