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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 ₹550 crore following the ban imposed by the RBI on transactions related to its payments bank.
The company had posted a loss of ₹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 ₹2,267 crore, a modest decline of 3% Y-o-Y (year-on-year). Our contribution margin was 57% including UPI incentives, and 51% excluding UPI incentives,” Paytm said in a statement.
The Reserve Bank of India (RBI) barred Paytm Payments Bank Limited (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 onwards.
“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 ₹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 ₹227 crore investment for a 39% 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 ₹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% 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 ₹559 crore. 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, Paytm Payment Bank Ltd,” Sharma said in a letter to shareholders.
The revenue from operations of Paytm declined by 2.8% to ₹2,267.1 crore during the reported quarter from ₹2,464.6 crore in the corresponding quarter of the financial year (FY) 2023.
Paytm said that there were temporary disruptions in operating metrics like Monthly Transacting Users (MTU), merchant base, and Gross Merchandise Value (GMV) during February and March.
“This is expected to have an incremental EBITDA impact of ₹100-150 crore, in the first quarter of FY25 and should start recovering from the second quarter as we are seeing stabilisation or growth in consumer and merchant base metrics from April/May,” the statement said.
For the year ended March 31, 2024, the company’s loss narrowed to ₹1,422.4 crore. Paytm had recorded a loss of ₹1,776.5 crore in FY23.
The annual revenue of Paytm increased by about 25% to ₹9,978 crore for FY24 from ₹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 ₹1,500-1,600 crore,” the statement said.
Paytm estimates its EBITDA before ESOP to be in the negative zone of ₹500 to ₹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% increase in revenue, due to GMV growth, device additions, and growth in the financial services distribution business.
“Net payment margin has gone up 50% to ₹2,955 crore due to increase in payment processing margin and increase in merchant subscription revenues,” the statement said.
The GMV of Paytm increased by 30% to ₹4.7 lakh crore during the reported quarter from ₹3.6 lakh crore a year ago.
Paytm received UPI incentives of ₹288 crore for FY24, as compared to ₹182 crore in FY23.
“The financial services business reported a 30% revenue increase due to growth in the value of loans distributed on our platform. The Marketing services business reported 14% growth to ₹1,738 crore, impacted by the lower MTUs in February and March,” the statement said.
Paytm’s contribution profit increased by 42% to ₹5,538 crore, driven by growth in net payment margin and higher-margin financial services business.
The company calculates contribution profit after excluding payment processing charges, promotional cashbacks, incentives etc.
Despite the disruption in operations, the average monthly transacting users of Paytm grew by 7% to 9.6 crore from 9 crore a year ago and merchant subscriptions grew by 58% on Y-o-Y basis to 1.07 crore.
“Merchant subscription revenue in the fourth quarter was about ₹90 per device per month and we expect it to bottom out at about ₹80 in the first quarter of FY25, post which it should increase towards ₹100 by the fourth quarter of FY25,” the statement said.
Ripunjai Gaur, Chief Business Officer, Offline Payments, has been designated as senior management personnel of the company.
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