One 97 Communications Ltd Q1 FY23 Earnings Conference Call Insights

Key highlights from One 97 Communications Ltd (PAYTM) Q1 FY23 Earnings Concall

Q&A Highlights:

• Sachin Salgaonkar of Bank of America asked about Soundbox monthly rental going down to zero and the monetization of it. Bhavesh Gupta CEO, Lending replied that on Soundbox, the rental going down to zero is not the case. A very small percentage of merchants are being given the offer. This won’t have any material impact on the subscription revenue of Soundbox.

• Sachin Salgaonkar of Bank of America also asked the improvement in net payments margin (NPM) and what would be the steady state NPM. Madhur Deora CFO answered that PAYTM will continue to try to improve this number. The threshold is it should be positive on net payment margin.

• Karan Gandhi enquired if merchant retention is improving. Bhavesh Gupta CEO, Lending replied that merchant retention is surely improving. PAYTM looks at the static cohorts of merchant. On the card machine side merchant retention cohort is improving every quarter by about 1%. On Sound Box, it is stable between 85-86%.

• Rahul Jain from Dolat Capital asked about the contribution from the introduction of platform fee on payments to consumer. Bhavesh Gupta CEO, Lending answered that this is currently a very small percentage of revenue. PAYTM believes that in next couple of quarters, platform revenue could become a reasonable portion of the consumer fee but not large.

• Rahul Jain from Dolat Capital asked about the sustainability of improvement in EBITDA going forward. Madhur Deora CFO replied that the business has significant tailwinds w.r.t not just growth and revenue but also profitability. PAYTM will continue to drive the performance.

• Rahul Jain from Dolat Capital asked about the INR29 crore impact in payment services, if it’s fully baked in 1Q23. Madhur Deora CFO answered that it’s more or less a run rate impact. Not every single rationalization happened at quarter beginning, but it is more or less a full quarter impact.

• Saurabh Kumar of JPMorgan asked about the volumes being syndicated in the credit card business and if EMI is launched. Bhavesh Gupta CEO, Lending replied that the company has an EMI business on PAYTM post-paid. EMIs like contemporaries is on the build and is expected to launch sometime in FY23.