Paytm Q3 FY 2023 Earnings Presentation INR
Paytm Q3 FY 2023 Earnings Presentation INR
Paytm Q3 FY 2023 Earnings Presentation INR
7,313
+ Brand
Dec-21 Mar-22 Jun-22 Sep-22 Dec-22 5,554
+ Distribution
Subscription Paying Merchants + Insights 3,553
+ Technology
3.8 Mn Devices 5.8 mn 2,181
4.8 mn
3.8 mn
2.9 mn
2.0 mn Dec-21 Mar-22 Jun-22 Sep-22 Dec-22
# of Loans (Mn)
4.4 6.5 8.5 9.2 10.5
Dec-21 Mar-22 Jun-22 Sep-22 Dec-22
Merchants pay subscription for our devices
3
Revenue growth driven by continued platform expansion &
increased monetization across businesses
Notes:
1 Other Operating Revenue is revenue relating to the Payments business and was ₹44 Cr in Q3 FY 2023, ₹15 Cr in Q2 FY 2023, ₹2 Cr in Q1 FY 2023, ₹12 Cr in Q4 FY2022 and nil in Q3 FY 2022 and Q2 FY 2022
2 Includes Other Operating revenue, as it relates to the Payments business
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Growth in contribution profit + strong operating leverage =
Improved Profitability
Dec-21 Mar-22 Jun-22 Sep-22 Dec-22
2%
49% (9%)
43% 44%
35%
31% (16%)
+29%
improvement
(24%)
Quarter (27%)
Dec-21 Mar-22 Jun-22 Sep-22 Dec-22
Ending
Contribution Margin Indirect expenses as % of revenues EBITDA before ESOP as % of revenue
1. Consistent improvement in contribution margins: higher payments profitability; 1. Achieved operating EBITDA profitability three quarters ahead of guidance
increase in mix of high-margin loan distribution business 2. Driven by revenue growth across businesses, disciplined cost management
2. Operating leverage as demonstrated by indirect expenses (as % of revenue), and operating leverage
indirect expenses were up 20% YoY, flat for past three quarters
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Payments business: Revenue growth with improved profitability
Quarter
Ending Dec-21 Mar-22 Jun-22 Sep-22 Dec-22 4. Reported revenue growth (YoY & QoQ) impacted by timing of e-commerce
Payment Services to Consumers Payment Services to Merchants festive sales (which were mostly in Q3 FY 2022 and Q2 FY 2023) and focus
Incentives from PIDF & NABARD (other operating revenue)
on profitable GMV
1This is management estimate as per notification received on January 11, 2023. It is based on internal data
and is subject to confirmation from NPCI/acquirer banks.
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Payment business generated ₹459 Cr of Net Payments Margin
Payment Processing Margin Net Payments Margin grew 120% YoY
1. Margin on payment processing in Q3 was within the range of
(in ₹ Cr) Dec-21 Sep-22 Dec-22
7-9bps (of GMV) as indicated in December 2022
Reported payments revenue 992 1,188 1,197
2. This is proforma for Q3 FY 2023 UPI incentive and despite Payment processing charges
inclusion of interchange costs for Paytm Postpaid (783) (746) (660)
(excluding interchange cost for Postpaid)
3. Since UPI is growing faster than other instruments, we expect Net Payments Margin (like-for-like)
209 443 537
(excluding interchange cost for Postpaid)
payment processing margin to stabilize at 5-7 bps
Interchange cost for Postpaid na na (78)
Reported Net Payments Margin 209 443 459
Subscriptions
1. Net Payments Margin is calculated as total payments revenue less payment
1. Merchant subscriptions for payment devices were 5.8 mn,
processing charges
increasing 3.8 mn YoY
2. On a like-for-like basis (i.e., excluding interchange cost for Paytm Postpaid), Net
2. We continue to see good traction and earn more than ₹100
Payments Margin for Q3 FY 2023 would have been ₹537 Cr, increasing 21%
per month per device
QoQ
3. Further, we have received additional incentive on select
installations from partner banks, RBI and NABARD etc, which 3. Starting this quarter, we are now incurring interchange costs which are included
as a part of Payment Processing Charges (detailed explanation in the earnings
could be lumpy in nature
release)
4. Interchange cost for Paytm Postpaid was ₹78 Cr, resulting in reported net
payments margin at ₹459 Cr
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Acceleration in consumer & merchant credit
1. Accepted at 17 Mn merchants 1. Cross sell opportunities continue with over 1. Device merchants accounted for more than
2. Penetration at 4.0% of MTU 40% of loans to existing Postpaid users 85% of disbursals; Repeat rate of 45%
2. Penetration at 0.8% of MTU 2. Penetration at 5.2% of devices merchants
₹4,050 Cr
₹1,208 Cr
Value of ₹3,383 Cr ₹2,055 Cr
Loans
₹827 Cr
₹2,183 Cr ₹1,344 Cr
₹565 Cr
₹805 Cr ₹474 Cr
₹1,190 Cr
₹516 Cr
Quarter
Ending Dec-21 Ma r-22 Jun-22 Sep-22 Dec-22 Dec-21 Ma r-22 Jun-22 Sep-22 Dec-22 Dec-21 Ma r-22 Jun-22 Sep-22 Dec-22
# of Loans
(Mn) 4.3 6.4 8.3 8.9 10.1 0.06 0.09 0.13 0.19 0.24 0.03 0.04 0.06 0.08 0.12
Calculation of penetration
Postpaid: Avg monthly number of loans in a quarter as a % of that quarter’s avg MTU; Personal Loans: Number of loans disbursed in last 12 months as a % of avg MTU in Q2 FY 2023; Merchant loans: Number of loans disbursed in last 12 months as % of devices
deployed at end of Q2 FY 2023
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Better Collection Efficiency = Increased Scale & Revenues
Scale up driven by loan distribution Continued focus on credit quality
257% YoY 446
Indicative portfolio performance for our Personal Merchant
Postpaid
partners Loan Loan
349
• Augmented through advanced
271
machine learning models Bounce 11.5% to 11.0% to
NA(2)
• Helping lending partners scale Rates 12.5% 13.0%
168 with risk-based pricing
125
• Own collection technology
platform aiding digital Bucket 1 89% 84% 81%
collections Resolution to to to
Quarter • Lower operating expenses and % 92% 87% 83%
Ending Dec-21 Mar-22 Jun-22 Sep-22 Dec-22 scaling well
Revenues from Financial Services & Others (₹ Crore) • Capacity enhancement with
Recovery 27% 31% 25%
increase in employees and over
1. Total 8.1 mn unique borrowers who have taken a loan through our Rate to to to
50 tie ups with on ground
Post 90+ 29% 33% 27%
platform, increasing 1.4 mn in the quarter collection partners
Enabling Commerce
185
1. GMV was ₹2,299 Cr, increasing 6% YoY and 11% QoQ
135 139 125
103
2. Revenues were ₹185 Cr, resulting in take-rate of 8%, driven by
Quarter travel demand and high volumes in the events business
Ending Dec-21 Mar-22 Jun-22 Sep-22 Dec-22
Commerce Services Cloud Services Column2 3. We provide a full stack of services for certain events in the
entertainment business, with high take-rates but also higher direct
costs. On a steady state basis, our take rate is 6%, similar to Q2 FY
2023
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Growth Drivers in Our Business
1. India’s digital payments are in early days. Growth in UPI, cards and EMI-led payments are yet to reach the masses
a) Launching UPI Lite, allowing instant, multiple small-value UPI payments, which will lead to increased adoption of digital payments
b) Launching Credit Card on UPI, enabling users to link their credit cards to UPI
2. Potential of 10 Crore merchant and more than 50 Crore payment customers in near term
3. We continue to integrate large NBFCs and Banks to leverage the full potential of small, digital credit through Paytm platform
4. We remain focused on working with the RBI regarding Paytm Payments Bank and Paytm Payments Services Ltd
5. Highest focus accorded on building scale with highest focus on operational risk and compliances
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Annexure
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Revenue breakdown: Overall growth of 42% YoY
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Contribution Profit up by 131% YoY
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EBITDA before ESOP cost improved by ₹424 Cr YoY
Software, cloud and data center 130 173 171 31% (1%)
EBITDA before ESOP cost Margin % (27.0%) (8.7%) 1.5% +29% +10%
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Reconciliation of Non-GAAP Measures
EBITDA before ESOP cost
Quarter Ended
(in ₹ Cr)
Dec-21 Sep-22 Dec-22
(Unaudited) (Unaudited) (Unaudited)
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Operational KPIs
Quarter Ended Change
(in ₹ Cr) Units
Dec-21 Sep-22 Dec-22 YoY QoQ
MTU (avg over the period) million 64.4 79.7 84.9 32% 7%
Number of sales employees includes on-roll and off-rolls employees. Cost relates to on-roll employees only
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Definitions for Metrics & Key Performance Indicators
Metric Definition
GMV is the rupee value of total payments made to merchants through transactions on our app, through Paytm Payment
GMV Instruments or through our payment solutions, over a period. It excludes any consumer-to-consumer payment service such
as money transfers.
Monthly Transacting User (MTU) Unique users with at least one successful transaction in a particular calendar month
Contribution profit is a non-GAAP financial measure. We define Contribution profit as revenue from operations less payment
Contribution Profit processing charges, promotional cashback & incentives expenses, connectivity & content fees, contest, ticketing & FASTag
expenses & logistic, deployment & collection cost of our businesses.
Net Payments Margin Payments revenues (including other operating revenue) less payments processing charges
EBITDA before ESOP cost is a Non-GAAP financial measure. We define EBITDA before ESOP cost as our loss for the
period, before depreciation & amortization expense, income tax expense, share based payment expense, finance costs,
EBITDA before ESOP cost
other income, loss for the period from discontinued operations, exceptional items, IPO expenses & share of profit/(loss) of
associates/joint ventures.
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