One97 Communications (PAYTM) Q3 24/25 earnings summary

Executive summary

• Merchant transaction volumes have grown year-over-year, while consumer transaction volumes have remained flat or slightly declined, even after adjusting for discontinued businesses.

• Revenue for Q3 FY2025 rose 10% sequentially to $214M, driven by growth in payments and financial services.

• EBITDA before ESOP improved by $17M QoQ, and PAT improved by $24M QoQ, excluding exceptional gains from the prior quarter.

• Contribution margin remained strong at 52%, with contribution profit up 7% QoQ.

• 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 comfortably above the guided three basis points, with subscription revenue from devices contributing positively.

• Revenue from operations reached $214M, up from $194M in the previous quarter and $333M in the same quarter last year.

• Contribution profit was $112M, up from $104M QoQ, but down from $178M YoY.

• EBITDA before ESOP cost was $(5)M, a significant improvement from $(22)M in the previous quarter.

• Consolidated revenue from operations for the quarter was INR 18,278 million, up from INR 16,595 million in the previous quarter and INR 28,505 million in the same quarter last year.

Outlook and guidance

• Merchant loan penetration is expected to rise from the current 4%-5% of device merchants to 10%-15% over the next two to three years, driven by increased ticket sizes, repeat loans, and a growing merchant base.

• FY26 is expected to be better than FY25 for personal loan disbursements, assuming stable macroeconomic conditions and additional lending partners.

• Payment processing margin exceeded 3bps guidance and is expected to be 5-6bps (including UPI incentives) for FY2025.

• 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, with continued focus on operating leverage and efficiency.