Fintech giant Paytm reports a Rs 550 Crore loss in the quarter ending in March 2024, up from a loss of Rs 169 crore in the same period last year. Revenue dropped 3% YOY (year-on-year) to Rs 2,267 crore, compared to Rs 2,334 crore in the previous year.
The company’s performance was affected by temporary disruptions from the UPI transition and ongoing issues due to the Paytm Payments Bank embargo.
Paytm Reports Increased Loss in Q4 and Revenue Drops 3% YOY
EBITDA before ESOPs fell to Rs 103 crore, down from Rs 234 crore in the same quarter last year. Without UPI incentives, EBITDA before ESOPs was Rs 185 crore. The payments business revenue grew 7% year-on-year to Rs 1,568 crore. Still, it declined 9% quarter-on-quarter due to disruptions with Paytm Payments Bank products and a conservative approach taken for certain businesses.
Paytm noted that while it experienced some disruptions in Q4, the full financial impact will be seen in the first quarter of the next fiscal year.
Paytm Faces Uncertainty with PPBL Operations Due to RBI Restrictions
Paytm, holding a 49% stake in PPBL, cited ongoing uncertainty regarding PPBL’s business operations following restrictions imposed by the RBI on January 31, 2024. The RBI directed PPBL to halt banking services starting March 2024 due to concerns regarding regulatory guideline breaches and non-compliance.
As a result, Paytm has accounted for its share of losses and OCI (Other Comprehensive Income) of PPBL based on unaudited financial information for the year ended March 31, 2024, as audited financial statements of PPBL are not yet available.
Paytm Reports Increased Losses in Q4 FY24 Following RBI’s PPBL Ban
In response to RBI’s actions, Paytm terminated its nodal accounts with PPBL and ceased major business activities with PPBL. On May 22, Paytm disclosed a net loss of Rs 550 crore in Q4 FY24, a significant increase compared to the previous year, as RBI’s ban impacted margins on PPBL.
Revenue from operations decreased by 2.9% year-on-year to Rs 2,267.10 crore. The company attributed part of the loss to an impairment of Rs 227 crore related to its investment in PPBL. Excluding this, the profit after tax would have been Rs 323 crore.
Paytm Faces Impact from Payment Bank, Cuts Marketing Spending
Paytm, known for its Payment Bank products like the Paytm wallet and FASTag, disclosed that the company distributed these products. However, due to the current embargo, it expects an annualized direct impact on EBITDA of about Rs 500 crore. Operationally, the gross merchandise value (GMV) for the fourth quarter increased by 30% year-on-year to Rs 4.7 lakh crore. The Q4 contribution profit remained flat year-on-year at Rs 1,288 crore.
Contribution margins improved to 57% from 55% a year ago. Excluding UPI incentives, the contribution margin remained flat at 51% year-on-year. As of March 2024, there were 1.07 crore merchant subscriptions, showing a growth of 39 lakh year-on-year. Subscription revenue in Q4 was impacted due to lower new merchant deployment and active merchants.
Merchant subscription revenue in the fourth quarter was Rs 90 per device per month. Paytm expects it to decrease to Rs 80 in Q1FY25 before increasing towards Rs 100 by Q4FY25.
During January-March 2024, Paytm reduced its marketing spending by pausing most user growth initiatives in February and March. However, the company intends to reinvest in these areas in the next financial year. Revenue from financial services and other sources dropped 36% year-on-year to Rs 304 crore in the reporting quarter, primarily due to reduced loan distribution.
Paytm’s Non-Lending Revenue Grows Year-on-Year, Slightly Declines Quarter-on-Quarter
Non-lending revenue at Paytm increased compared to the previous year but saw a slight dip compared to the previous quarter due to business disruptions. The value of merchant loans distributed fell by 28% year-on-year to Rs 1,671 crore, while personal loans dropped marginally by 1% year-on-year to Rs 3,408 crore.
The average ticket size for loans increased to Rs 1.4 lakh from Rs 1.3 lakh a year ago, with the average tenure rising to 16 months compared to 15 months previously. Revenue from marketing services, including ticketing, advertising, credit card marketing, and deals and gift vouchers, rose by 1% year-on-year to Rs 395 crore. GMV for ticketing, deals, and gift vouchers jumped by 28% year-on-year to Rs 2,804 crore.
Paytm’s Revenue Forecasts for Q1 FY25
As of March 2024, Paytm’s cash balance stood at Rs 8,650 crore, slightly down from Rs 8,901 crore in December 2023.
The company anticipates revenue for the first quarter of the fiscal year 2025(Q1FY25) to be around Rs 1,500-1,600 crore. Paytm expressed confidence in significant improvement starting from the second quarter of FY 2025, driven by the restart of certain paused products and steady growth in operating metrics. For the fiscal year 2024, Paytm reported a 25% increase in revenue, attributed to growth in gross merchandise value (GMV), device additions, and expansion in the financial services distribution business.
Paytm’s Net Payment Margin Increases
Paytm’s net payment margin surged by 50% to Rs 2,955 crore, driven by higher payment processing margin and increased merchant subscription revenues. For the first time since its IPO, Paytm achieved full-year EBITDA profitability for the fiscal year 2024, reaching Rs 559 crore. In early trade on Wednesday, Paytm shares are trading 1.3% lower at Rs 347 on the NSE.
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