On Wednesday, One 97 Communications, the parent company of Paytm, announced a net loss of ₹550 crore for the quarter ending March 2024, an increase from previous losses. Additionally, their revenue from operations slightly decreased to ₹2,267.10 crore.
CEO Vijay Shekhar Sharma anticipates that the RBI’s ban on its associate, Paytm Payments Bank (PPBL), will have an immediate effect on the company’s revenue and profitability.
In a letter to shareholders, Sharma emphasized the company’s dedication to enhancing its governance framework, improving cost efficiencies, and addressing the financial performance impacts resulting from regulatory actions.
1] EBITDA before ESOP Profitability in FY24 Paytm
It achieved its first full year of EBITDA profitability before ESOPs (since its IPO), amounting to ₹559 crore in FY24. Sharma highlighted that the company maintained strong revenue momentum and a disciplined focus on profitability despite regulatory actions affecting its associate entity, (PPBL).
2] Transition of Payments Business
Sharma announced that they have successfully shifted its core payments business from PPBL to other partner banks. He explained that this transition mitigates business risks and creates new opportunities for long-term monetization.
3] Impact on Revenue and Profits
Sharma indicated that the company anticipates short-term financial impacts on its revenue and profitability due to business disruptions in Q4 following the RBI’s ban on PPBL. He noted that this includes the ongoing impact of halting the PPBL wallet. However, he shared that several paused payment and loan products have been or are in the process of being reinstated.
4] AI-Driven Cost Efficiencies
Leveraging Artificial Intelligence (AI) capabilities, Paytm is working on significant cost efficiencies, including creating a leaner organizational structure. Sharma stated that their AI experiments and learnings are set to revolutionize customer and merchant care in the financial industry, unlocking new revenue streams and cost savings. He anticipates tangible results from these initiatives in the upcoming quarters, enhancing the company’s competitive edge.
5] Strong Governance
Sharma reiterated the company’s commitment to building its business in line with regulatory compliance and prudent risk management policies. He mentioned that Paytm is strengthening its governance framework across group entities, particularly regulated ones, by appointing subject matter experts as advisors or independent directors and reviewing various processes. He also emphasized increased regulatory engagement and a stronger focus on compliance.
At 12:00 pm, its shares were trading 0.64% lower at ₹349.50 each on the BSE.
