Regulatory action impacts Paytm financials, reports widened loss at ₹550 crore, Q-o-Q revenue drops 20%

Digital payments giant Paytm, which perhaps endured one of its most difficult business quarters since its public market debut due to regulatory concerns, has reflected the same in its just announced earnings numbers. Broadly, the company reported widened losses to the tune of ₹550 crore, with a 20% revenue drop compared to previous quarter. That translated to ₹2267 crore in revenue, a 3% year-on-year drop compared to same quarter last year.

Majority of the loss and drop in revenue can be accounted to the shut down of its payments bank subsidiary, Paytm Payments Bank Limited (PPBL) on orders of RBI after non-compliances that extended for nearly two years. RBI’s ban came almost two years after it had directed Paytm Payments Bank to halt new customer onboarding. This, it said, was a result of “persistent” non-compliances and “continued material supervisory concerns” in the bank. Paytm Payments Bank had faced penalties in the past, with a penalty of ₹5.39 Cr imposed in October 2023 for non-compliance with Know Your Customer (KYC) norms.

“We demonstrated strong revenue momentum (up 25%) and continued our disciplined focus on profitability (EBITDA before ESOP margin up by 8%), in spite of regulatory action on our associate entity PPBL,” Paytm said in a statement. It further claims to have successfully transitioned its core payment business from PPBL to other partner banks. “This move de-risks our business model and also opens up new opportunities for long-term monetisation,”, it added.

To offset some of this business loss, Paytm significantly curtailed its marketing expenses, according to the data released. Such expenses were brought down by 16 percent Quarter on Quarter at ₹2,691 crore while keeping it stable Y-o-Y.

Paytm managed to close its FY24 with 25 percent growth in revenue at ₹9,978 crore while the losses narrowed to ₹1,442 crore, drop of 19 percent compared to FY23.

The impact of financials is expected to linger for a long period of time, the company said. It expects near-term financial impact to its revenue and profitability, on the back of pausing of PPBL wallet and other payments and loan products.

Overall, both its payments and lending businesses saw impact. While the payments business is down by 9 percent QoQ, to ₹1568 crore as the RBI ban impact subscription revenues as well as transaction volumes. The lending business on the other hand took a massive hit with the company having to pause on new loans to resolve operational issues, and regain banking partners’ confidence due to critical governance concerns.

In Q4FY24, revenue from financial services and others declined 36 percent YoY to ₹304 crore, on account of lower loan distribution. Values of loan disbursed took a nose dive from a staggering ₹15535 crore in December of last year to nearly a third — ₹5,799 crore in Q4 of 2024.