Paytm Steps Up Marketing Spend as AI Boosts Profitability

Paytm parent One97 Communications Ltd is ramping up spending on marketing, customer acquisition and expansion of merchants, even as artificial intelligence (AI)-led efficiencies continue to lift profitability.

"Paytm's expenditure on sales and service activities, including marketing, rose 27% year-on-year as the company continued to focus on long-term growth," Madhur Deora, President and Group Chief Financial Officer, said in a statement commenting on the company's quarterly results.

“We are also spending more on marketing,” Deora said, adding that while spending increased, Paytm’s adjusted EBITDA margin, excluding the Payments Infrastructure Development Fund (PIDF) benefit, improved by seven percentage points, from 1% to 8%.

He said the company continues to focus on investments that can generate growth while exercising operational discipline.

Also Read: mPokket Appoints Naveen Polishetty as Brand Ambassador

AI-Led Growth:

The increased marketing outlay comes on the back of Paytm seeing higher engagement across its platform. Monthly transacting users (MTUs) increased by about 8% year-on-year, but consumer gross transaction value (GTV) grew by 45%, suggesting that users are transacting more often and spending more through the platform.

Stronger engagement is beginning to translate into higher marketing services revenue and increased consumer financial services income, Deora said. “But the company’s travel business remained under pressure during the quarter due to sector-specific headwinds,” he said.

We will continue to invest aggressively in building our consumer and merchant ecosystems and AI is helping us optimise our operating costs', said Vijay Shekhar Sharma, Founder and Chief Executive Officer.

"We continue to invest in consumer expansion, merchant expansion and financial services. Powered by AI means our costs are being dramatically optimised," Sharma said.

He also said that Paytm has implemented AI across merchant acquisition with in-house AI agents helping field sales teams identify and onboard small businesses more efficiently. The company is also exploring how to commercialise some of these AI capabilities for external customers.

Also Read: FSSAI Suspends Westend Agro Products' Licence Over Alleged Labelling Violations

"Paytm’s overall cost structure has largely stabilised. Most operating expenses, except for employee-related sales costs and marketing investments, have remained flat or declined sequentially," Sharma said.

The comments came as Paytm reported a strong improvement in its quarterly financial performance.

Revenue from operations rose 28% year-on-year and 8% sequentially to ₹2,448 crore. EBITDA increased 182% from a year earlier and 54% quarter-on-quarter to ₹203 crore, while profit after tax (PAT) climbed 79% year-on-year to ₹220 crore.