MUMBAI: Paytm’s losses widened to Rs 550.5 crore in the March quarter on a consolidated basis from Rs 167.5 crore in the year ago period as the Reserve Bank of India’s (RBI) move to impose restrictions on the firm’s banking entity disrupted operations. Revenue from operations during the quarter declined to Rs 2,267 crore from Rs 2,334.5 crore in the year ago quarter.In its earnings statement on Wednesday, the Noida-based firm said that it continues to expect near-term financial impact to its revenue and profitability and the full impact of the RBI’s action on the business will play out in Q1FY25.
“Due to temporary disruption in our operating metrics, we have taken a conservative view and paused certain payments and loan distribution businesses. With emerging regulatory clarity and the recalibration of these products, we have started or will be starting these products soon. These changes are expected to have an incremental EBITDA impact of Rs 75-100 crore, in Q1FY25 and should start recovering in subsequent quarters” the company said. Paytm has written off Rs 227.1 crore worth of investments in Paytm Payments Bank (PPBL) and accounted for it as impairment losses.
Paytm’s monthly transacting users (MTU) declined to 8 crore in April from 10.4 crore users in January on the back of voluntary user attrition due to RBI’s action on PPBL and pause in new user sign-ups for the TPAP (third party application provider) app. Value of loans disbursed during Q4FY24 declined to Rs 5,776 crore from Rs 12,554 crore in the year ago quarter. In a post-earnings call, the company said that about 12% of its payments GMV (gross merchandise value) was coming from businesses which have been currently discontinued or disrupted (like wallet business). “The business has come off its worst. Excluding these disrupted products, we are now seeing a positive growth trend in payment GMV since the month of April,” said Madhur Deora, group CFO at Paytm.
Founder and CEO Vijay Shekhar Sharma said that governance and compliance will be the key focus areas for Paytm in the next few quarters. The company can be expected to add more independent board members and subject matter experts across subsidiaries and associate entities as well as to the board of the parent entity. “We are committed our core payments business. We will invest in customer acquisition,” Sharma said, adding that the company will look at pruningnon-core assets.
Paytm also hinted at more job cuts (largely non-field roles) as it continues to leverage artificial intelligence (AI) to bring about cost efficiencies and expects to record annualised people cost savings of Rs 400-500 crore. “For the coming year, while we continue to invest in the merchant sales team, as well as risk and compliance functions, we expect reductions in other employee costs…..we are optimising our cost structure, leveraging AI capabilities…this includes creating a leaner organisation structure,” the company said.
On January 31, the RBI issued a directive to PPBL asking it to stop accepting money in any customer account, including wallets and other prepaid instruments due to persistent non-compliance. The restrictions were put in place after March 15. Paytm said that it has transitioned its core payments business from PPBL to other partner banks. “This move de-risks our business model and also opens up new opportunities for long-term monetisation, given our platform’s strength around customer and merchant engagement,” the firm said.
The stock price of Paytm ended at Rs 368.85 apiece on the BSE on Wednesday, up nearly 5%.
“Due to temporary disruption in our operating metrics, we have taken a conservative view and paused certain payments and loan distribution businesses. With emerging regulatory clarity and the recalibration of these products, we have started or will be starting these products soon. These changes are expected to have an incremental EBITDA impact of Rs 75-100 crore, in Q1FY25 and should start recovering in subsequent quarters” the company said. Paytm has written off Rs 227.1 crore worth of investments in Paytm Payments Bank (PPBL) and accounted for it as impairment losses.
Paytm’s monthly transacting users (MTU) declined to 8 crore in April from 10.4 crore users in January on the back of voluntary user attrition due to RBI’s action on PPBL and pause in new user sign-ups for the TPAP (third party application provider) app. Value of loans disbursed during Q4FY24 declined to Rs 5,776 crore from Rs 12,554 crore in the year ago quarter. In a post-earnings call, the company said that about 12% of its payments GMV (gross merchandise value) was coming from businesses which have been currently discontinued or disrupted (like wallet business). “The business has come off its worst. Excluding these disrupted products, we are now seeing a positive growth trend in payment GMV since the month of April,” said Madhur Deora, group CFO at Paytm.
Founder and CEO Vijay Shekhar Sharma said that governance and compliance will be the key focus areas for Paytm in the next few quarters. The company can be expected to add more independent board members and subject matter experts across subsidiaries and associate entities as well as to the board of the parent entity. “We are committed our core payments business. We will invest in customer acquisition,” Sharma said, adding that the company will look at pruningnon-core assets.
Paytm also hinted at more job cuts (largely non-field roles) as it continues to leverage artificial intelligence (AI) to bring about cost efficiencies and expects to record annualised people cost savings of Rs 400-500 crore. “For the coming year, while we continue to invest in the merchant sales team, as well as risk and compliance functions, we expect reductions in other employee costs…..we are optimising our cost structure, leveraging AI capabilities…this includes creating a leaner organisation structure,” the company said.
On January 31, the RBI issued a directive to PPBL asking it to stop accepting money in any customer account, including wallets and other prepaid instruments due to persistent non-compliance. The restrictions were put in place after March 15. Paytm said that it has transitioned its core payments business from PPBL to other partner banks. “This move de-risks our business model and also opens up new opportunities for long-term monetisation, given our platform’s strength around customer and merchant engagement,” the firm said.
The stock price of Paytm ended at Rs 368.85 apiece on the BSE on Wednesday, up nearly 5%.
