Paytm Q2 Results

Exactly 5 days after the action-packed listing of One97 Communications (Paytm) on the bourses, the company announced its quarterly results for the Sep-21 quarter.

In those 5 days post listing, the stock of Paytm had dropped precipitously as much as 41% from the IPO price and over the next 2 days it had also recovered 40% from the lows. The stock still trades about 18% below the issue price but at this juncture, the focus shifts to the fundamentals.

For the quarter ended Sep-21, One 97 Communications (the company that owns and operates the Paytm brand), announced a smart growth in top line. Top line revenues for the quarter grew by 64% to Rs.1,090 crore compared to the corresponding Sep-20 quarter.

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However, Paytm also reported a widening of net losses to Rs.473 crore in the quarter as total expenses touched Rs.1,600 crore.

But the real story of Paytm has always been about top line and there was no disputing its growth on this metrics. Revenue growth was triggered by a 52% growth in non-UPI payment volumes (GMV) as well as smart growth in revenues from financial services.

GMV refers to the gross merchandise value and is considered to be a very important metrics for digital companies that are buying market share aggressively in their early years.

Let us now get back to the important metrics of the gross merchandise value or GMV. For the Sep-21 quarter, Paytm saw GMV more than double on a YoY basis at Rs.195,600 crore. There was also lateral growth.

Average monthly transacting users (AMTUs) were up 35% in the latest month of October 2021 touching 6.30 crore against 4.70 crore in Oct-20. The reason for the widening of the losses was the sharp spike in expenses in the quarter.

It may be recollected that Paytm just listed its stock after the mega Paytm IPO of Rs.18,300 crore which included Rs.8,300 crore as fresh issue and Rs.10,000 crore by way of offer for sale. Paytm had a bad listing but has since recovered much of the price damage.

Large anchor investors like Blackrock and Canadian Pensions had bought Paytm at lower levels. Paytm is backed by marquee investors like Softbank, Berkshire Hathaway and Ant Financial.

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