Vijay Shekhar Sharma-led Paytm reports 36% fall in revenue; loss widens at Rs 839 in Q1FY25

Vijay Shekhar Sharma-led fintech firm Paytm has witnessed a significant decline in its financial performance in the first quarter of fiscal year 2025 (Q1 FY25).

The fintech firm's revenue from operations fell by 36% to Rs 1,502 crore compared to Rs 2,342 crore in the same quarter the previous year.

Additionally, the net loss widened to Rs 839 crore, a substantial increase from Rs 357 crore in Q1 FY24. 

The significant downturn in financial performance came after the RBI took strict action against Paytm Payments Bank, halting most of its business operations and significantly reducing Paytm's parent market capitalization.

What contributed to the decline in revenue?

The revenue decline was broad-based, impacting several of Paytm's business segments. Revenue from financial services was Rs 280 crore, and from marketing services was Rs 321 crore.

The overall operating revenue stood at Rs 1,502 crore, and the total revenue, including interest and gains from financial assets, was Rs 1,639.1 crore.

The company also faced a decline in its employee benefits costs and payment processing expenses.

Specifically, employee benefits costs decreased by 13.75% to Rs 952.5 crore, while payment processing expenses fell by 27.66% to Rs 517.1 crore compared to the previous quarter.

How did expenses impact Paytm's financials?

Despite efforts to reduce costs, Paytm's expenses remained high. The company spent significantly on marketing and promotions, which increased by 72% to Rs 221.4 crore.

IT infrastructure costs also rose by 12.38% to Rs 182.4 crore.

Overall, the total expenses for the quarter amounted to Rs 2,476.4 crore, a decrease from Rs 2,691.4 crore in the previous quarter. The company noted that it spent Rs 1.65 to earn a rupee of operating income during the quarter.

What Are Paytm's Plans for Recovery?

Paytm remains optimistic about its future despite the current challenges. The company highlighted the rebound in key operating metrics, particularly the merchant base, which has grown to over 1.09 crore.

The daily transaction values are approaching pre-pandemic levels, and the customer base is stable at 7.8 crore with increasing average transaction values per customer. 

Paytm is focusing on market leadership through innovations in merchant payment solutions and expanding its offerings in insurance and mutual fund distribution. 

 "We are seeing a rebound in our merchant operating metrics and stability in our consumer base, demonstrating our path to recovery. This also indicates the continued confidence of our merchant partners and consumers on our platform, and we are grateful for the trust of our stakeholders," Paytm spokesperson said.

Expecting improvements in revenue and profitability

Looking forward, Paytm expects improvements in both revenue and profitability. The company plans to save Rs 400-500 crore annually on employee costs and has already achieved a 9% reduction in these costs quarter-on-quarter.

Despite these efforts, Paytm reported an EBITDA loss of Rs 792 crore and an EBITDA before ESOP loss of Rs 545 crore for Q1 FY25. However, the company is confident that with the ongoing recovery in its loan distribution business and continued focus on cost optimization, it will achieve sustained growth. 

"With Q1 illustrating the full impact of recent disruptions, we are confident in our trajectory towards sustained growth going forward," Paytm said.