One97 Communications (PAYTM) Q3 24/25 earnings summary

Executive summary

• Merchant business showed year-on-year growth, while the consumer side remained flat or slightly declined, even after adjusting for discontinued businesses.

• Revenue for Q3 FY2025 rose 10% sequentially to $214M (INR 18,278 million), driven by growth in payments and financial services.

• EBITDA before ESOP improved by $17M QoQ, and PAT loss narrowed to $(24)M, excluding exceptional gains.

• DLG (Default Loss Guarantee) model now accounts for about 80% of merchant loan disbursals, with growing interest from lending partners.

• Unaudited consolidated and standalone financial results for the quarter and nine months ended December 31, 2024, were reviewed and approved, with no material misstatements identified by auditors.

Financial highlights

• Payment processing margins remain above the guided three basis points, with Q3 FY2025 margin at 5-6bps including UPI incentives.

• Contribution margin stood at 52% for the quarter, with contribution profit up 7% QoQ.

• Revenue from operations reached $214M (INR 18,278 million), up from $194M in the previous quarter.

• Cash and investable balances (excluding customer funds) increased to $1.5B as of Dec 2024.

• Capex for 9M FY2025 was $21M, significantly lower than $79M in 9M FY2024, aiding PAT improvement.

Outlook and guidance

• Merchant loan penetration is expected to rise from 4%-5% to 10%-15% of the device base over the next two to three years.

• Payment processing margin is expected to be 5-6bps (including UPI incentives) for FY2025.

• CapEx is expected to remain below FY24 levels, with continued savings from device refurbishment.

• Management assessed that regulatory actions on Paytm Payments Services Limited do not materially impact current business or revenues, as restrictions apply only to onboarding new merchants.

• The company targets double-digit EBITDA margins in the medium term.