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Digital payments firm Paytm on Wednesday reported a wider consolidated loss of Rs 549.6 crore in the fourth quarter (Q4) of 2023-24 (FY24), compared to Rs 168.4 crore in the same quarter last year (2022-23/FY23). Sequentially, the loss doubled from Rs 219.8 crore in the third quarter (Q3) of FY24.
One97 Communications, which operates Paytm, has attributed the decline in income in Q4FY24 to “temporary disruptions in business operations”.
In January, the Reserve Bank of India (RBI) placed crippling restrictions on the firm’s associated entity Paytm Payments Bank (Paytm PB). The Noida-based firm reported a loss of Rs 1,417 crore for the entire FY24, down from Rs 1,776.5 crore in FY23.
Net income declined by 2.6 per cent year-on-year to Rs 2,398.8 crore in Q4FY24 compared to Rs 2,464.6 crore in Q4FY23.
“The last three months have been a roller coaster journey for Paytm. We learnt a lot of lessons. We learnt how to become better and more resilient. We also resolved ourselves to be fully compliant with the regulator’s expectations,” said Vijay Shekhar Sharma, founder and chief executive officer of Paytm.
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The company will see the full financial impact in the first quarter (Q1) of 2024-25 (FY25). Due to prudent operations, risk policies, and temporary disruptions, it is confident to see meaningful improvement, starting the second quarter (Q2) of FY25, said the company in a press release.
The company added it recorded its first full year of earnings before interest, tax, depreciation, and amortisation (Ebitda) before employee stock ownership profitability (since the initial public offering) of Rs 559 crore.
It has written off Rs 227.1 crore worth of investment in Paytm PB and accounted for it as impairment losses. Sequentially, revenue dipped 20 per cent from Rs 2,999.1 crore in Q3FY24.
Overall revenue for the entire FY24 rose 25.2 per cent to Rs 10,524.7 crore from Rs 8,400 crore in FY23. Temporary disruptions in operating metrics such as monthly transacting users and payment gross merchandise value, among others, during February and March this year are expected to have an incremental Ebitda impact of Rs 100 to Rs 150 crore in Q1FY25.
The company expects recovery from Q2FY25 as it stabilises growth in the consumer and merchant base metrics.
Meanwhile, the company has its eyes set on pruning non-core businesses such as cross-border payment products and software-as-a-service (SaaS) to banks, among others.
“Internally, we were running many projects such as cross-border payments and SaaS for banks, which we do not need to do now. We are trying to find out whether these businesses, where our cost structure of overall engineering and technology people, has been larger than what a pure payment company would have had,” Sharma told analysts.
On getting a payment aggregator licence from the banking regulator, he elucidated that the company is in a “waiting phase”.
“We do not foresee that as a risk. Interministerial committee meetings will be due once the new government is formed. I cannot say much about when it will be done or so on,” he said.
At the end of the quarter ended March 2024, Paytm had a cash balance of Rs 8,650 crore, compared to Rs 8,901 crore as of the quarter ending December 2023. This includes Paytm Money (PML) customer funds of Rs 339 crore and Rs 462 crore for March 2024 and December 2023, respectively.
“We have about 8,300 crores excluding PML customer funds. While we have mentioned that the next year, the next quarter will be Ebitda-negative, we will get back very quickly on the path back to profitability. I think over the last quarter, the most important thing for us to do was to finish transitions and un-pause some of the things that we had paused temporarily,” said Madhur Deora, president and group chief financial officer of Paytm.
After the restrictions on Paytm PB, One97 Communications’ expenses increased slightly in Q4FY24 compared to the same quarter in FY23. It spent Rs 2,691.4 crore in Q4FY24 compared to 2.3 per cent (Rs 2,630.5 crore) in Q4FY23.
Sequentially, the company cut down its expenses by 16.3 per cent from Rs 3,216.3 crore in Q3FY24. Expenses were pegged at Rs 11,644.6 crore for the entire FY24, up 15 per cent from Rs 10,130.4 crore in FY23.
“I am happy to share that we have successfully transitioned our core payment business from Paytm PB to other partner banks. This move derisks our business model and also opens up new opportunities for long-term monetisation, given our platform’s strength around customer and merchant engagement,” Sharma said in a statement.
The company expects annualised cost savings of Rs 400-500 crore as it looks to reduce its employee costs.
