![[Explained] Are Privacy Concerns Around Paytm's 'Opt-Out' UPI Mass Migration Justified?](https://inc42.com/cdn-cgi/image/quality=75/https://asset.inc42.com/2024/07/paytm-financials-f1-760x570.png)
While Paytm’s loss soared 134% YoY to INR 840.1 Cr in Q1 FY25, operating revenue declined 36% YoY to INR 1,502 Cr during the quarter under review
The company said that per device subscription revenue has bottomed out and the fintech expects it to shoot up on the back of new merchant signups
On the potential sale of its ticketing business Paytm Insider to Zomato, the fintech major reiterated its stance that no binding agreement has been signed
Fintech major Paytm
on Friday (July 19) reported a net loss of INR 840.1 Cr in the quarter ended June 2024 (Q1 FY25), up 134% from INR 358.4 Cr in the year-ago quarter.
Operating revenue also declined 36% to INR 1,502 Cr during the quarter under review from INR 2,342 Cr in Q1 FY24.
Despite this, the Vijay Shekhar Sharma-led startup said in a statement that it expects revenue and profitability to improve going forward. The company said this growth will come on the back of revival of its merchant payment business, expansion of loan cross-selling vertical, strong product market fit for its shop insurance vertical, among others.
Following this, the company’s shares surged over 6% during the intraday trading session on the BSE. The stock gave up some of the gains to close over 3% higher at INR 458.70 on the BSE.
Here are the key highlights from the company’s Q1 financial results:
Signs Of Revival Of Merchant Trust On Paytm
During the quarter, the fintech major claimed that its new merchant signups are reaching January levels. The company said that per device subscription revenue has bottomed out and is expected to shoot up on the back of new merchant signups.
It is pertinent to note that the company saw a disruption in this vertical after the Reserve Bank of India’s (RBI) clamp down on Paytm Payments Bank. Following the RBI’s regulatory action, many merchants began looking at other options to avoid any business outages.
Moving forth, Paytm said it is looking to redeploy devices from inactive merchants to new merchants. As a result, the company claimed that it witnessed a marginal increase in its merchant subscriber base to 1.09 Cr from 1.07 Cr in the preceding March quarter.
The addition of 2 Lakh new subscribers in the quarter was significantly lower than the 14 Lakh new merchants it added to its subscriber base in Q3 FY24. The company expects its net device merchant additions to reach “previous run rates” in the third quarter of the ongoing fiscal.
Meanwhile, the company’s monthly transacting users (MTU) have seen a sharp decline in 2024. The company’s MTU dipped to 7.8 Cr in June, 25% lower than the 10.4 Cr monthly transactions it witnessed in the first month of the year.
As of now, the company is barred from onboarding new UPI consumers on its platform. “We are focused on retaining existing customers and have increased reactivation of inactive customers…We expect growth in MTU once we start onboarding new UPI users,” the startup’s earnings report said.
Paytm’s Rejigged Loan Book
For the quarter, the company reported a revenue of INR 280 Cr from its financial services business, a 8% QoQ dip from last quarter’s INR 304 Cr. After witnessing a sizable sequential decline in the loans distributed last quarter, the company’s loan distribution dipped in the June quarter as well. Its loan distribution stood at INR 5,008 Cr in Q1 FY25, a marginal decline from INR 5,079 Cr in the previous quarter.
However, the company saw a sequential uptick in its merchant loans. Paytm distributed INR 2,508 Cr worth of merchant loans during the quarter under review, a 50% jump from last quarter’s INR 1,671 Cr. Paytm said that moving forth, it will focus on providing loans to high-quality merchants.
On the other hand, its personal loan distribution took a hit during the quarter. The company distributed INR 2,500 Cr in personal loans, down 27% from the previous quarter’s INR 3,408 Cr. For personal loans, average ticket size stood at INR 1.35 Lakh during the June quarter.
It is pertinent to note that the company decided to reduce its focus on small-ticket loans at the end of 2023. Subsequently, it shut its small personal loans offering at the beginning of this quarter. “Our partners’ approach is consistent with industry-wide trends on tightening risk policies,” the company said.
Marketing Services’ Revenue Dips QoQ
The company’s marketing services revenue continued to dip this quarter quarter as well, falling 19% QoQ to INR 321 Cr. Revenue from this channel also dipped 23% QoQ to INR 395 Cr in the preceding March quarter.
However, Paytm attributed this decline to “seasonality of the events business and lower MTU”.
Its gross merchant value (GMV) for ticketing, deals & gift vouchers, among others, stood at INR 2,817 Cr. Under the segment, the startup said that its overall growth in the near future would come from its travel business.
“We continue to see strong growth in the travel segment, driven by partnerships and innovative travel solutions. As highlighted (earlier)… Paytm gained market share among OTAs, with a 19% YoY increase in flight bookings, surpassing the industry’s growth rate of around 3%,” it said.
On the potential sale of its ticketing business Paytm Insider to Zomato, the startup reiterated its stance that no binding agreement has been signed.
“The company routinely explores various strategic opportunities aimed at enhancing shareholder value. Accordingly, the potential transfer of Paytm’s Entertainment business, a component of our Marketing Services, is under consideration,” it said.
Meanwhile, Paytm also disclosed that it received a show cause notice from SEBI in relation to 2.1 Cr ESOPs granted to CEO Vijay Shekhar Sharma in FY22.
