Paytm reported operating profit for fourth consecutive quarter

Paytm, an Indian digital payments company, recorded an operating profit for the fourth straight quarter. The firm, which was one of India’s first startups to go public, saw its losses lower and revenues grow. In the earnings release on 20th October, it noted that the recorded operating profit was significantly boosted by the steady growth of loans in its financial services business.

Paytm’s earnings release

One 97 Communications Ltd., Paytm’s parent company dropped by over 5% on Monday (23rd October) despite the upbeat earnings results at the end of the previous week. Granted, most analysts still consider it a strong buy.

For instance, investment bank Goldman Sachs stated, “We see upside to both Paytm earnings and multiples as we expect continued momentum in lending and payments, with strong operating leverage in the business model. In addition, resolution of outstanding regulatory issues and/or inclusion of a bank as a lending partner could act as catalysts for Paytm.”

Paytm’s earnings release for the quarter ending in September 2023 stated, “For Q2 FY 2024, we continued our momentum with 32% YoY revenue growth, despite some of the revenues getting pushed to Q3 FY 2024.” For instance, online sales from this year’s India festive season are set to be included in the next release unlike in the past year where those sales were largely captured in Q2.

Its revenue growth was largely boosted by a significant increase in its gross merchandise value (GMV), growth in distributed loans, and merchant subscription revenues. The firm sees profitability on the horizon, further substantiating its decision to invest in growth. In fact, analysts project that the firm will be among the world’s most profitable fintech companies. In a recent report, Reuters projected that Paytm will be profitable in 2024.