Paytm, operated by One 97 Communications Ltd, reported a wider net loss of Rs 839 crore for the first quarter of FY25, compared to Rs 357 crore in the same period last year. The company’s revenue from operations fell by 36% to Rs 1,502 crore from Rs 2,342 crore a year ago, primarily due to the impact of RBI restrictions on its payments bank business.
Out of the Rs 1,502 crore in revenue, the payments business contributed Rs 900 crore, financial services brought in Rs 280 crore, and the remaining came from marketing services. As of 11:10 AM on July 19, Paytm shares were trading 1% lower at Rs 441 per share.
Paytm stated in a stock exchange filing that it expects future improvements in revenue and profitability, driven by growth in its Gross Merchandise Value (GMV), an expanding merchant base, recovery in its loan distribution business, and ongoing cost optimization efforts.
Earlier this year, the Reserve Bank of India (RBI) imposed significant restrictions on Paytm Payments Bank Limited (PPBL), which has impacted Paytm’s overall financial performance. The company had previously written off Rs 227.1 crore of investment in PPBL as impairment losses.
To address the rising losses, Paytm has implemented a cost-saving plan targeting Rs 400-500 crore annually in employee costs. This initiative has already resulted in a 9% reduction in employee costs quarter-on-quarter. However, other indirect costs have increased due to some one-time expenses, which the company expects to reduce in the coming quarters.
In the payments business, Paytm earned Rs 900 crore in revenue with a net payment margin of Rs 383 crore for the quarter, down from Rs 853 crore in the previous quarter. Payment margins rely on earnings from non-UPI instruments like post-paid, EMI, and cards, as well as subscription charges on devices sold to merchants.
Paytm reported that new merchant signups have reached January 2024 levels, and the company aims to increase revenue from device subscriptions through new signups, reactivation of merchants, and redeployment from inactive merchants. As of the end of June 2024, about 1.09 crore merchants subscribed to its devices, a slight increase from the previous quarter.
Paytm is also awaiting approval to start onboarding new UPI consumers. As of June, the platform had about 7.8 crore monthly transacting users, a slight increase since March but still significantly lower than the 10.4 crore users in January.
Do you have a news tip for Lakshmishree reporters? Please email us at media@lakadmin
Source: Moneycontrol
