Paytm Reports Q4 FY24 Net Loss of Rs 550 Crore, Revenue Drops 2.9% YoY

Paytm, under the leadership of Vijay Shekhar Sharma, released its financial results for the fourth quarter of the fiscal year ending in March 2024 (Q4 FY24) on Wednesday. The fintech company reported a modest 3% drop in revenue from operations, totaling Rs 2,267 crore, compared to Rs 2,334 crore in Q4 FY23. This decrease transpired despite the cessation of Paytm Payments Bank Limited (PPBL) services and was mainly driven by macroeconomic challenges, competitive pressures, and regulatory changes.

For the entire fiscal year 2024, Paytm’s operational revenue saw a remarkable 25% rise, climbing to Rs 9,978 crore from Rs 7,990 crore in FY23. This impressive growth was fueled by a surge in gross merchandise value (GMV), an increase in device installations, and an expanded array of financial services.

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The company’s GMV experienced a 39% year-over-year increase, reaching Rs 18.3 lakh crore, while merchant subscriptions grew to 1.07 crore by March 2024, an uptick of 39 lakh compared to the previous year.

In January, the Reserve Bank of India (RBI) imposed restrictions on Paytm, citing concerns over regulatory compliance. While the RBI later provided temporary relief, these limitations affected Paytm’s revenue. For example, revenue from payment services increased by 7% year-on-year, reaching Rs 1,568 crore in Q4 FY24 compared to Rs 1,467 crore in Q4 FY23. However, it saw a 9% decline quarter-on-quarter due to disruptions in PPBL services. Despite these hurdles, Paytm successfully enhanced its operational efficiency and profitability.

Paytm achieved a contribution margin of 57% in Q4 FY24, factoring in UPI incentives, and posted an EBITDA of Rs 103 crore before accounting for ESOP expenses. Despite this, the company’s net losses swelled to Rs 550 crore in Q4 FY24. This increase was driven by a Rs 227 crore loss associated with PPBL and non-cash ESOP expenses totaling Rs 326 crore.

In response, Paytm streamlined its cost structure by harnessing AI capabilities and cutting employee and marketing expenses, aiming to save approximately Rs 400-500 crore annually. Looking ahead, Paytm projects an incremental EBITDA impact of Rs 100-150 crore in Q1 FY25 due to temporary disruptions in February and March. The company expects to bounce back from these challenges by Q2 FY25, with a stabilization or growth in consumer and merchant metrics starting from April/May. Furthermore, Paytm is in talks with the National Payments Corporation of India (NPCI) to finalize the onboarding of new UPI users for its TPAP App. The company also intends to reinvest in marketing and user growth initiatives in the coming financial year to drive further expansion.

Despite a 3% drop in Q4 FY24 revenue, Paytm reported an impressive 25% annual revenue growth in FY24, driven by a 39% surge in gross merchandise value and a 39% increase in merchant subscriptions. While regulatory challenges and disruptions in Paytm Payments Bank services impacted profitability, the company enhanced operational efficiency, achieved a 57% contribution margin, and plans to optimize costs by Rs 400-500 crore annually. Looking ahead, Paytm expects to rebound by Q2 FY25, with stabilization in consumer and merchant metrics, and aims to expand its UPI user base and marketing initiatives.