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Paytm to slash losses by third this financial year: CEO

The digital payments company has become contribution margin positive in September quarter.

Oct 14, 2019 by The Passage Team
Paytm to slash losses by third this financial year: CEO

Paytm CEO Vijay Shekhar Sharma said the company will bring down its EBITDA losses by at least a third to USD 350-400 million in this financial year. EBITDA is a more precise measure of corporate performance since it is able to show earnings before the influence of accounting and financial deductions.

Paytm has become contribution margin positive in September quarter. Paytm deputy CFO Vikas Garg said the company’s contribution margin has grown to a profit of 12% of the revenue.

At the EBITDA level, its losses have come down by 34% in the July-September quarter as compared to January-March in 2019. “These businesses (commerce) have matured and brought in network effect after three years of investment phase. We will continue to invest USD 150-200 million in the payments business,” Sharma told Times of India.

Paytm pulled back IPO filing last month after its major backer SoftBank told the mobile payment firm to turn profitable before getting listed. Paytm is reportedly in talks to raise USD 1-2 billion. Paytm’s gross merchandise value has increased 40% in the July-September period. The firm expects to reach USD 100 billion of gross transaction value by the end of the current financial year.

Garg said the Quarter on Quarter growth of the group, including all its subsidiaries, is much higher than 15% of One 97 Communications. “Further, the last financial year was a year of significant expansion of the payments business which is a very low margin business,” he added.

Paytm’s overall UPI transactions, which has been the fastest-growing payment mechanism in India, has been declining apropos to other emerging players like Google Pay and Phonepe. “We have very actively made sure that we maintain a dominating market share in merchant payments in UPI,” said Sharma.

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