Fintech company One97 Communications, which owns the Paytm brand, reported a significant increase in its quarterly loss. For the quarter ending June 30, Paytm’s loss widened to Rs 840 crore. This is primarily due to the continued impact of restrictions imposed on Paytm Payments Bank Ltd (PPBL) by the Reserve Bank of India (RBI).
Financial Performance
Paytm’s loss of Rs 840 crore in the recent quarter marks a substantial increase from the Rs 358.4 crore loss reported in the same period last year. Additionally, the company’s consolidated revenue fell by 33.48%, from Rs 2,464.2 crore a year ago to Rs 1,639.1 crore in the reported quarter.
Impact of RBI Restrictions
The primary reason for the increased loss and revenue decline is the disruption caused by restrictions on PPBL. The RBI barred PPBL from accepting deposits, credit transactions, or top-ups in customer accounts, wallets, and FASTags starting from March 15. This measure was taken to protect customers, including merchants.
Company Response
A Paytm spokesperson explained that three main factors contributed to the revenue decline and increased loss:
- Disruption from PPBL Products: Products like Wallet were stopped.
- Temporary Suspension of Certain Products: Some products were halted due to regulatory concerns.
- Reduced Merchant Base and GMV: The disruption led to a decrease in the merchant base and gross merchandise value (GMV), impacting overall profitability.
Gross Merchandise Value (GMV)
Paytm’s GMV declined by 9.1% quarter-on-quarter, from Rs 4.69 lakh crore. However, on a year-on-year basis, the GMV rose by 5% to Rs 4.3 lakh crore. The GMV from continued business showed a 27% increase year-on-year, reaching Rs 4.26 lakh crore, despite a 15% decline in monthly transacting users to 7.8 crore.
Future Outlook
The first quarter of the fiscal year has absorbed the impact of PPBL’s disruption. The Paytm spokesperson mentioned that the company’s performance is expected to improve from the second quarter onwards. Improvements are already seen in areas such as GMV, merchant devices, loan distribution recovery, and cost optimization.
Cost Optimization
Paytm is focusing on sharp cost optimization. The employee benefit cost decreased to Rs 798.4 crore from Rs 970 crore year-over-year and Rs 966 crore from the March 2024 quarter. Additionally, the number of sales employees increased by 5% year-on-year to 31,607 but decreased by 13% quarter-on-quarter.
Paytm’s financial performance in the recent quarter has been heavily impacted by restrictions on its payments bank. However, the company is optimistic about future improvement, citing cost optimization and recovery in key business areas. As Paytm navigates these challenges, its focus remains on stabilizing and enhancing its operational metrics.
