Paytm’s Q1 FY22 Update
Paytm’s revenue from operations up by 62% Y-o-Y,
contribution margin positive up by 85% Y-o-Y for Q1FY22 — financial services
play major role
Paytm’s financial services bet takes off — revenue from
operations up by 62% Y-o-Y, contribution margin positive up by 85% Y-o-Y for
Q1FY22
India’s leading
digital payments and financial services platform Paytm has disclosed its
financials for three months ended June 2021, as the company prepares for its
mega IPO. Paytm has filed its Red Herring Prospectus today ahead of its mega
IPO. Paytm is headed for a ₹18,300 crore IPO — the largest market debut in
India yet. It had hiked its IPO issue size from the earlier ₹16,600 crore as it
received increased investor demand.
For the three
months ended June 2021, Paytm has seen a huge uptick in its revenues driven by
its payments and financial services offerings, as per the company’s RHP. The
company’s revenue from operations is up by 62% to ₹8,908 million in Q1FY22,
from ₹5,512 million in Q1FY21.The revenue is driven by payment and financial
services offerings of the company. For Q1FY22, the company’s payments and
financial services revenue alone stood at ₹6,894 million contributing to 77% of
its total revenue.
Interestingly,
Paytm’s contribution margin also rose significantly to 27.4% in Q1FY22, up from
14.9% in Q1FY21. This indicates that the company is on the path to
profitability. Media reports had earlier quoted sources to say that the company
is looking to turn profitable in 18-22 months from now.
Paytm’s losses
stood at ₹3,819 million for the three months ended June 2021. The marketing and
promotional expenses of the company went up to ₹1,377 million for Q1FY22,
while the company’s employee benefits expense also grew to ₹3,507 million in
Q1FY22 from ₹2,138 million in Q1FY21.
As per the
company’s RHP, Paytm’s total user base has increased to 337 million registered
consumers and over 21.8 million registered merchants, as of June 30, 2021.
The company’s
lending vertical has taken off as the company disbursed 1.4 million loans in
Q1FY22 and 2.8 million loans in Q2FY22, as per the RHP.
It also has a
stronghold in the offline merchants space through its Paytm devices. The
company had 947K devices deployed as of Jun’21 and 1,280K devices deployed as
of Sep’21. Paytm offers digital payment and financial services, commerce and
cloud services to Indians. It has built a multi-stack payment architecture
through the payment options offered by the company — Paytm Wallet, Paytm UPI,
Paytm Postpaid (Buy Now, Pay Later), credit cards/debit cards, Paytm PoS,
All-in-One QR code, Soundbox among others.
10 things to watch out for in Paytm’s RHP as the company heads closer to
its mega IPO
Paytm, India’s
leading digital ecosystem for consumers and merchants, is headed for a public
market debut — a much awaited one as it is going to be the country’s largest
IPO. On 22nd October, the company received the approval from SEBI for its IPO
and it has now filed the Red Herring Prospectus.
Here are the ten
things that stand out in the company’s RHP
- Issue size increased: Paytm is headed for a ₹18,300 crore IPO — the largest market
debut in India yet. It had hiked its IPO issue size from the earlier
₹16,600 crore as it received increased investor demand.
- Paytm adoption goes up: Paytm, which has the country’s largest internet ecosystem as per
Redseer, has seen its user base grow in the first three months of FY22. As
per the company’s RHP, Paytm’s total user base has increased to 337
million registered consumers and over 21.8 million registered merchants,
as of June 30, 2021. This is reflected in transacting users too - with the
monthly transacting users going up to 57.4 mn, as of September 30, 2021 (a
33% YoY increase).
- Big jump in revenue: For the three months ended June 2021, Paytm has seen a huge
uptick in its revenues driven by its payments and financial services
offerings. The company’s revenue is up by 46% to ₹9,480 million in Q1FY22,
from ₹6,494 million in Q1FY21. Paytm’s losses stood at ₹3,819 million for
the three months ended June 2021.
- Payment and Financial
services contribute to almost 80% of the revenue: Paytm’s bet in the financial services space has taken off as the
payments and financial services vertical contributes to almost 80% of the
company’s revenue. As per the
company’s RHP, for Q1FY22, the company’s payments and financial services
revenue alone stood at ₹6,894 million.
- Contribution margin goes
up: Paytm’s contribution margin also rose
significantly to 27.4% in Q1FY22, up from 14.9% in Q1FY21.
- Bullish on GMV: Paytm GMV has increased from ₹697 billion in the three months
ended June 30, 2020 to ₹1,469 billion in the three months ended June 30,
2021. The take rate, defined as ratio of the total revenue from operations
to GMV, for the first quarter of FY 2022 was 0.61%, marginally lower
compared to the previous quarter as COVID-19 affected the category mix of
the company’s offline merchants (particularly with respect to offline
devices subscriptions and MDR revenues) and commerce merchants.
- Lending goes big: Paytm has been betting big on its lending vertical. And as per its
RHP, it has taken off and how. The company in its RHP stated that in
Q2FY22 it disbursed 2.84 million loans.
- Merchants drive big
numbers: Paytm merchant transactions have
increased from 3.8 billion in FY 2019 to 5.2 billion in FY 2020, and to
5.9 billion in FY 2021, and from 1.0 billion in three months ended June
30, 2020 to 2.3 billion in the three months ended June 30, 2021. Revenue
from payment services to merchants went up ₹1979 million in Q1FY21 to
₹3340 million in Q1FY22
- On a hiring spree: Paytm has grown its employee base as at the end of june 30, 2021
the company’s total on roll employee count stood at 10,266.
- Expansion into
international markets: While Paytm continues to
innovate and provide better products and services to its consumers and merchants
in India, the company believes there is a large opportunity to leverage
its technology infrastructure and expand to international markets. In
2017, it piloted the bill payment services in Canada and in 2018, it
partnered with Softbank Corp. and Yahoo Japan Corporation to launch
PayPay, a leading digital payments and financial services company in
Japan. Paytm continues to explore international opportunities, especially
in the developed markets, where it can
either
launch its merchant services, or collaborate with partners to launch consumer
facing platforms.
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