Vijay Shekhar Sharma Unveils Paytm’s Road To Profitability
Fintech startup Paytm expects to turn profitable after two years as it is monetising the existing customer base and eyeing financial services as its next major frontier for growth, founder Vijay Shekhar Sharma has said.
The Noida-based firm, which has had an astonishing rise since demonetisation in 2016, is betting on financial services, commerce and payments as three key focus areas.
In an interview with Press Trust of India, Sharma said Paytm's growth is divided into three phases:
- Finding the right product-market fit
- Revenue and monetisation
- Profitability and free cash flows
"We are in the second phase of that journey," the chief executive officer of Paytm’s parent, One97 Communications Pvt. Ltd., said.
In 2015, Paytm started deploying QR codes and by 2018-19 completed its product-market fit. From 2019-20 onwards, it is monetising.
"I would say at least two years because we are also a large dominant market share company and we wouldn't want to lose market share while becoming profitable next quarter," Sharma said, when asked about the timeline for hitting profit.
In the last 12 months, Paytm has seen a reduction in pre-tax loss, thanks to monetisation and not reckless cost-cutting, he said, adding that business like Paytm Payments Bank, commerce and cloud were already profitable, while Paytm FirstGames and Paytm Mall are "close to profitability".
Paytm, which competes with Google Pay, Flipkart-owned PhonePe and others in the digital payments space, had late last year raised $1 billion from the U.S.-based asset manager T. Rowe Price and existing investors, including SoftBank Group Corp. and Alibaba Group Holding Ltd., to fund expansion plans.
Paytm had also said it plans to invest around Rs 10,000 crore over the next three years to expand its financial services. The last round of funding had valued the company at about $16 billion.
When Asked about the businesses under OCL that were draining profitability, Sharma said that investments were focused on expanding the offline merchant base. "Overall, offline merchant expansion and technology is where the investment is happening," he said.
Earlier this month, Paytm said it aims to add close to 10 million merchants to its platform over the next 12-18 months as it brings new features to its payments platform. The company, which has introduced a new all-in-one payment gateway and business solutions as well as an Android-based point-of-sale machine, currently has more than 16 million merchants across unorganised and organised sectors.