Indian digital payments firm Paytm (PAYT.NS) is focusing on financial milestones and aims to become “free cashflow positive in the near future,” given the continued growth of the company, its CEO said. In a letter to shareholders, Chief Executive Vijay Shekhar Sharma said the firm’s decision to concentrate on its “core revenue and growth driver” had brought it much success.
Paytm reported a nearly 52 percent rise in fourth-quarter revenue on Friday, aided by a surge in loan growth. The company also posted an operating profit for a second consecutive quarter, indicating it is moving in the right direction. Paytm’s parent, One 97 Communications Ltd. (PAYT.NS), said that revenue went up from 15.41 billion rupees a year ago to 23.35 billion rupees ($285.80 million) in the three months ending March 31.
In the letter, Sharma said he believed the advent of early-stage artificial general intelligence (AGI) in 2023 would help bring efficiencies in the business model. “I see AGI as something like smartphones ten years back – very ripe for innovation and very potent to become part of everyday life at scale,” he said. “Our technology teams have started to see very encouraging results already.”
That means, in the near future, that positive free cash flow may be attainable for Paytm. A positive free cash flow means the company has sufficient funds to invest in growth or to sustain operations without increasing its profitability. This is an indication that Paytm is growing sustainably and can allocate resources where they are needed most. In this case, that driver is payments and financial services distribution. Sharma says this decision to focus on its “core revenue and growth driver” has allowed Paytm to become cashflow positive in the near future.
Additionally, the company is well positioned for growth given the digitization of payments in India, which has only accelerated in the wake of the Covid-19 pandemic. Mobile payments are becoming increasingly widespread, and Paytm has seen considerable success with the adoption of its smartphone app in India, where it now boasts millions of users. In this context, the company represents a prominent player in a growing market, and its potential for growth is considerable.
Paytm’s digital platform simplifies the remittance process for both consumers and businesses by leveraging the latest technologies, including artificial intelligence (AI), machine learning, and blockchain technology, among others. Its innovative approach to payments, combined with its ability to adapt rapidly to new and complex market developments, has enabled it to rapidly scale and assume a central role within India’s increasingly digitized payments industry.
Furthermore, Paytm is among the pioneers of the Indian fintech space and has played an instrumental role in the democratization of digital payments and financial services in India. The company’s commitment to financial inclusion has facilitated increased access to finance for vast sections of the Indian population previously excluded from the formal banking sector. This is evidenced by its growing user base and its deepening penetration into India’s unbanked rural hinterlands; presently, it operates across various segments, including banking services, lending, insurance, and other financial products.
As Paytm continues to grow, the focus on financial milestones becomes crucial for its future. The closing of a successful fintech funding round in the near future will not only promote the company’s growth in the digital payments and financial services landscape but also add substantial credibility to its endeavor to become free cashflow positive. Amid a constantly evolving industry, Paytm’s continued focus on financial milestones and sustainable growth is expected to serve the company well.
