Paytm has given additional disclosures; we are very confident about where the business is going: CFO

“For the first time, we have said in our earnings release as well as in our earnings presentation which is on the website, that we believe that there is a huge amount of operating leverage in our business and as a result of which we expect EBITDA also to continue to come down,” says Madhur Deora, President and Group CFO, One97 Communications Ltd.


On decoding the Q3 numbers & the plan going ahead
I am going back to the IPO. The IPO was priced on the back of very strong demand from global institutional investors as well as Indian institutional investors in the anchor book demand that we had. Obviously, the way the stock price has performed is disappointing. We understand that a lot of investors are sitting on losses or have taken losses. It is very disappointing for all of them and it is very disappointing for us.

The global fintech sell off really did start at the end of October and not justifying our share price performance, but I do want to put that in the context. Nearly all companies were at 52-week highs around the end of October and that was the time when our anchor round happened. Even by the time we got listed, the stocks were already falling and our stock also took a big hit in the first couple of days and showed a little bit of a recovery.

In the New Year, unfortunately there has been this global selloff away from growth stocks which has impacted all stocks as well as ours. We have had a huge amount of time now to focus on what matters to investors, take all the feedback that investors have given us and the things that matters to investors is number one more disclosure about our business, so that they can understand our business a lot better; what are the key drivers in payments, in lending, in our commerce and cloud business which are the merchant services.

We have given a huge amount of additional disclosure even if companies reduce the disclosures that they have from perspectives to earnings. We have actually increased the disclosure because we are very confident about where the business is going but more importantly, we have taken feedback that like how we understand our business really well, investors would also like to understand our business and for that they need additional metrics.

The second thing that we have done is really focussed on what are the performance levers that matter which is expansion of revenue, expansion of contribution margins and reducing EBITDA losses.

You want to get to earnings. I would not may be go into that right now but suffice to just say on those metrics that matter and this is feedback from investors that you need to focus on all three of them – revenue growth, contribution margin expansion and reducing EBITDA losses. We cannot be talking about one or two of them. All three have to move in the right direction. So, that is what we wanted to demonstrate quarter on quarter on quarter. Yes, we have made a little bit of a quip about quarter to quarter, which is the reality of a public company but that is the reality. It is the reality of a public company that now we have to live with because it used to be public so we want to deliver strong results on revenue contribution margin and reducing EBITDA losses every quarter.

It is great to know how you think Paytm needs to be valued and that is based on the feedback that you have received from your institutional investors. I am going to ask this question on behalf of the retail investors. What is the larger message for retail investors?
Our message to institutional investors and retail investors is not different. We are not saying we only care about this set of investors or that set of investors. The feedback that I am referring to is not just of institutional investors. It is also from analysts who write for retail investors and give feedback on what retail investors care about long term.

So, I just want to correct the question a little bit. I was not referring only to feedback from institutional investors. Obviously it is hard to get feedback from a huge amount of retail investors over the same time but the analysts who speak to them are probably the best way to make sure that we tap into and we have done a lot of work with retail analysts who write for retail investors. That is why for the first time, we have said in our earnings release as well as in our earnings presentation which is on the website, that we believe that there is a huge amount of operating leverage in our business and as a result of which we expect EBITDA also to continue to come down. That is something that some institutional investors and a lot of retail analysts were asking. Our message to them and the feedback that we collect is from everyone, it is not sort of targeted only one set of investors.