One 97 Communications Ltd (Paytm) on May 22 reported net loss of Rs 550 crore in Q4FY24, a 3.2X jump, as its margins took a hit post RBI’s crippling ban on its associate company, Paytm Payments Bank (PPBL) on January 31.
Revenue from operations fell 3 per cent year-on-year to Rs 2,267.10 crore against Rs 2,334.50 crore in the same quarter last year. Paytm said its March quarter results were impacted by temporary disruption on account of UPI transition and permanent disruption because of PPBL embargo. Paytm has impaired the carrying value of company’s investment in PPBL.
The fintech major said its contribution margin stood 57 per cent including UPI incentives, and 51 per cent excluding UPI incentives. Its Ebitda before ESOP was Rs 103 crore, including UPI incentives and minus Rs 185 crore excluding UPI incentives. Following the fintech major’s results, Paytm shares were trading 0.78 per cent lower at Rs 349 on BSE.
PPBL products like the Paytm wallet and FASTag were distributed by Paytm. But due to the current embargo on these products, Paytm anticipates the steady state annualised direct impact on Ebitda to be Rs 500 crore, as previously disclosed.
“Most of this impact will be in Q1 as these products were operational during most part of Q4 FY 2024. 2. Temporary disruptions in operating metrics (MTU, merchant base, payment GMV) during February and March. This is expected to have an incremental Ebitda impact of Rs 100-150 crore in Q1 FY 2025 and should start recovering from Q2 as we are seeing stabilization or growth in consumer and merchant base metrics from April/May,” Paytm said.
Paytm said it is confident of achieving erstwhile growth trends in the merchant and consumer base and said it is in discussions with NPCI for confirmation of signing up new UPI consumers for its TPAP App.
“During the quarter, we have taken various prudent measures in line with regulatory guidance and circulars, in the credit and payment business. Due to this and 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,” Paytm said.
“These changes are expected to have an incremental Ebitda impact of Rs 75- Rs 100 crore, in Q1 FY 2025 and should start recovering in subsequent quarters. In Q4 FY 2024, we had lower marketing spends, as we paused most of the user growth spends in the month of February and March. We expect to reinvest in these areas in the coming financial year. While we experienced financial impact in Q4 due to the above disruptions, the full financial impact will be seen in Q1 FY 2025,” Paytm said.
Besides, Paytm expects Q1FY2025 revenue of Rs 1,500-Rs 1,600 crore and Ebitda before ESOP of minus Rs 500-600 crore. Paytm said it confident of seeing meaningful improvement starting from Q2 FY2025, based on restarting certain paused products and achieving steady growth in operating metrics.
“We are optimizing our cost structure, leveraging AI capabilities, and focusing on our core business will enable us to achieve significant cost efficiencies. This includes creating a leaner organization structure and pruning non-core businesses. All recent changes are aligned with pre-approved succession plans discussed with the Board in previous financial years. We will continue to reward our high-performing talent by promoting them into leadership roles and welcome new senior executives who will contribute to the next wave of growth,” Paytm said.
Paytm said its employee costs have increased in recent years due to investments primarily in technology, merchant sales, and financial services.
“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 expect annualized people cost savings of Rs 400-500 crore.
The stock that closed at Rs 351.75 on Tuesday slipped by over two per cent to Wednesday’s low of Rs 344.65 after starting the session at Rs 356.90.
Paytm shares were trading lower by 1.68 per cent, or Rs 5.90, at Rs 345.85 at 9:54 am on Wednesday.
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