Fintech

Paytm Aims to Achieve Positive Free Cash Flow by Year-End, Reports Narrower Loss for Q1

• ByStartupStory     |    July 23, 2023

One 97 Communications, the parent company of digital payments giant Paytm, is determined to generate positive free cash flow by the end of this year, according to its chief executive, Vijay Shekhar Sharma. The company recently reported a narrower loss for the fiscal first quarter, showing signs of a positive trend reversal in its cash reserves. Paytm’s cash balances improved sequentially, reaching Rs 8,367 crore compared to Rs 8,275 crore at the end of March 2023.

“We remain committed to generate free cash flow by the year end, you must have seen we have already started adding to our cash reserves,” Paytm tweeted, quoting Sharma.

The company’s focus on reducing marketing expenses and improving working capital, along with interest income, contributed to the increase in cash balance. Marketing expenses were down 16% from the previous year, and cashback expenses also saw a significant decrease.

Paytm’s merchant subscription base witnessed substantial growth, reaching 7.9 million at the end of June, nearly doubling from the previous year. However, the revenue contribution from payments did not increase proportionately, growing only 31%.

The company aims to improve its Ebitda profile by providing diversified payment offerings and focusing on higher revenue generating payment modes, such as cards and EMI through its point-of-sale (PoS) offerings.

Additionally, Paytm continues to prioritize its credit business, deploying more PoS terminals and offering cashbacks to merchants to deploy Paytm QR codes and payment terminals at their retail outlets. The financial services business saw significant growth, with merchant loans, personal loans, and Paytm Postpaid, its buy-now-pay-later business, all showing substantial increases in revenue.

Overall, Paytm’s focus on generating positive free cash flow and expanding its merchant base through diversified payment offerings positions the company for continued growth and success in the digital payments and financial services sector.

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