Paytm Soundbox’s superior product offering gives it a competitive edge

Paytm, a pioneer in mobile payments in India, continues its growth trajectory in Q3FY24, driven by sustained growth in Gross Merchandise Value (GMV), increased device adoption, and the expansion of its financial services business. The festive seasons in the December quarter contributed to this upward momentum.

During the earnings call with analysts, the management highlighted key achievements, including leadership in the Soundbox category, consistent EBITDA growth, and significant progress in high-ticket loans. Founder, CEO & MD, Vijay Shekhar Sharma, shared insights gained from speaking with merchants who consider Paytm Soundbox superior, citing early settlements, product excellence, and a reasonable cost as differentiators.

“I was in Ahmedabad, on the roads trying to learn where Paytm Soundboxes are being used and why, the shopkeeper literally went on to say ‘I use it because it works better than other Soundboxes’. I did say what if the other guys give you for free, will you still continue. The guy said this works better as my settlements come early, my product is superior, cost is not so much at 100 bucks. Here I believe the nuances of the product like for example we do settlement before 6am, our target is that before the day starts it should happen. And the guy himself told that the other settlements come around 8am or 9am or 10am and that is where the cash doesn’t show up. Then the notification speed, success, surety, bluetooth are actually differentiators,” said Vijay.

As of the December quarter, the number of merchants subscribing to Paytm’s payment devices surpassed one crore, reaching 1.06 crore, indicating a YoY increase of 49 lakh.

Bhavesh Gupta, President and COO, also discussed the tracking of device deactivations and efforts to understand the reasons, emphasizing the importance of addressing service issues and competitor challenges.

In Q3FY24, Paytm reported a 38% YoY growth in revenue from operations, amounting to ₹2,850 crore, and EBITDA before ESOP increased to ₹219 crore compared to ₹153 crore in Q2FY24 (excluding UPI incentives). The company’s Profit After Tax (PAT) improved by ₹170 crore YoY to (₹222 crore).

Madhur Deora, President and Group CFO, highlighted the consistent improvement in EBITDA before ESOP over the last 6-7 quarters since achieving break-even profitability. He expressed confidence in continued EBITDA improvement, driven by strong momentum and operating leverage.

Within the financial services segment, Paytm sees significant opportunities in the high-ticket loan business. Madhur shared positive trends in merchant loans and personal loans, emphasizing excitement about the business. On Postpaid, the management said that it has low contribution and minimal impact on the bottom line and have got various products to offset the reduction in postpaid.

Overall, Paytm remains at the forefront of industry leadership, with a focus on sustained growth, innovative offerings, and operational efficiency.

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