Paytm's results & the Japanese connection 🧵
So, Paytm declared its results on Friday night
- Operating revenues increased by 77% to nearly Rs 4,974 crore in FY22 vs FY21
- But the loss increased by 41% to Rs 2,396 crore
This is a reversal in Paytm nos for the last 2 years
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Between FY19 and FY21, Paytm was able to cut down its losses by over 60%
This was done by primarily reducing marketing & promotional expenses
But as a result of this its topline remained flat. Just 8% in FY19. 1% in FY20
We covered the reasons here -
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Now since its listing process started a year ago, Paytm has been stepping up the pedal on growth
This has meant that marketing and promotion expenses are up over 60% in FY22 to Rs 855 crore
Which has now meant an increase in losses, again
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Part of the losses are also on account of an increase in ESOP costs
But even if one takes into account Paytm's EBITDA before ESOPs, losses have come down by only 8%
This is compared to a 30% and 42% cut in losses in FY20 & FY21, respectively
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So, basically, Paytm's losses are not falling as fast in previous financial years. And it is only going to become tougher
This is significant as Paytm plans to reach breakeven by Sep 23
Impossible? No. But the path to it with current numbers seems hard
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Does Paytm have a trump card? It is the stake Japan's PayPay with Softbank
Fine print for the latest result shows Paytm has taken a gain of Rs 937 crore for its shareholding in PayPay. This has reduced its overall loss
Some background on it here -
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How fast will Paytm be able to monetise the PayPay stake is still a question that remains to be answered. It will be interesting if it comes up in the analyst call today
And if it will be enough to stop its share price from bleeding further only time will tell/ Ends
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