(Bloomberg) — Paytm’s losses widened and sales fell again in the latest quarter, underscoring the ongoing impact of a regulatory order that has crippled much of the fintech business.
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Net loss for the fiscal first quarter through June more than doubled to 8.39 billion rupees ($100 million), the company, based outside New Delhi, said on Friday. Analysts had expected a loss of 9.33 billion rupees. Revenue shrank 36% to 15 billion rupees.
Its shares fell as much as 4.4% ahead of earnings before erasing losses after the report.
Paytm is trying to revive its business after the Reserve Bank of India earlier this year ordered the near closure of its banking affiliate. Paytm’s charismatic founder, Vijay Shekhar Sharma, controls the bank, which is separate from the listed fintech that trades as One97 Communications Ltd. Sharma has now forged deeper partnerships with major Indian lenders to stabilize its payments business, which previously relied on large part of Paytm Payments Bank.
Paytm on Friday said employee costs fell 9% from the previous quarter, in line with its target of reducing personnel expenses by 4 billion to 5 billion rupees. It cut jobs to cope with lower business volumes since the regulator’s onslaught.
The company’s monthly transacting user base stabilized at around 78 million during the June quarter. The average daily value of payments made to merchants through its applications and payment solutions, excluding discontinued products, increased during the period and is almost back to January 2024 levels, he added.
Paytm said it has disbursed 50.1 billion rupees in loans, almost the same as in the previous three-month period.
What Bloomberg Intelligence says
“Paytm is driving more downside risk on payments and financial services revenue in the near term following the closure of its bank and a service suspension prior to that, leading to merchant and user churn, with the consensus seeing a decline of more of 30% – both in the year – throughout the year and sequentially – in the fiscal 1Q ended in June. It plans to increase marketing spend to acquire and reactivate users in its efforts to recover most of the business volume lost in the January-March period.”
– Nathan Naidu, Analyst
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Sharma pioneered fintech in India with Paytm mobile wallets and then QR codes. His company, once India’s most valuable startup, has won the support of some of the world’s biggest executives, including Alibaba Group Holding Ltd. founder Jack Ma, SoftBank Group Corp. chief Masayoshi Son and Chairman of Berkshire Hathaway Inc., Warren Buffett. A disastrous capital market debut in 2021 was perhaps Sharma’s first public hurdle, from which Paytm is yet to recover – the shares are still down around 80% from their listing price.
Paytm competes with Amazon.com Inc., Alphabet Inc.’s Google and billionaire Mukesh Ambani’s Jio Financial Services Ltd. in India’s crowded digital payments space.
(Updates with details from company statement in fifth to seventh paragraph)
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