Paytm CEO in June 2023 quarter thrives on payments and business expansion
One97 Communications, the fintech company operating under the Paytm brand, anticipates achieving a positive free cash flow by the conclusion of the current year, as disclosed by a senior company representative on Saturday. Vijay Shekhar Sharma, the founder and CEO of Paytm, conveyed during an earnings call that the notable growth observed in the company’s performance during the June 2023 quarter is attributable to its strategic expansion within payments, financial services, and the commerce sector.
“We are on our committed guidelines of becoming free cash flow positive by the year-end, meaning we could start generating free cash,” Vijay Shekhar Sharma said.
He also added, “In fact, some of you may have seen the numbers. So, we have added some cash in our reserves already. We are very sure that based on the market conditions and positive movement in payment revenues and credit opportunity, we should surely be able to deliver it before year-end.”
In a recent earnings call with the news agency PTI, Vijay Shekhar Sharma emphasised that the notable growth experienced by the company in the quarter concluding in June 2023 can be chiefly attributed to its progress in the areas of payments, financial services, and commerce.
During the first quarter ending on June 30, 2023, Paytm disclosed a reduced loss of Rs 358.4 crore, marking a significant improvement compared to the loss of Rs 645.4 crore reported during the corresponding period in the previous year. This positive financial shift highlights the company’s strategic measures in managing and mitigating financial losses.
In a blog of investor relations released by Paytm, they said that in the June quarter, revenue from the payments sector witnessed a robust 31% year-on-year growth, reaching ₹1,414 crore, while the Gross Merchandise Volume (GMV) saw a notable 37% year-on-year increase, reaching ₹4.05 lakh crore. This surge can be attributed to the escalating trend of digital payments among consumers, coupled with the adoption of devices such as Paytm Soundbox and card machines by merchants. “As trailblazers in QR and mobile payments in India, our success is evident in the addition of 11 lakh new merchants from April to June and a remarkable 41 lakh over the past year”, the blog added.
Madhur Deora, the president and group CFO of Paytm, in an earnings call in June, stated, “Payments business has continued to scale up very nicely with improved profitability. Our monthly transacting users, which is the number of customers who transact on the Paytm app, has gone up 23% year-on-year and continues to see an upward trend. Our merchant subscription business, as we have mentioned before, which is a key focus area, has more than doubled year-on-year. In the last quarter, we added 11 lakh merchant subscriptions. So, this is a product and offering that continues to find larger and larger addressable market opportunities.”
Update on RBI’s action against Paytm Payments Bank (PPBL)
Vijay Shekhar Sharma provided an update on the Reserve Bank of India’s (RBI) restriction on the onboarding of new customers by Paytm Payments Bank (PPBL). He mentioned that the company has submitted a compliance report to the banking regulator, which is currently under review. Despite a longer-than-anticipated approval process from the RBI, Sharma expressed optimism that the approval is expected to be granted soon.
In the financial year 2022, the RBI instructed PPBL to cease the onboarding of new customers from March 1, 2022. Subsequently, in FY2023, the apex bank enlisted an external auditor to conduct a thorough systems audit of PPBL. On October 21, 2022, PPBL received the final audit report from the RBI, highlighting the necessity for continued enhancement of IT outsourcing processes and operational risk management, including KYC (Know Your Customer), at the bank.
