Aim to reclaim EBITDA profitability in ongoing fiscal amid challenges, says Paytm CEO

Vijay Shekhar Sharma said ChatGPT's answers to questions on current affairs won't be 'logically good'.

In a clear signal of its financial recovery, Paytm CEO Vijay Shekhar Sharma said the company is aiming to deliver one profitable quarter in the ongoing fiscal year, even without UPI incentives.

"We expect to hit EBITDA profitability before employee stock option costs even without that one-time extraordinary (UPI) incentive,” Sharma stated during a call to discuss the company's latest financial results.

The statement comes after the fintech firm's earnings slipped into red in the first quarter of FY25 in an aftermath to shutdown of its banking entity five months back.

The Noida-based firm had reported its first-ever adjusted EBITDA profitability in Q3 last fiscal. However, after a period of conservative growth, the earnings took a hit in the January-March quarter due to shut down of its banking entity on January 31.

The operating profit fell to Rs 103 crore in the March quarter from Rs 219 crore, sequentially, before slipping into red in Q4FY25 at Rs 545 crore.

Sharma noted that the full financial impact of recent disruptions became apparent in Q1 FY2025.

Regarding the UPI onboarding process, he mentioned that the firm is in process of completing technology integration and migration with banks and will soon receive NPCI approval to start adding new customers.

“There is a multiple bank ecosystem and backend needs to be expanded. We are at the last leg of this. We are hopeful to receive NPCI’s approval to start onboarding new customers in the near future," said Sharma.

On April 17, Paytm announced it had begun migrating customers to partner payment service provider (PSP) banks from now barred-- Paytm Payments Bank Limited (PPBL).

Paytm now operates as a third-party application provider (TPAP) with Yes Bank, Axis Bank, HDFC Bank, and SBI as PSP partners, effective March 15.

Despite initiating the migration of users to new UPI IDs or handles in April, Paytm will need a couple more months before it can start onboarding new customers. The delay has affected its market share, which dropped to 8 percent in May, the lowest in four years.

In response to escalating losses, Paytm had launched an aggressive plan to save Rs 400-500 crore annually on employee costs, which it managed to being down by almost 9 percent in Q1 FY25, quarter-on-quarter.

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

The company this reduction to continue by another 5-7 percent in next few quarters, the management said.