Paytm Q4 loss widens to Rs 550 cr; revenue drops 3%

Paytm has reported a widened consolidated net loss of ₹549.60 crore in the March quarter, compared to ₹219.80 crore in the December quarter and ₹168.90 crore in the same quarter last year. Due to declining sales in the fourth quarter, Paytm has warned of job cuts and plans to trim non-core assets. The fintech company also stated that regulatory probes have significantly reduced its operations. Paytm’s revenue from operations fell by 3% year-on-year to ₹2267.10 crore from ₹2334.50 crore in the same quarter last year. Sequentially, revenue dropped by 20.5% from ₹2850.5 crore.

The Managing Director and Chairman of the fintech giant, Mr. Vijay Shekhar Sharma, has stated that the company expects a near-term financial impact on their business and revenue due to disruptions in Q4. The financial disruptions in the 4th quarter occurred mainly due to two reasons: temporary disruptions related to the UPI transition and a permanent disruption due to an embargo on Paytm Payments Bank Limited (PPBL). The impact on PPBL also restricted several other payment and loan products for customers.

The fintech’s Earnings Before Interest, Taxes, Depreciation, and Amortization (EBITDA) before Employee Stock Ownership Plans (ESOPs) dropped significantly to ₹103 crore in the March quarter, compared to ₹234 crore in the same quarter the previous year. Excluding the UPI initiatives, the EBITDA before ESOPs was Rs 185 crore. Paytm was the distributor of PPBL products like Paytm Wallet and FastTAG. Paytm, however, projects a steady-state annualized direct impact on EBITDA of Rs 500 crore as a result of the present restriction on these products.

Despite the challenges, the company is not idly sitting back. The Managing Director has announced that they have successfully shifted their main payment business from PPBL to other partner banks. This move reduces the risk in their business model and creates new opportunities for long-term monetization. It’s important to note that Paytm Payments revenue increased by 1568 crore in the fourth quarter. However, it’s also worth mentioning that there was a 9% decline on a quarter-on-quarter basis.

Despite the turbulent financial situation in the fourth quarter, the fintech giant is expecting a better outlook in 2025. The managing director stated that the company is confident of achieving previous growth trends in both the merchant and consumer base. It is currently in discussions with NPCI to finalize the signing up of new UPI consumers for its TPAP App. The firm has already implemented various prudent changes in accordance with regulatory guidance and circulars for certain payments and loan products. These changes are expected to have an incremental EBITDA impact of Rs 75- Rs 100 crore in Q1 FY 2025 and should start showing recovery in subsequent quarters.

Additionally, they are optimizing their cost structure, leveraging AI capabilities, and focusing on the core business to achieve significant cost efficiencies. This involves creating a leaner organizational structure and divesting non-core businesses. As a result of these developments, the fintech company expects revenue of Rs 1,500-Rs 1,600 crore and EBITDA before ESOP of minus Rs 500-600 crore for Q1FY2025. Given that they are resuming certain halted goods and witnessing a consistent rise in operating metrics, Paytm expressed confidence in seeing significant improvement beginning in Q2 of FY2025.