July 19, 2024
New Delhi, India
Paytm Q1 Results
One 97 Communications Ltd, the company behind Paytm, has reported a significant widening of its Q1FY25 net loss to Rs 839 crore, compared to Rs 357 crore a year ago. The company’s revenue from operations also fell by 36% to Rs 1,502 crore, largely due to the impact of Reserve Bank of India (RBI) restrictions that have hampered its payments bank business.
Financial Performance: Paytm’s revenue from operations decreased from Rs 2,342 crore in Q1FY24 to Rs 1,502 crore in Q1FY25. Of this revenue, the payments business contributed Rs 900 crore, financial services contributed Rs 280 crore, and the remaining revenue came from marketing services.
At 12:23 PM on July 19, Paytm shares were trading at 449.00INR up +3.70 or (+0.83%).
Company Outlook: “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 optimization,” Paytm stated in a stock exchange filing.
Impact of RBI Curbs: The RBI placed restrictions on Paytm Payments Bank Limited (PPBL) in January, severely impacting its operations. Paytm had previously written off Rs 227.1 crore worth of investment in PPBL as impairment losses. In response to the escalating losses, the company has launched an aggressive cost-saving plan aimed at reducing employee costs by Rs 400-500 crore annually.
Cost Management: “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 added.
Payments Business Update: Paytm’s revenue from its payments business stood at Rs 900 crore. The net payment margin was Rs 383 crore during the quarter, down from Rs 853 crore QoQ. Payment margins depend on what Paytm earns from non-UPI instruments like post-paid, EMI, and cards, and subscription charges on devices sold to merchants.
Merchant Subscriptions: While Paytm claims that new merchant signups have reached January 2024 levels, its revenue from per device subscription has bottomed out in Q1 FY25. The company expects this to increase in the future as it works towards new signups, reactivation of merchants, and redeployment from inactive merchants. As of June 2024, about 1.09 crore merchants subscribed to its devices, a marginal increase from the previous quarter.
UPI Consumer Onboarding: Paytm is awaiting approval to start onboarding new UPI consumers. As of June, it had about 7.8 crore monthly transacting users, slightly up since March but significantly lower than the 10.4 crore in January.
Despite the current financial challenges, Paytm remains optimistic about future revenue and profitability improvements driven by growth in operating parameters, an expanding merchant base, and cost optimization efforts. The company’s strong balance sheet, with Rs 8,108 crore of cash on books, provides a buffer as it navigates through this period of financial restructuring.
Currency Market Update July 19, 2024
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