Paytm net loss widens to Rs 550 cr in Q4 as RBI ban impacts bottomline

New Delhi: Fintech firm One97 Communications, which owns the Paytm brand, on Wednesday said its loss in the fourth quarter of the financial year 2023-24 has widened to Rs 550 crore following the ban imposed by the RBI on transactions related to its payments bank. It had posted a loss of Rs 167.5 crore in the same period a year ago, the company said in a regulatory filing.

"Our fourth quarter FY24 results were impacted by temporary disruption on account of UPI transition etc. and permanent disruption because of the PPBL embargo. Paytm reported a revenue of Rs 2,267 crore, a modest decline of 3 per cent Y-o-Y (year-on-year). Our contribution margin was 57 per cent including UPI incentives, and 51 per cent excluding UPI incentives," Paytm said in a statement.

The Reserve Bank of India (RBI) barred Paytm Payments Bank Ltd (PPBL) from accepting deposits, credit transactions or top-ups in any customer accounts, wallets, and FASTags, keeping in view the interest of customers, including merchants from March 15.

"PPBL products like the Paytm wallet and FASTag were distributed by Paytm. Due to the current embargo on these products, we anticipate the steady state annualised direct impact on EBITDA to be around Rs 500 crore, as previously disclosed. Most of this impact will be in the first quarter as these products were operational during most part of the fourth quarter of FY24," the statement said.

The company during the reported quarter wrote off Rs 227 crore investment for a 39 per cent stake in PPBL following future uncertainties associated with the bank's business operations including the uncertainty of any other regulatory development etc.

"PPBL, the management, on a prudent basis, has determined that the value of the company's investment in PPBL is impaired and, accordingly, has recorded an impairment provision of Rs 2,271 crore, representing the carrying value of its investment in PPBL and disclosed the same as impairment of investment in associate," the company said in an audit note.

Paytm Founder and CEO Vijay Shekhar Sharma holds 51 per cent in PPBL. The company for the first time posted operational profit before Employee Stock Ownership Plan (ESOP) cost for the full year.

"FY24 has been a landmark year for the company as we achieved our first full year of EBITDA before ESOP profitability (since IPO) of Rs 559 crore. We demonstrated strong revenue momentum (up 25 per cent) and continued our disciplined focus on profitability (EBITDA before ESOP margin up by 8 per cent), in spite of regulatory action on our associate entity, Paytm Payment Bank Ltd," Sharma said in a letter to shareholders.

The revenue from operations of Paytm declined by 2.8 per cent to Rs 2,267.1 crore during the reported quarter from Rs 2,464.6 crore in the corresponding quarter of the FY23. For the year ended March 31, 2024, the company's loss narrowed to Rs 1,422.4 crore. Paytm had recorded a loss of Rs 1,776.5 crore in FY23. The annual revenue of Paytm increased by about 25 per cent to Rs 9,978 crore for FY24 from Rs 7,990.3 crore in FY23.

The company expects the full financial impact of disruption in the fourth quarter to be visible in the June 2025 quarter. "We expect first quarter of FY 2025 revenue of Rs 1,500-1,600 crore," the statement said.

Paytm estimates its EBITDA before ESOP to be in the negative zone of Rs 500 to Rs 600 crore. "We are confident of seeing meaningful improvement starting from the second quarter of FY25, based on restarting certain paused products and achieving steady growth in operating metrics." the statement said.

For FY24, the company reported a 25 per cent increase in revenue, due to GMV growth, device additions, and growth in the financial services distribution business. "Net payment margin has gone up 50 per cent to Rs 2,955 crore due to increase in payment processing margin and increase in merchant subscription revenues," the statement said.