Paytm Q1 results: Net loss widens to Rs 839 crore; revenue falls 36%

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One 97 Communications Ltd, which runs Paytm, on July 19 reported its Q1FY25 consolidated net loss widened two-and half times to Rs 839 crore from Rs 357 crore a year ago, as the company continues to cope with the impact the RBI curbs shutting the payments bank business.

Sequentially, the loss was up 50 percent from Rs 550 crore in the preceding quarter.

The fintech firm's revenue from operations declined 36 percent to Rs 1,502 crore in Q1FY25 as against Rs 2,342 crore in the year-ago period.

Of Rs 1,502 crore revenue, payments business contributed Rs 900 crore, Rs 280 crore came from financial services while the rest was contributed from marketing services.

Paytm shares fell 1 percent at Rs 441 apiece, post the announcement.

"Going forward, we expect revenue and profitability to improve, driven by growth in operating parameters such as GMV, an expanding merchant base, recovery in loan distribution business and continued focus on cost optimisation," said Paytm in a stock exchange filing.

The Reserve Bank of India (RBI) had placed crippling restrictions on the firm’s associated entity Paytm Payments Bank Limited (PPBL) in January this year.

Previously, Paytm had written off Rs 227.1 crore worth of investment in PPBL and accounted for it as impairment losses.

Employee cost reduced 9% 

In response to escalating losses, Paytm had launched an aggressive plan to save Rs 400-500 crore annually on employee costs.

"As part of this goal, we have achieved a 9% reduction QoQ. However, excluding employee costs, our indirect costs have increased due to certain one-time expenses. We expect these costs to reduce in the coming quarters," the company said.

Further, the ESOP cost was down at Rs 247 crore as many were lapsed on the back of layoffs and resignations.

Paytm managed to bring down its overall expenses by almost 8 percent QoQ, barring marketing expenses which almost doubled in the quarter to Rs 221 crore.

It also bore a one-time expense on software, cloud and data centre relating to the migration to the TPAP model.

Update on payments business

Paytm earned Rs 900 crore revenue from payments business.

The net payment margin was Rs 383 crore during the quarter, down from Rs 853 crore QoQ.

Payment margins are dependent on what Paytm earns from non-UPI instruments like post-paid, EMI, and cards, and subscription charges on devices sold to merchants.

While Paytm claims to be seeing its new merchant signups reaching January 2024 level, its revenue from per device subscription has bottomed out in
Q1 FY 2025.

The company expects this to increase in future as it works towards new sign ups, reactivation of merchants and redeployment from inactive merchants.

As of June 2024 end, about 1.09 crore merchants subscribed to its devices, a marginal increase from the previous quarter.

On the consumer payments side, Paytm is awaiting approval for starting onboarding of new UPI consumers.

As of June, it had about 7.8 crore monthly transacting users, slight up since March but significantly low from January levels when it was about 10.4 crore.

Lending business updates 

Paytm's revenue from lending business came further down from Rs 304 crore to Rs 280 crore, sequentially, on account of lower loan distribution. This includes personal and merchant loans.

After a temporary pause on February 1, it had resumed operations in March end with two updates--complete phase out of post paid loans and focus solely on a distribution-only credit model.

It, however, still provides collection services to the lender in certain cases.

Paytm's demand and supply for personal loans has not managed to pick up while a marginal uptick was seen from merchant side. It distributed personal loans worth Rs 2,500 crore in the quarter, further down 26 percent QoQ while the value of merchant loans distributed stood at Rs 2,508, up 50 percent sequentially.

The average ticket size for the latter increased to Rs 2.25 lakh from Rs 1.9 lakh a year ago.