Paytm warned of job cuts and said it would trim non-core assets after reporting its first sales drop on record, reflecting the fallout from a regulatory probe that slashed much of the pioneer's business Indian fintech.
Once a role model for India's nascent startup economy, Paytm's net losses widened several times to Rs. 5.5 billion ($66.1 million) in the three months to March. The company known as One 97 Communications reported a 2.6 percent drop in revenue to Rs. 22.7 billion, the first drop since its stock market debut in 2021. Its shares fell as much as 2 percent.
Paytm, founded by then-celebrated Indian businessman Vijay Shekhar Sharma in 2010, is struggling to recover after a financial watchdog in January ordered a key banking subsidiary to exit. The restrictions dealt a blow to Paytm's reputation and led to speculation that customers might abandon rivals such as Walmart's PhonePe.
On Wednesday, Paytm said it was profitable before interest, tax, depreciation and amortization, and before taking into account employee incentives. He warned that revenue should fall further to 15-16 billion rupees in the June quarter, but expected a “significant improvement” thereafter. To get there, the company aimed to streamline the organization, reduce employee costs and “prune” non-core businesses, it said in a statement.
Paytm, which also competes with financial services offered by Amazon.com, Alphabet's Google and billionaire Mukesh Ambani's Jio Financial Services, is trying to put its regulatory woes behind it.
Its shares have lost half their value since the government ordered Paytm Payments Bank, which processed transactions for Paytm, to halt its key operations, citing non-compliance. The banking subsidiary known as PPBL is not controlled by Paytm, although it is part of founder and CEO Sharma's fintech empire.
Since then, Sharma has moved quickly to steady the ship by forging new partnerships with some of India's top lenders, including Axis Bank Ltd., HDFC Bank Ltd. and State Bank of India Ltd. The alliances will help Paytm drive instant money transfers for customers by linking banks. with its fintech application. Paytm previously used its banking subsidiary to run its digital wallets and payment traffic.
The company also uses partner banks to clear business transactions.
Paytm on Wednesday said it lost around 4 million monthly transaction users in the March quarter. It disbursed Rs 57.76 billion in loans, a sharp drop from Rs. 155.35 billion in the previous three-month period.
“We expect a short-term financial impact on our revenue and profitability, due to the disruptions we faced in our business in the fourth quarter,” Sharma said in a letter to shareholders. “This includes the steady-state impact due to the pause in the PPBL portfolio. We have also paused some other payments and loan products to our customers over the past quarter, and I am happy to share that many of these products have restarted or are in the process of starting soon.”
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